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Stocks extended their short-term downtrend on Friday, with the S&P 500 index closing 1.73% lower after reaching a local low of 5,402.62. The market reacted to lower-than-expected monthly jobs data, among other factors. However, this morning, the index is likely to open 0.6% higher on improving investor sentiment ahead of the important CPI data on Wednesday and the FOMC Rate Decision next week. My speculative short position in the S&P 500 futures contract from August 20, became more profitable on Friday. On August 21, I wrote “Recently, the market has continued to climb following the brief Yen crisis at the start of August, surprising many traders. The question is whether the market will continue to new highs or reverse course and retrace the recent rally. I think there is a chance the market will reverse its course and correct some of the advances, retracing a large part of the rally.” Despite recent declines, investor sentiment remained elevated, as shown by the AAII Investor Sentiment Survey last Wednesday, which reported that 45.3% of individual investors are bullish, while 24.9% of them are bearish, down from 27.0% last week. The S&P 500 index retraced more of its August rebound on Friday, as we can see on the daily chart. S&P 500 selling off by over 4% last week Compared to the previous Friday’s closing price, the S&P 500 lost 4.25% last week, after gaining just 0.2% the previous week. This formed a topping pattern just below its mid-July record high. Last Tuesday, I wrote “In the short term, the market may be nearing a downward correction, but overall, the medium-term outlook remains bullish.” This proved correct, and I still think the recent decline is just a downward correction, likely part of a medium-term consolidation that started after the mid-July record high. Nasdaq 100…

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Filed under: News - @ September 9, 2024 1:24 pm