A Ninth Consecutive Weekly Gain

The U.S. stock market extended its rebound from the first quarter’s negative results as the S&P 500 recorded its ninth consecutive weekly gain. Led by information technology stocks, the Nasdaq finished 2.4% higher for the week and the S&P 500 added 1.4%.

Overall, non-energy minerals, consumer durables, and electronic technology were among the top performers during the week, while energy minerals, industrial services, and utilities lagged.

A Strong Month of May in the Books

May’s U.S. stock market gains were big, though they fell short of the unusually strong results recorded in April. The Nasdaq climbed 8.4% in May and the S&P 500 gained 5.1%. In April, both indexes recorded double-digit gains, rebounding from negative first-quarter results.

Year to date, the Russell 2000 small-cap index leads the way with a gain of 17.6%, the Nasdaq Composite is ahead 16%, and the S&P 500 shows a 10.7% gain.

Oil Falls as Iran Talks Progress

Trader optimism over the latest round of U.S.-Iranian negotiations sent oil prices lower for the second week in a row. U.S. crude was trading around $88 per barrel on Friday afternoon, down nearly 10% for the week and roughly 16% lower for May.

Stock indexes in South Korea and Japan climbed to record highs on Friday. A South Korean benchmark surged nearly 11% for the week amid optimism over AI-related stocks, while a Japanese index rose nearly 2%.

Gold Under Pressure

Gold started the week with a bounce, trading around $4,520 per ounce on Tuesday. However, the bounce would not last. By Wednesday gold had fallen to around $4,420, and on Thursday prices slid further, touching a low near $4,390, their weakest level in nearly two months. The dynamic continues to reflect a market where rising rate expectations from persistent inflation are weighing on the metal even as the fundamental case for owning a safe-haven asset remains strong.

Bitcoin Drifts Lower

Bitcoin spent most of the shortened week drifting lower, unable to sustain the enthusiasm from equities. It slipped below $75,000 on Wednesday on new developments regarding the conflict in Iran, and fell further on Thursday, trading near $73,000 to $74,000 as hot inflation data and renewed Middle East uncertainties hit sentiment. The broader crypto market moved in line, with major altcoins all trading lower on the week. On the week Bitcoin lost 4.6%.

Key SPX Technical Levels to Watch

Support near 7,500, 7,440-500, and 7,330-35. Resistance near 7,600, 7,645, and 7,740-50.

In any case, as we always do at TheTechTrader.com, we’ll “Trade What We See, Not What We Think.”

— HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com

A Seventh Consecutive Weekly Gain — But Just Barely

The S&P 500 eked out its seventh weekly gain in a row, but the index’s thin 0.2% rise marked a sharp departure from the big increases seen in the preceding weeks. The Nasdaq recorded a fractional weekly decline after stocks rallied on Thursday only to retreat on Friday.

A large-cap growth index outperformed its value counterpart for the sixth week out of the past seven, marking a shift from value’s run of outperformance earlier this year. At the market capitalization level, small-cap stocks lagged in the latest week, with a small-cap benchmark falling 2.3%.

Within the S&P 500, which closed at a record high on Thursday before pulling back Friday, the energy sector advanced the most, while consumer staples and information technology also posted gains. Consumer discretionary, real estate, and materials led declines.

Despite a near 10% correction in March and ongoing uncertainty around the Iran war and oil prices, stocks are back near all-time highs. The S&P 500 is up 8.22% this year and up a stellar 17% since the March 30th lows, while the Nasdaq Composite is ahead 12.84%.

Investors may be wondering why stock markets have been rising despite higher oil prices, elevated inflation, and geopolitical uncertainty.

The answer lies in the resilience of earnings and the momentum of AI-driven demand. But that resilience may now be getting tested.

Should You “Sell in May and Go Away”?

There is an old adage that says “Sell in May and go away.” While it does not hold every year, there is historical evidence suggesting that the May through September period has lower returns on average than the October through April period. Since 1980, average returns in the May through October period have been about 4.6%, while returns in the November through April timeframe were about 8.4% on average.

This year in particular, we have seen a strong rally since the March lows, and the odds of a pause, a period of sideways movement, or possibly a substantial pullback and retest in stock markets could be rising as we head into the summer months.

My Technical Read: Be Vigilant and Tighten Your Stops

Despite the appearance of supporting fundamentals, the recent divergences seen in the indices and underlying technicals are serving as warnings of potential trouble ahead this summer.

My advice to traders is to be very vigilant in the days ahead, pay close attention to technical support levels, and tighten stops as protection.

Six Straight Weeks of Gains and Fresh Record Highs 

The S&P 500 and the Nasdaq recorded their sixth consecutive weekly gains as stronger-than-expected quarterly earnings growth and a ceasefire in Iran that could lead to an end to the war lifted both indexes to fresh record highs.

The Nasdaq finished up 4.5% for the week, the S&P 500 added 2.4%, and the Russell 2000 small-cap index gained 1.7%.

A U.S. large-cap growth index outperformed its value counterpart by a wide margin for the fifth week out of the past six, eroding value’s still-sizable year-to-date performance lead. As of Friday’s close, the growth benchmark was up nearly 20% over the past six weeks versus an 11% rise for value. Since the March 30th low, the Nasdaq 100 has gained an astounding 28%, while the S&P 500 and the Russell 2000 both surged about 21%.

Technology led with a gain of approximately 6.7%, with significant surges in semiconductors, including Micron up 10% and Qualcomm up 9%, driven by AI infrastructure demand. Energy and Utilities underperformed, both down more than 3%.

Oil Remains Volatile

Shifting narratives about the conflict in the Middle East continued to affect volatility in the oil market. U.S. crude briefly climbed to $107 per barrel on Monday before sinking to $89 on Wednesday. By Friday afternoon, oil was trading around $95, down about 5% for the week.

As a result of the dramatic surge in oil prices, the Dow Transportation Index dropped a very sharp 5,300 points in just three weeks. Although caused by external economic pressures, in basic Dow Theory such a severe negative divergence like that should not be ignored.

Warning Signs Beneath the Surface

It is also very interesting, and of concern, that although the indices are at or very near all-time highs, the McClellan Oscillator is only at a neutral reading of -4 and only 57% of stocks are above their 40-day moving averages. In addition, the VIX has slipped into the mid-teens and is now at a three-month low, showing a lack of fear and perhaps apathy. These are more indications of a narrowing market that could be nearing an important top.

However, it is important to mention that these types of divergences historically can last a bit longer before prices are affected, and the markets nearly always go further than you can anticipate. This may require patience until a distinct reversal is more apparent.

Key SPX Technical Levels to Watch

Support near 7,362-70, 7,320, 7,280, and 7,250-55. Resistance near 7,400-02 and 7,435-40.

In any case, as we always do at TheTechTrader.com, we’ll Trade What We See, Not What We Think.

HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com

A Mixed Week After Three Strong Ones

U.S. stock indexes posted mixed weekly results last week, flattening out after three consecutive weekly gains pushed the S&P 500 and the Nasdaq to record highs.

The technology-heavy Nasdaq Composite led gains, followed by the S&P 500 and Russell 2000 indexes. Strong results for semiconductor stocks lifted the Nasdaq to a 1.5% weekly gain, while the S&P 500 finished just fractionally higher.

Growth Continues to Outpace Value

U.S. growth stocks outpaced their value counterparts for the fourth week in a row, chipping away at value’s year-to-date performance lead over growth. A growth benchmark gained more than 16% over the four-week stretch versus just 8% for its value counterpart.

Some generally positive economic data, ongoing strength in AI-linked stocks, and upbeat earnings results helped offset continued uncertainty surrounding the U.S.-Iran conflict.

The Russell 2000 small-cap index leads the way year to date with a 12.3% gain. The Nasdaq Composite is up 6.9% while the S&P 500 has moved ahead by 4.67%.

Oil Climbs Back Toward $95

The Strait of Hormuz, where around a fifth of global oil supplies move through, remains closed, pushing oil prices back up. U.S. crude was trading around $95 per barrel on Friday afternoon, up from roughly $83 at the end of the previous week. Even with the weekly rise, oil remains well below its year-to-date peak of around $113 reached on April 7.

Key SPX Technical Levels to Watch

Resistance at SPX 7,175-95, 7,250, and 7,385-7,400. Support lies near 7,050, 7,000, 6,900, and 6,750.

In any case, as we always do at TheTechTrader.com, we’ll Trade What We See, Not What We Think.

— HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com

A Historic Week for U.S. Stocks

Easing Middle East tensions and sliding oil prices fueled optimism, pushing the S&P 500 to three consecutive daily record highs starting on Wednesday. The index finished 4.5% higher for the week, and the Nasdaq’s 6.8% rise also pushed that index to record heights. Year to date, the S&P 500 is ahead 4.1% while the Nasdaq Composite is up 5.25%.

Friday’s rally marked the 13th positive trading session in a row for the Nasdaq, the longest such streak since 1992. Each of the major U.S. indexes climbed more rapidly during that stretch than they declined beginning in late February as tensions rose in the Middle East.

Oil Continues to Slide

A two-week decline in oil prices accelerated on Friday as shipping disruptions eased in the Strait of Hormuz. U.S. crude was trading around $83 per barrel on Friday afternoon, down from around $96 a week earlier and a recent peak of about $113 on April 7. On a year-to-date basis, oil was still up more than 40% as of Friday.

Growth and AI Stocks Lead the Way

Growth stocks outpaced their value counterparts by a wide margin for the third week in a row, supported in part by ongoing enthusiasm around artificial intelligence-linked stocks. The Nasdaq Composite finished 6.84% higher for the week versus a 2.4% rise for a value index.

The leading sectors were Information Technology, up 8.1%, followed by Consumer Discretionary, up 6.8%, and Communication Services, up 6.3%. Semiconductor stocks also contributed meaningfully, with the PHLX Semiconductor ETF rising 7.5%, reinforcing the strength of the broader AI trade.

Small Caps Hit a Record High

The Russell 2000 small-cap stock index climbed to a record high on Thursday, surpassing its prior peak set nearly two months earlier. The Russell 2000 climbed 5.6% for the week. Just four weeks earlier the index had entered a correction after falling 10% below its recent peak. The index is now up 11.9% year to date.

The VIX finished near 17.50, down from 19.33 at the close the previous week. Over the last three weeks that index has fallen from a peak of 31.65 to a low of 16.87, a dramatic reversal in investor fear.

Key Technical Levels to Watch

SPX support near 7,045, 7,008, 6,950, and 6,905. Resistance appears near 7,145-50 and 7,190-7,200.

Nasdaq 100 support at 26,480, 26,400, and 26,200. Resistance at 26,700 and 27,000.

In any case, as we always do at TheTechTrader.com, we’ll “Trade What We See, Not What We Think.”

— =HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com

A Second Straight Week of Strong Gains

Last week the major U.S. stock indexes surged 3% to 5%, roughly matching the magnitude of the previous week’s gains. An easing of tensions in the Middle East sent oil prices down about 15%, providing significant lift for stocks.

The market’s back-to-back weekly gains went a long way toward reversing March’s declines. The Nasdaq’s cumulative gain for the two weeks was about 9%, the S&P 500’s was 7%, and the Dow’s was 6%. Year to date through Friday, the S&P 500 and the Dow were essentially flat on a total return basis while the Nasdaq was down about 1%.

Sector Rotation Back Toward Tech

Within the S&P 500, energy was the only sector to post negative returns, while consumer discretionary, communication services, and information technology led gains. U.S. Treasuries also generated positive returns.

Money flowed back into semiconductor stocks on this week’s rebound, and the PHLX Semiconductor Index is trading at fresh all-time highs. Meanwhile, money fled out of software stocks on renewed AI disruption concerns, with the iShares Expanded Tech-Software Select ETF trading at its lowest levels since October 2023.

Ceasefire Hopes Drive the Rally — But Durability Is the Question

The fragile ceasefire between the U.S., Iran, and Israel has sparked hopes for a durable de-escalation, driving oil prices lower and triggering a sharp rebound in equity and bond markets. While volatility has eased, there may well be bumps ahead of the April 21 ceasefire deadline, with significant hurdles to overcome before a peace deal can be reached.

Oil prices remain elevated as investors worry about the durability of the truce, especially amid Israeli military strikes on Lebanon last week and still very limited oil traffic through the Strait of Hormuz.

Gold prices climbed for the second week in a row, regaining more of the ground lost in a mid-March sell-off. On Friday afternoon, gold was trading around $4,800 per ounce, up more than 2% for the week. Nevertheless, the precious metal remained well below the record high of around $5,500 set in late January.

My Technical Read: Real Healing, But Near-Term Overbought

Aside from the Iran war, the indices achieved substantial technical healing this week, which also provides psychological healing for traders. When you are caught in a downtrend making fresh lower lows every week, traders are much less willing to step in and provide bid support. That dynamic has shifted.

The S&P 500 surged above its 200-day SMA on Wednesday on ceasefire talks and experienced subsequent upside follow-through, placing it above the 50-day SMA as well. Even though the RSI remains below 70, I consider it overbought because the RSI has surged from under 30 to 60 in just eight trading days. On a very near-term basis, it would not surprise me to see some consolidation or retracement on Monday and Tuesday.

Key SPX Technical Levels to Watch

Resistance near 6,890-6,900, 6,950, and 6,990-7,002.

Support appears at the 6,740-60 zone, 6,650, 6,535, and 6,473-75.

In any case, as we always do at TheTechTrader.com, we’ll “Trade What We See, Not What We Think.”

— HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com