Stocks face uncertainty ahead of earnings

The stock market has rebounded from Friday’s low, but further fluctuations may lie ahead.

The S&P 500 closed 0.41% higher on Monday, rebounding after its decline of more than 1% on Friday. Today, the market is expected to open 0.3% lower as investors await earnings releases from NFLX and SPCX, scheduled for after the market close.

Investor sentiment has deteriorated slightly, as reflected in last Wednesday’s AAII Investor Sentiment Survey, which reported that 38.7% of individual investors are bullish, while 41.6% are bearish.

The S&P 500 remains near its upward trendline, as shown on the daily chart.

S&P 500 futures contract: Pulling back

This morning, the S&P 500 futures contract is trading lower, retracing yesterday’s rebound.

Resistance is currently at 7,750, while support is at 7,680-7,700, among other levels.

Market outlook: Extending a months-long consolidation

The S&P 500 is set to open slightly lower today, likely continuing to fluctuate following Friday’s sharp sell-off. So far, the price action suggests that the market is extending the consolidation that began in early August.

Investors are awaiting quarterly earnings reports from major corporations. This week, Netflix (NFLX) and SpaceX (SPCX) are scheduled to report today, followed by Tesla (TSLA) and Meta Platforms (META) tomorrow, among others.

Here's what I think is most likely:

• The S&P 500 index is trading sideways following Friday’s pullback, suggesting that the medium-term consolidation remains intact.
• My Volatility Breakout System is currently short in the market.

What this means for your portfolio

For individual investors, this environment calls for careful position management. While the market continues to advance, the combination of low volatility, seasonal weakness signals, and stretched valuations suggests that defensive positioning may become increasingly important in the weeks ahead.