Is There Further Upside for the Stock Market?

The S&P 500 index closed 0.01% lower on Friday after hitting a new record high of 6,315.61. The market continues to extend its consolidation, remaining near record territory. A handful of mega-cap tech stocks are still supporting the bulls, but much will depend on this week’s earnings reports, which will take center stage.

On Thursday, earnings from Tesla (TSLA) and Alphabet (GOOG), among others, will be released and closely watched.

This morning, the S&P 500 is expected to open 0.2% higher, likely remaining near record levels, just above 6,300.

Investor sentiment has slightly deteriorated, as reflected in last Wednesday’s AAII Investor Sentiment Survey, which reported that 39.3% of individual investors are bullish, while 39.0% are bearish.

The S&P 500 remains near record highs, as the daily chart shows.

Weekly Chart: S&P 500 Still Consolidating

Last week, the S&P 500 gained 0.59%, fully retracing the previous week’s 0.3% loss. The index continues to fluctuate after a strong rebound from April lows. Support remains around the 6,150 level – the highs from January and February.

Nasdaq 100 Extends Rally, but Watch for Topping Signs

The Nasdaq 100 closed 0.05% lower on Friday but reached a new all-time high of 23,153.21. The index has recently been driven by record highs in Nvidia and Microsoft.

While no strong bearish signals have emerged yet, the recent price action may be forming a potential topping pattern.

VIX Hovers Near Lows – But Reversal Risk Grows

The Volatility Index dropped to a local low of 16.28 on Friday, still above the prior Thursday low of 15.70. It briefly rebounded to 19.50 during Wednesday’s intraday dip before continuing a consolidation.

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. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.

S&P 500 Futures Contract Stays Elevated

This morning, the S&P 500 futures contract is trading near the 6,350 level, close to its record highs. Last Wednesday, it bounced from an intraday low around 6,241.

Resistance is near 6,360, while support is at 6,300-6,320.

Markets remain highly sensitive to geopolitical developments and could stay volatile in the near term.

Crude Oil Update: Consolidation Continues

Crude oil declined 0.3% on Friday, continuing to consolidate below the $68–70 resistance. A recent rebound was fueled by a larger-than-expected draw in U.S. inventories reported by the EIA last Wednesday.

However, prices are lower again today.

For oil markets specifically, these developments are worth monitoring:

• Oil prices are reacting to the EU’s 18th sanctions package against Russia and pending U.S.-EU trade talks.
• The EU introduced a floating price cap and blacklisted 105 Russian “shadow fleet” tankers.
• Analysts say Russia continues to bypass sanctions, minimizing their effectiveness.
• Additional headwinds include upcoming U.S. tariffs and ongoing concerns about global demand, despite a drop in U.S. oil rig count.

Oil: Still in Consolidation

Last Wednesday, crude oil rebounded from $65–66 support, briefly moving above a month-long trend line and reaching just over $67. Resistance remains near $68-69. Today, oil is pulling back toward the $65 support.

My short-term outlook on oil remains neutral.

Conclusion

The S&P 500 is set to start the new week slightly higher, with futures up 0.2%. Sentiment remains bullish, supported by recent earnings reports and optimism over progress in trade negotiations.

However, a lack of strong bullish catalysts may limit further upside in the near term.

Investors are now turning their attention to corporate earnings, with the major tech companies scheduled to begin reporting this week.

And if you’re not yet on our free mailing list, I strongly encourage you to join it – you’ll stay up-to-date with our free analyses that will still put you ahead of 99% of investors that don’t have access to this information. Join our free stock newsletter today.

Thank you.

Paul Rejczak
Stock Trading Strategist