|

Stocks moving sideways: Consolidation before the next leg up?

The S&P 500 continues to fluctuate following last week’s rally - what’s next?

The S&P 500 Index closed 0.07% lower on Tuesday, essentially moving sideways after Monday’s pullback. The market remains mixed as investors digest recent tariff-related news and economic data. Today, the index is set to open 0.2% higher, according to futures contracts. The S&P 500 remains relatively close to Friday’s new record high of 6,284.65.

Investor sentiment has improved, as reflected in last Wednesday’s AAII Investor Sentiment Survey, which reported that 45.0% of individual investors are bullish, while 33.1% are bearish.

The index is trading above the 6,200 level, as the daily chart shows.

Chart

Nasdaq 100: Short-term consolidation

The Nasdaq 100 gained 0.07% on Tuesday, remaining within Monday’s trading range. After hitting a new all-time high of 22,896.01 on Friday, it pulled back to a low of 22,587.47 on Monday. This appears to be a brief correction, with no confirmed negative signals evident at this point.

Chart

VIX: No clear direction

The Volatility Index (VIX) hit a local low of 16.11 on previous Thursday - the lowest since February 21 - reinforcing the strength of the equity rally and signaling calmer market conditions. However, despite continued stock market gains, it failed to make a new low last week. Volatility increased on Monday but pulled back again on Tuesday.

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.

Chart

S&P 500 futures contract: Approaching 6,300 again

This morning, the S&P 500 futures contract is consolidating below the 6,300 level. Resistance remains in the 6,300–6,320 range, with support near 6,250.

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

Chart

Conclusion

Wednesday’s session is expected to open on a slightly positive note, with the S&P 500 index set to rise 0.2%. The index remains near its all-time high, and no clear bearish signals are currently present. However, a more pronounced round of profit-taking cannot be ruled out in the near term.

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 continues to consolidate after pulling back to around 6,200 on Monday.

  • 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.


Want free follow-ups to the above article and details not available to 99%+ investors? Sign up to our free newsletter today!


Want free follow-ups to the above article and details not available to 99%+ investors? Sign up to our free newsletter today!

Author

Paul Rejczak

Paul Rejczak

Gold Price Forecast

Paul Rejczak is a stock market strategist who has been known for the quality of his technical and fundamental analysis since the late nineties.

More from Paul Rejczak
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading 

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.