S&P 500: Upcoming Earnings Lift Hope
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 yesterday, it rebounded by 0.9%. Was it an upward reversal? For now, it looks like an upward correction or consolidation following an almost 6% decline from the recently acquired new record high.
However, the market might offer a dip-buying opportunity here, as the earnings season historically tends to boost stock prices. Nevertheless, the main short-term trend still indicates a downward trajectory following the recent price action.
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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