Will S&P 500 Continue Advancing? NASDAQ Advances Above 18,000

S&P 500 is about to reach a new record high, but will it continue advancing?

Despite some uncertainty following higher-than-expected Producer Price Index release yesterday, stock prices were gaining, with the S&P 500 index closing 0.48% higher. It went even closer to the February 28 record high of 5,264.85 as the daily high was at 5,250.37. The market has retraced almost all of its 311 points or 5.9% correction from the record high to a local low of 4,953.56 on April 19. Yesterday, the index was just 15 points below the all-time high.

Today, the market is likely to open higher after a slightly lower than expected Consumer Price Index release (+0.3% vs. +0.4% m/m), and lower than expected Retail Sales release (0.0% vs. +0.4% m/m). The futures contract rallied after the release, and right now, it’s trading 0.6% higher, pointing to a record-breaking open for the index.

The S&P 500 remained at a potential resistance level marked by its trading range from March and April, as we can see on the daily chart.

Last week, the technology-focused Nasdaq 100 index has been mostly fluctuating along the 18,000 level. However, on Friday, it broke higher and retraced more of its previous declines. Potential resistance level remains at 18,400-18,500, marked by the March 21 record high of 18,464.70. Today, the tech stocks gauge is likely to open 0.6% higher following consumer inflation data.

The VIX index, also known as the fear gauge, is derived from option prices. In late March, it was trading around the 13 level. However, market volatility led to an increase in the VIX, and on April 19, it reached a local high of 21.4 - the highest since late October, signaling fear in the market.

Recently, it was going lower again, and on Friday, it was as low as 12.50, showing complacency in the market. We saw VIX going back to near last Friday low at 12.45.

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.

Is this complacency or market is starting a new rally?

S&P 500 index closes at 1.17% after the important Consumer Price Index release. Market is set to reach a new record high at the open as Tuesday’s trading session closed just around 0.4% below that level.

The uncertainty seemed to be gone, but the overall bullish sentiment coupled with low VIX readings may be worrying for the market in the short-term. Some profit-taking may be on the horizon.

But there will be opportunities for us to take and we could prepare ourselves for this rally.

Appreciate if you could share your thoughts in the comment section whether you think S&P 500 and Nasdaq would continue its advances this week?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.