S&P 500 reaches new record, but uncertainty looms

Stocks continue their consolidation as tariff news poses risks.

The S&P 500 index gained 0.27% on Thursday, reaching a marginally higher all-time high of 6,290.22. The market is continuing its short-term consolidation. Today, it is set to open about 0.5% lower, as indicated by futures, in response to overnight news regarding a 35% tariff on Canada.

Investor sentiment remains elevated, as reflected in the Wednesday’s AAII Investor Sentiment Survey, which reported that 41.4% of individual investors are bullish, while 35.6% are bearish.

The S&P 500 continues to trade near its all-time high, as the daily chart shows.

Nasdaq 100: More uncertainty

The Nasdaq 100 closed 0.16% lower on Thursday, underperforming the broader market. Currently, the index appears to be consolidating within an ongoing uptrend. While no negative signals have emerged, the price action may be forming a potential topping pattern.

VIX hits another local low

Yesterday, the Volatility Index (VIX) dropped to a new local low of 15.70, further supporting the strength of the equity rally.

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. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.

S&P 500 futures contract extends consolidation around 6,300

This morning, the S&P 500 futures contract is trading slightly below 6,300 after rebounding from an overnight dip caused by Trump’s tariff announcement. The market remains in a consolidation, which could represent a topping pattern or a flat correction before another leg higher.

Resistance remains around 6,320, with support near 6,250.

Markets remain highly sensitive to geopolitical developments and could stay volatile in the near term.

Crude Oil update: Pulling back again

Crude oil closed 2.65% lower on Thursday, falling below the $67 level and extending its recent consolidation. The decline followed a surprise inventory build. Despite the setback, recent price action still marks a rebound from the sharp June 23–24 sell-off. Oil is trading 0.9% higher this morning.

For oil markets specifically, these developments are worth monitoring:

• The IEA reported that the oil market may be tighter than it appears, driven by strong summer demand despite forecasts of a surplus due to rising supply. Refinery runs and crude burning for power are increasing, narrowing the gap between apparent supply excess and real-world demand.

• Despite recent output increases, indicators like backwardation and healthy refining margins suggest continued tightness in physical oil markets. OPEC+ production hikes have had limited effect on easing the market, pointing to persistent global demand for oil.

• Long-term outlooks diverge: while the IEA expects modest demand growth of 700,000 bpd in 2025, OPEC forecasts nearly double that. The IEA also lowered its 2026–2029 demand projections, mainly due to anticipated declines in Chinese consumption.

Oil retraces slightly after sell-off

Although crude is trading higher this morning, the rebound only recovers a portion of Thursday’s losses. Key support remains around $66-67, with resistance near $69. The current trend appears mildly bullish or simply a continued consolidation following the June sell-off.

My short-term outlook on oil remains neutral, and no positions are currently justified from a risk/reward standpoint.

Conclusion

The S&P 500 is expected to open lower today, pulling back from Thursday’s record high. While there are no clear bearish signals, some short-term profit-taking is possible. Investors are turning their focus to the upcoming quarterly earnings season, which kicks off next week with major banks reporting.

Last Tuesday, I noted “I think that in the short term, overbought technical conditions may lead to a period of consolidation or a mild pullback. However, no clear bearish signals are currently evident”. That outlook remains valid.

Here’s the breakdown:

• The S&P 500 hit a new record but remains in consolidation.

• The recent rally extended gains for those who bought based on my Volatility Breakout System.

• There are no clear bearish signals yet, but a deeper downward correction is not out of the question at some point.

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