Stocks near record highs - Is there any upside left?

After rebounding from Monday’s low, is the S&P 500 poised to reach new highs?

Stock prices advanced on Wednesday, with the S&P 500 closing 0.61% higher and inching closer to last Friday’s record high of 6,284.65. The rally was led by large-cap tech names, including fresh all-time highs in NVDA and MSFT. NVDA's market capitalization has now reached a staggering $4 trillion, prompting some valuation concerns. Despite this, the index remains near its all-time highs, and futures suggest a flat open this morning, signaling continued short-term consolidation.

Investor sentiment remains elevated, as reflected in yesterday’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 hover near last week’s high, as the daily chart shows.

Nasdaq 100: Slightly higher high

The Nasdaq 100 rose 0.72% on Wednesday, reaching a new record high of 22,915.33. Gains were again driven by strong performances in NVDA and MSFT. While the index continues its uptrend, the move appears to be an extension of short-term consolidation rather than a breakout.

VIX hits local low

Yesterday, the Volatility Index (VIX) dropped to a new local low of 15.76, 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 holds near 6,300

This morning, the S&P 500 futures contract trading near the 6,300 level. 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: Consolidation continues

Crude oil edged up 0.07% on Wednesday, extending its recent consolidation following gains earlier this month. However, the move still appears to be a rebound from the sharp sell-off on June 23-24. Oil prices held firm despite tariff-related headlines and the OPEC+ production increase, though this morning crude is trading 0.9% lower after a surprise inventory build.

For oil markets specifically, these developments are worth monitoring:

• OPEC+ is considering halting further production increases after completing a planned 550,000 bpd hike in September, part of a broader 2.2 million-barrel revival. Delegates cited by Bloomberg suggest the group may delay reversing an additional 1.66 million bpd of halted supply, reflecting caution amid uncertain global demand.

• Oil prices dipped as markets reacted to President Trump's renewed tariff threats, including a 50% levy on Brazilian exports and plans targeting copper, semiconductors, and pharmaceuticals. Despite the bearish outlook, market reactions have been muted due to Trump's history of reversing tariff policies, with investors adopting a wait-and-see approach.

• JP Morgan noted record global flight activity and strong freight trends, indicating steady trade and oil demand growth of nearly 1 million bpd year-to-date.

Oil stalls after recent advances

Crude oil is lower this morning, extending its sideways movement. Resistance remains at $69, with support around $67. Despite negative headlines - including the OPEC+ supply boost - oil has shown relative resilience. It’s unclear whether the current consolidation marks a short-term top or simply a pause. My short-term outlook on oil remains neutral.

Conclusion

The S&P 500 is expected to open flat today and continues to trade near all-time highs. There are currently no clear bearish signals, though a round of profit-taking cannot be ruled out.

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 Monday’s dip to around 6,200.

• 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.