Stocks rallied again – Have they hit short-term highs?

The S&P 500 is likely to open near its record, but is there any upside left?

Stock prices once again extended their record-breaking rally on Thursday, with the S&P 500 index closing 0.83% higher after reaching a new all-time high of 6,284.65. Investor sentiment remained elevated ahead of the long holiday weekend, supported by expectations of positive tariff-related developments and the upcoming vote on Trump’s “Big Beautiful Bill.”

This morning, the S&P 500 is poised to open 0.2% lower, as indicated by futures contracts. The market is likely to remain volatile for some time following its recent rally.

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

The S&P 500 remains near its record high, as the daily chart indicates.

S&P 500: Another weekly advance

The S&P 500 closed last week 1.72% higher, extending its previous week's gain of 3.4%. The market continues its multi-year bull run, with support now around 6,150 - the highs from January and February.

Nasdaq 100: New record nearing the 23,000 Mark

The Nasdaq 100 closed 0.99% higher on Friday, reaching a new all-time high of 22,896.01.

While no immediate technical sell signals are evident, the index may be entering overbought territory, suggesting the potential for short-term consolidation or a correction.

Volatility remains relatively low

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 gains in stocks, the VIX failed to make a new low last week, which could be a warning sign for bulls.

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: Hovering near 6,300

This morning, the S&P 500 futures contract is retracing some of Friday’s weakness, when the market drifted lower amid low volatility and a shortened trading session.

Resistance is currently around 6,330, while support is near 6,280, marked by recent local lows.

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

Conclusion

Stocks are set to open relatively flat, slightly below Thursday’s closing levels. The S&P 500 remains near its all-time high, with no clear bearish signals at the moment. However, some profit-taking could occur 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 remains near new record highs.

• The 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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