Stocks: Still No Signs of Weakness

The S&P 500 index closed 0.14% higher on Monday, continuing its short-term fluctuations and remaining near Thursday’s record high of 6,290.22. While it appeared the market was waiting for today’s major bank earnings and inflation data, overnight news that Nvidia would resume chip sales to China pushed futures higher toward a new all-time high.

This morning, the S&P 500 is expected to open 0.4% higher following the release of the Consumer Price Index (CPI), which came in as expected at +0.3% month-over-month.

Investors are now shifting their focus to the upcoming corporate earnings season, with major banks reporting this week. Wednesday and Thursday will be especially important, with ASML reporting on Wednesday, followed by TSMC and Netflix on Thursday.

Investor sentiment remains elevated, as reflected in the last Wednesday’s AAII Investor Sentiment Survey, which reported that 41.4% of individual investors are bullish, while 35.6% are bearish.

The S&P 500 continues to hover near last week’s record, as the daily chart shows.

Nasdaq 100: Likely to Reach New All-Time High

The Nasdaq 100 closed 0.33% higher on Monday and is expected to open 0.5% higher today, fueled largely by Nvidia’s 4.4% premarket surge, which pushed its market cap to a staggering $4.2 trillion.

While no strong negative signals have emerged, recent price action could be forming a potential topping pattern.

VIX: Short-Term Elevated

The Volatility Index (VIX) dropped to a local low of 15.70 on Thursday, signaling continued strength in equities. Yesterday, however, the VIX rebounded to a daily high of 17.85 despite relatively calm market action.

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: Fluctuating Around 6,300

This morning, the S&P 500 futures contract hit a new record near 6,350 following the CPI release.

Despite this new high, the index remains in a consolidation – potentially forming either a topping pattern or a flat correction before a possible next leg higher.

Resistance is near 6,350, while support is around 6,300.

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

Crude Oil Update: Retreat Toward $67

Crude oil fell 2.15% on Monday after a 2.8% gain on Friday, pulling back from the key $70 level and confirming it as strong psychological resistance. Today, price is consolidating near $67.

For oil markets specifically, these developments are worth monitoring:

• Oil prices fell as traders reacted to President Trump’s decision to delay immediate sanctions on Russia, giving Moscow 50 days to end the war in Ukraine before enforcing penalties. Analysts believe the lack of immediate action reduced market fears of a supply shock.
• OPEC expects the global economy to perform better in the second half of 2025, citing strong momentum in countries like India, China, and Brazil. Despite geopolitical tensions, the group left its oil demand growth forecasts for 2025 and 2026 unchanged, reflecting optimism in global recovery.
• China’s Q2 GDP slightly beat expectations at 5.2%, helped by strong exports and stimulus measures. Crude imports surged over 7% year-on-year in June, driven by refineries resuming operations after maintenance.

Oil: Extending Fluctuations

Currently, crude oil is trading 0.2% lower, hovering near $67. Resistance is around $68, with support between $65-66.

My short-term outlook on oil remains neutral, and no positions are currently justified from a risk/reward standpoint.

Conclusion

The S&P 500 is expected to open 0.4% higher, buoyed by Nvidia’s overnight announcement, bank earnings, and CPI data.

With tariff-related news still circulating, investor focus will shift toward the start of earnings season.

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Paul Rejczak
Stock Trading Strategist