Are stocks resuming their downtrend or just extending consolidation along lows?
The S&P 500 closed 0.67% higher on Wednesday, before the Trump tariff announcement. However, futures sold off sharply after hours, breaking below 5,500 in a negative reaction to the tariff news. Today, the S&P 500 is expected to open 3.2% lower, though current price action suggests an extended consolidation following the February and March declines.
Investor sentiment has significantly worsened, as shown in yesterday’s AAII Investor Sentiment Survey, which reported that 21.8% of individual investors are bullish, while 61.9% of them are bearish.
The S&P 500 is expected to retrace its recent advances, as we can see on the daily chart.
S&P 500 Futures Contract Pulls Back Towards 5,500
This morning, the S&P 500 futures contract is trading above the 5,500 level after rebounding from its new local low of 5,481. The market continues to fluctuate along its previous lows.
Currently, resistance is around 5,560-5,600, while support is at 5,480.
Conclusion
The stock market faces significant downside pressure today as investors digest the severe Trump’s tariff announcement. Previous support levels have been broken overnight, confirming technical damage. However, in the short-term, the market may have found another bottom that could lead to a rebound or upward reversal.
Here’s the breakdown:
- The S&P 500 is expected to sell off on Trump’s tariff announcement.
- The market may be still forming a bottom.
- In my opinion, the short-term outlook is neutral.
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Paul Rejczak
Stock Trading Strategist