S&P 500: More Uncertainty Following Earnings, Weak GDP Number
Conclusion
The S&P 500 index accelerated its downtrend last week, extending a correction from the March 28 record high of 5,264.85 on Middle East tensions, strong U.S. dollar. On Friday, it sold off below the important 5,000 level, and this week, it rebounded and retraced some of the declines.
However, yesterday, the S&P 500 backed off from a local high of around 5,090, and this morning, it’s poised to open 1.0% lower on yesterday’s META earnings and the likely 15% lower opening of that stock, plus a weak Advance GDP data.
Yesterday, I wrote “Was it an upward reversal? It still looks like an upward correction or consolidation following an almost 6% decline from the recently acquired new record high.
However, it might be a time for cautious optimism, as earnings releases appear to be driving stock prices higher.”
Indeed, it still looks like an upward correction, and I was right about a cautious optimism – it’s not a time to by fully optimistic about the market, which remains within a correction phase.
On April 2, I wrote that “In April, we will see a usual series of important economic data, but with the Fed leaning towards easing monetary policy, we should perhaps pay more attention to the quarterly earnings season. However, good earnings may be met with a profit-taking action this time. The market appears to be getting closer to a correction.”
Then, I added: “It appears that profit-taking is happening. Is this a new downtrend? Likely not, however, a correction towards 5,000-5,100 is possible at some point.”
For now, my short-term outlook remains neutral.
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