Stocks To Extend Uptrend Amidst No Confirmed Negative Signals

Market closed rather flat on Tuesday as traders and investors display not much conviction ahead of the Wednesday’s holiday.

On Thursday morning (20 June), futures contracts are pointing to another flat opening for the index, following lower-than-expected Retail Sales data despite strong manufacturing data.

Investor sentiment much improved, as indicated by the AAII Investor Sentiment Survey last Wednesday, which showed that 44.6% of individual investors are bullish, while 25.7% of them are bearish (down from last week's reading of 32.0%).

The AAII sentiment is a contrary indicator in the sense that highly bullish readings may suggest excessive complacency and a lack of fear in the market. Conversely, bearish readings are favorable for market upturns.

The S&P 500 index continues to trade above a short-term upward trend line, as we can see on the daily chart.

On Tuesday (18 June), the technology-focused Nasdaq 100 index reached a new record high of 19,908.86 and closed 0.03% higher. On Monday, the technology-focused Nasdaq 100 index reached a new record high of 19,977.84 and closed 1.24% higher. The gains was led by the rallying big-cap stocks, including AAPL, MSFT, and NVDA.

But we saw that the index took a breather after its strong performance on Monday (17 June), so we might expect similar performance on Thursday (20 June) as market await the economic data for the rest of this week.

The VIX index, also known as the fear gauge, is derived from option prices. In late May, it set a new medium-term low of 11.52 before rebounding up to around 15 on correction worries.

Recently, the VIX came back towards 12. On Monday (17 June), it was below 13, before dropping down to 12.25 on Tuesday (18 June) within a short-term range, and yesterday, it remained below the 13 level.

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.

This could probably indicate that the market might navigating a downward reversal.

If we take a look at the hourly chart of the S&P 500 futures contract. On Tuesday (18 June), it broke above the recent trading range and a resistance level of around 5,500.

This morning at time of this writing, it is trading within a relatively narrow price range – along a new record high. There have been no confirmed negative signals so far. However, a profit-taking action may occur at some point. The support level is now at 5,500.

Will stocks further extend their uptrend and reach new records despite some short-term overbought conditions? There have been no confirmed negative signals.

However, later in the week, we need to pay attention as more economic data will be released to the market :

Thursday (20 June 2024) - the Unemployment Claims

Friday (21 June 2024) – The important Flash Manufacturing PMI/ Flash Services PMI data.

Appreciate if you could share your thoughts in the comment section whether you think stocks could extend the uptrend while market comprehend the 2 important economic data for rest of the week?

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