Did the market reverse course yesterday, or was it just a temporary pullback?Tuesday’s trading session began on a positive note but soon turned bearish. The S&P 500 failed to reach Monday’s record high of 5,871.41 and reversed lower, ultimately closing 0.76% below Monday’s closing price. It sold off due to weakness in AI sector stocks, with NVDA dropping by almost 5%. This morning, the S&P 500 is likely to open 0.1% higher, as indicated by futures contracts. Investors are anticipating more quarterly reports, including TSMC and NFLX tomorrow.Investor sentiment improved last week, as shown by Wednesday’s AAII Investor Sentiment Survey, which reported that 49.0% of individual investors are bullish, while only 20.6% of them are bearish, down from 27.3% last week.The S&P 500 pulled back from Monday’s high but remained above the 5,800 level, as we can see on the daily chart. 
Nasdaq 100: Below September High Again
The Nasdaq 100 gained 0.8% on Monday, and yesterday, it lost 1.37%, retracing the recent advance. Yesterday, I wrote that “tech stocks may experience a period of uncertainty as investors await quarterly earnings and future outlooks.” That remains true; this morning, it is expected to open 0.1% higher. The resistance level remains at 20,400-20,600, among others. 
VIX Remains Elevated
On September 6, the VIX index, a measure of market fear, reached a local high of 23.76. On September 26, it fell to 14.90 as stock prices were advancing toward new record highs. Recently, it has been rising above 23, and yesterday, it moved above 20 again, signaling some fear in the market.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: Trend Change or Just a Pullback?
Let’s take a look at the hourly chart of the S&P 500 futures contract. On Monday, it reached a new record high of around 5,919. However, Tuesday’s trading brought the market lower. Still, it remains above the previous local highs of around 5,800-5,820, marking a strong support level. 
Conclusion
Stocks will likely open slightly higher this morning. Was yesterday’s pullback the beginning of a new downtrend? Likely not, at least for now. The market may experience some short-term fluctuations, as uncertainty builds ahead of major earnings releases.Investor sentiment remains elevated, as reflected in last week’s AAII survey, with only 20% of individual investors expressing bearish views. There are no clear negative signals at present, but the market may fluctuate after its recent rally.For now, my short-term outlook is neutral.Here’s the breakdown:
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