(Bloomberg) -- Indecision is back, going by daily charts of the S&P 500, after a five-day rebound restored half the ground lost earlier the month. The index has spent four straight days rising in the morning then slipping back during the session’s last few hours.
It happened again Thursday, with the S&P 500 all but erasing a gain that earlier reached 1.1 percent. The index ended up 0.1 percent at 2,703.96.
“The markets need to figure out which way they want to go next, and judging by the S&P’s performance in the past few days, it has little clue,” said Donald Selkin, New York-based chief market strategist at Newbridge Securities Corp. “The initial reaction following a sell-off is likely over.”
Following its 5.8 percent rebound, the gauge is stumbling upon a technical resistance level of about 2,750. The Federal Reserve is upbeat about the economy, but 10-year yields are marching toward 3 percent. Inflation data beat estimates but stayed unchanged from a month before. Wage growth may precede faster rate tightening, but earnings growth should support equities on their way up.
As always, nobody agrees on what happens next. To Evercore ISI’s Rich Ross, heavy trading volume during the market’s rebound signals the worst is likely over. To Chris Verrone at Strategas Research Partners, the process of bottoming out often includes retests of prior lows, which may yet happen.
On one point there is a greater consensus: the environment of low volatility and narrow stock swings is likely over. Stocks in the S&P 500 Index swung on average by about 13 points from 2017 until late January, four times less than the 58-point swing so far this month.
©2018 Bloomberg L.P.
RECOMMENDED FOR YOU
POPULAR