Investorideas.com

Call 800 665 0411 to learn about our services for your stock

Search   Follow Investorideas on Twitter   Investorideas is on Facebook   Investorideas is on Youtube   Investorideas is on Pinterest  Investorideas is on stocktwits   Investorideas is on tumblr   Investorideas is on LinkedIn   Investorideas Instagram   Investorideas Telegram   Investorideas Gettr   Investorideas RSS




Share on StockTwits

S&P 500's Post-Fed Rally - Will It Last?

 

March 21, 2024 (Investorideas.com Newswire) Yesterday's FOMC Rate Decision release has been a game-changer for the stock market, at least for the short-term. The S&P 500 index has reached a new record high at the level of 5,226.19, gaining 0.89% and breaking a two-week-long trading range.

This morning, the S&P 500 futures contract is up by 0.5%, indicating a higher opening for the index. So, the market is likely to reach yet another new all-time high; however, the question is: will that surge lead to a short-term or intraday downward correction and a potential retracement of the advance? From a contrarian standpoint, it seems likely, but the overall trend remains to the upside.

On March 1, I mentioned about February, "Despite concerns about stock valuations, the market rallied to new record highs, fueled by hopes of the Fed's monetary policy pivot and the AI revolution.". And yesterday, it was all about that Fed pivot, hence a positive market reaction.

While indexes were hitting new record highs, most stocks were essentially moving sideways. So, the question is - is this a topping pattern before a more meaningful correction? Still, there have been no confirmed negative signals; however, one might consider the possibility of a trend reversal.

Recently, the stock market continued to rally, fueled by advances in a handful of tech sector stocks, but as I wrote on February 7, "We may have to deal with a correction or consolidation of several weeks of advances. With the season of quarterly earnings announcements coming to an end and a series of important economic data, profit taking may follow." Despite the rally, this still holds true. The S&P 500 index seems to be crawling a wall of worry here.

Quite surprisingly, the investor sentiment worsened a bit; yesterday's AAII Investor Sentiment Survey showed that 43.2% of individual investors are bullish, while 27.2% of them are bearish, up from 21.9% last week. The AAII sentiment is a contrary indicator in the sense that highly bullish readings may suggest excessive complacency and a lack of fear in the market. Conversely, bearish readings are favorable for market upturns.

The S&P 500 index bounced from an over month-long upward trend line, as we can see on the daily chart.


Nasdaq 100 Without New Record

On March 8, the technology-focused Nasdaq 100 index reached a new record high of 18,416.73, however, it quickly retraced the advance, and since then, it has been trading sideways. Yesterday, it gained 1.15%, closing above the 18,200 level. It still looks like a consolidation following weeks-long uptrend.


VIX Dipped to 13

The VIX index, also known as the fear gauge, is derived from option prices. On Friday, it was as high as 15.50, and yesterday, it dipped to 13 following a rally after the Fed announcement. It clearly indicates a lack of fear in the market.

Historically, a dropping VIX indicates less fear in the market, and rising VIX accompanies stock market downturns. However, the lower the VIX, the higher the probability of the market's downward reversal.


Futures Contract Trades Above 5,300

Let's take a look at the hourly chart of the S&P 500 futures contract. It broke above the recent trading range as markets reacted to the FOMC release. This morning it's trading along the 5,300 level. The support level is now at 5,260, marked by the previous highs.


Conclusion

Today, the S&P 500 index is likely to open 0.5% higher following yesterday's breakout and a record-breaking advance. However, some profit taking action may be in cards at some point. There have been no confirmed negative signals so far though.

In my Stock Price Forecast for March, I noted "So far, stock prices have been trending upwards in the medium to long term, reaching new record highs. The prudent advice one could give right now is to remain bullish or stay on the sidelines if one believes stocks are becoming overvalued and may need a correction. It's likely that the S&P 500 will continue its bull run this month. However, we may encounter a correction or increased volatility at some point as investors start to take profits off the table."

For now, my short-term outlook remains neutral.

Here's the breakdown:

  • The S&P 500 reached a new record high on Fed news, and today, it will extend the advance.
  • Stock prices are getting more overbought, and another short-term correction may be coming.
  • In my opinion, the short-term outlook is neutral.


The full version of today's analysis - today's Stock Trading Alert - is bigger than what you read above, and it includes the additional analysis of the Apple (AAPL) stock and the current S&P 500 futures contract position. I encourage you to subscribe and read the details today. Stocks Trading Alerts are also a part of our Diamond Package that includes Gold Trading Alerts and Oil Trading Alerts.

And if you're not yet on our free mailing list, I strongly encourage you to join it - you'll stay up-to-date with our free analyses that will still put you ahead of 99% of investors that don't have access to this information. Join our free stock newsletter today.

More Info:


Investorideas.com Newswire

This news is published on the Investorideas.com Newswire - a global digital news source for investors and business leaders


Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. Contact management and IR of each company directly regarding specific questions.

More disclaimer info: https://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release and our other news services on the Investorideas.com newswire https://www.investorideas.com/News-Upload/

Global investors must adhere to regulations of each country. Please read Investorideas.com privacy policy: https://www.investorideas.com/About/Private_Policy.asp


That's all it takes to get an article published on Investor Ideas - Learn More