July 25, 2025 (Investorideas.com Newswire) Stocks continue to reach
new highs, but the peak may be near.
The S&P 500 index closed 0.07% higher yesterday, reaching
another all-time high of 6,381.31 before pulling back and ending the
session nearly flat.
This morning, the index is set to open 0.1% higher, continuing
short-term fluctuations. Since last Friday’s close, the market is up
about 1%
Investor sentiment has slightly deteriorated again, as reflected in
the yesterday’s
AAII Investor Sentiment Survey, which reported that 36.8% of individual investors are bullish,
while 34.0% are bearish.
The S&P 500 broke above its recent trading range on Thursday,
suggesting bullish momentum on the daily chart, but risks of a
potential short-term top remain.
Nasdaq 100: New High but Signs of Exhaustion
The Nasdaq 100 gained 0.25% on Thursday, reaching a new record of
23,268.49, before retreating slightly. It remains above a month-long
upward trendline, supported by optimism ahead of next week’s key
quarterly earnings releases.
While no strong bearish signals have emerged yet, the recent price
action may be forming a potential topping pattern.
Volatility Drops Again
The VIX (Volatility Index) fell to a new local low of 14.95
yesterday, marking its lowest level since late February – coinciding
with stocks hitting new highs. This reflects declining investor fear
but also raises the possibility of a short-term market top.
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: Above 6,400
This morning, the
S&P 500 futures contract
is trading just above 6,400, after pulling back from a high near
6,421.
While there are no clear negative signals, the market remains within
a potential topping pattern.
Resistance is now near 6,420-6,430, while support is at 6,370-6,380,
among others.
Markets remain highly sensitive to tariff-related news and could
stay volatile in the near term.
Crude Oil: Rebounds Again Amid Mixed Signals
Oil gained 1.20% on Thursday, bouncing once more from the key $65
support level, driven by optimism around U.S. trade agreements,
hopes for more tariff-related developments and declining inventory
data. Today, oil is up another 0.5%.
For oil markets specifically, these developments are worth
monitoring:
-
Markets gained on positive trade sentiment, with recent U.S.
agreements with Japan and progress toward a deal with the EU
helping to boost economic outlook and oil demand. India also
signaled optimism in averting U.S. tariffs, contributing to hopes
that more trade resolutions are on the horizon before the August 1
deadline. -
The U.S. may permit Chevron and other partners to resume limited
operations in sanctioned Venezuela, potentially boosting exports
by over 200,000 barrels/day, helping ease heavy crude shortages. -
Russia plans tighter gasoline export controls to curb domestic
fuel price inflation, which could add further pressure to global
fuel markets.
Oil Rebounds from $65 Again
Crude oil continues to trade sideways, holding above the key support
level around $65. It’s unclear whether this means a bottoming
pattern ahead of a potential rebound, or merely a consolidation
following the declines since mid-June, which could lead to a future
breakdown.
My short-term outlook on oil remains neutral, and no positions are
currently justified from a risk/reward standpoint.
Conclusion
Stocks are expected to open slightly higher, continuing their
short-term consolidation near record highs.
Investor sentiment remains elevated ahead of key earnings reports,
the FOMC interest rate decision next Wednesday, and tariff-related
developments.
The key question remains: Is this a topping pattern, or just a
classic case of the market “climbing a wall of worry”?
However, a lack of strong bullish catalysts may limit further upside
in the near term.
One of the warning signals that stocks may be approaching at least a
short-term top could also be the signal published by Ryan Mitchell
in his
Seasonal Trading Primer. Someone who opened a position based on this method realized a
decent profit yesterday, but the signal also suggests that the
market may be nearing the end of its short-term move.
Here’s the breakdown:
- S&P 500 hit a new all-time high, nearing 6,400.
-
The rally extended gains for those who bought based on my
Volatility Breakout System. -
There are no clear bearish signals yet, but a deeper downward
correction is not out of the question at some point.
The full version of today’s analysis – today’s Stock Trading Alert -
includes the additional stock trading ideas and the current S&P
500 position. I encourage you to
subscribe and read the details today (with a single-time 7-day
free trial).
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that includes Gold Trading Alerts and Oil Trading Alerts.
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Thank you.
Paul Rejczak
Stock Trading Strategist
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