The S&P has achieved levels that have crossed 50 percent retracement.
The stock market was strong during the month of September 2018. From December 2018, the S&P has reversed. The S&P 500 which was at its bottom point on Christmas Eve has recovered almost 13 percent. On Christmas Eve, it had gone down from its record high level achieved in September.
Currently, the S&P has been increasing for 4 consecutive weeks increasing by 1.5 percent.
Investors are now waiting on sidelines for a proper signal to buy or sell. Some strategists say that investors should have some cash, in case the trade tensions continue, or the Fed hikes up interest rates.
The bears are however rampant and a pessimistic mood has set in. With the market slowly trudging up, with no zoom or flurries, every analyst has made a forecast that the downtrend is going to last. A crash is expected after which the stocks will rise again.
Housing data is showing signs of deterioration even though some data has been delayed by the government shutdown. The labor market is seen to moving sideways for about 6 months. The closely monitored yield curves are showing signs of an inversion.
But on the positive side, a few analysts feel that if the fourth quarter shows good double-digit profits, the S&P 500 companies will show a spurt in their stock prices. FactSet has predicted a 10 percent increase in profits for the fourth quarter.
The earnings are just ahead and the stock movement is much awaited. Though the market is under its 200 DMA, investors wait for a pullback or a retest of its highs.
According to past history when there is a crash just before earnings season, it is seen to rally after earnings reports. But if there is no crash before earnings, market movement cannot be predicted, as it can move upwards, downwards or sideways.