Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

Last week, major U.S. stock indexes posted their steepest weekly declines since March 2020 as the United States imposed tariffs and some key trading partners retaliated, triggering sell-offs on Thursday and Friday. The S&P 500 finished down more than 9% overall and 17% below the record high it set just six weeks earlier. The NASDAQ Composite Index dropped around 10%.

Sector Performance & Small-Cap Bear Markets

Leading the way lower were the Energy group (-14%), Information Technology (-11.4%), Financials (-10%), Communications Services (-8.4%), Materials (-8.2%), and Consumer Discretionary (-8%).
Spring’s arrival ushered in bear markets, as a U.S. small-cap stock benchmark fell below that threshold on Thursday and the NASDAQ followed suit on Friday. The Russell 2000 sank 20% below a recent high reached in November 2024; the NASDAQ’s recent decline follows a record level set in December.

Quarterly & Monthly Market Setbacks

U.S. stock indexes finished this year’s first quarter with their biggest quarterly declines since 2022. The S&P 500 finished the quarter on Monday down around 4.6%. For March, the index’s 5.8% decline was the biggest monthly setback since September 2022.

Bond Markets & Oil Prices

Prices of U.S. government bonds posted their biggest weekly gains in more than seven months, sending yields lower as stock market volatility drove some equity investors into fixed income. The yield of the 10-year U.S. Treasury briefly fell below 4.00% on Friday for the first time in about six months (mid-January levels reached 4.80%).
The price of U.S. crude oil fell on Friday to its lowest level since April 2021, trading around $62 per barrel—down more than 10% for the week (with most of the overall decline occurring on Thursday and Friday). Less than three months earlier, oil was trading around $80.

Oversold Indicators & Technical Rebound Potential

We have now arrived at an extreme oversold short-term condition not seen since the Feb–March 2000 Covid crash. The VIX spiked to 41.54, an eight-month high, near the close on Friday. The McClellan Oscillator closed near -170 (in oversold territory, though not VERY extreme), and we saw an intraday TICK intensity reading on Friday of -1412. In addition, the percentage of stocks above their 40-day moving average plunged to near 7%—a number we haven’t seen since September 2022.

The combination of these oversold indicators leads me to believe that a rebound (and possibly a sharp one) should take place early this week. Next week should be a volatile one with excellent trading opportunities!

In any case, as usual, we will always “Trade What We See, Not What We Think.”

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Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

Last week, after posting gains on Monday and Tuesday, the major U.S. stock indexes turned negative the next three days to finish with overall weekly declines ranging from around 1% to nearly 3%. For the S&P 500, it was the fifth negative result in six weeks.

Bear Flag Breakdown Raises Red Flags

Friday’s session was particularly negative, as most indices broke recent snapback rally bear flag patterns and are now indicating at least the possibility of a short-term downside follow-through.

Growth vs. Value: The Gap Widens

U.S. large-cap growth stocks lagged their value counterparts by a big margin, widening the value equity style’s year-to-date outperformance following growth’s market leadership in 2024. The growth index was down about 2.6% for the week, while a major value index slipped 0.4%. Year to date, the growth index is down 10.0% versus a 1.2% gain for its value peer.

The price of gold climbed for the fourth week in a row, extending a year-to-date surge that briefly pushed the precious metal’s price above the $3,100-per-ounce level for the first time. On Friday afternoon, gold was trading around $3,116, up about 17% year to date.

Can the Magnificent Seven Keep Leading?

For the past 18 months, one question has dominated conversations about the U.S. stock market: How much longer can the Magnificent Seven continue to outperform? No one can say for sure, and while it’s true that cracks are potentially beginning to show in the fundamentals of these tech-related mega-cap stocks, predicting a market peak has always been a tough call.

A few things are clear and worth noting. First is the sheer magnitude of the largest companies’ outperformance of the broader market: The Magnificent Seven generated nearly 60% of the S&P 500 Index’s return year to date through June; in 2023, that figure was 62%. The performance disparity between these few stocks and the rest of the market has been so severe that the Magnificent Seven now represent more than 30% of the S&P 500—even after accounting for a recent drawdown. Within growth stocks, the imbalance is even more exaggerated: Just three stocks in the Russell 1000 Growth Index recently represented one-third of the index.

What History Teaches About Outperformance

Periods of concentrated outperformance in the stock market aren’t unprecedented—think of the Nifty Fifty in the early 1970s and the dot-com bubble in the early 2000s. When these streaks end, the reversals can be sudden and severe.

Dow Theory Divergences Flash Warnings

It’s been apparent for several weeks that both the Transportation Index (TRAN) and the major small-cap index, the Russell 2000 (tracked by the IWM ETF), have been diverging negatively and not confirming the new NDX (Nasdaq 100) and SPX (S&P 500) highs. In Dow Theory, those kinds of divergences often lead to market tops and resulting bear phases.

Valuation Meets Reality

There’s no single reason behind these reversals, but one common theme persists: Companies with lofty valuations tend to carry equally high expectations. When growth stalls or fails to meet those expectations—whether due to tariffs, competition, regulation, or management missteps—the consequence is often a swift repricing.

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Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

Markets remained volatile last week, with U.S. stock indexes alternating between modest daily gains and losses.

Ultimately, indexes finished slightly higher overall after recent declines had pushed the S&P 500 into correction territory the previous week. At Friday’s close, the index finished up 0.5% for the week, snapping a string of four weekly declines in a row—though it remains down year to date.

Nasdaq Composite: Tech Continues to Struggle

The tech-heavy index faced challenges, particularly on Thursday, with a 0.3% decline influenced by sector-specific pressures and broader market sentiment.

This small-cap index experienced a “death cross” on Thursday, where its 50-day moving average fell below the 200-day moving average—historically a signal of potential longer-term downtrends.

The information technology sector and many of the Magnificent Seven stocks that have led the U.S. market in recent years slightly lagged the broader market again last week, extending their tough year-to-date run. The tech sector is now down more than 9% year to date, compared with a nearly 37% gain in 2024.

Bonds and International Markets Take the Lead

Market leadership has rotated toward bonds and international stocks. International equities have generated the strongest returns among major asset classes so far this year, led by developed-market large-cap stocks. Europe is benefiting from a multi-year plan to increase defense and infrastructure spending, which could help spur growth.

The European index posted a fractional weekly gain, lifting its year-to-date return to about 14% versus the S&P 500’s 3% loss.

Chinese stocks have also risen on expectations for additional fiscal and monetary stimulus aimed at boosting consumption and avoiding deflation. A pullback in the U.S. dollar from its January peak has added to investment returns in major international currencies.

Small Caps Remain Under Pressure

Small caps have been hit hard. The Russell 2000 is now down over 15%—the first time since 2023—with P/E multiples 6% below the 40-year average. Depressed valuations suggest an estimated 9% annual price return over the next decade for small caps, versus just 1% for large caps.

Rebound Lacks Conviction

An important and possibly negative statistic—and a major concern—is that volume levels during this recent snapback attempt were relatively light throughout most of the week, including the lightest daily volume of the year on Thursday.

Coming off the most oversold level of the year, I would have expected to see higher, more convincing volume to confirm a bottoming action. Instead, this appears to have been a lower-volume retracement—possibly a bear flag-type consolidation. If correct, that certainly doesn’t augur well for the markets going forward.

What’s Next?

The next few days may be critical in determining market direction. I’ll be watching closely for technical clues.

As always, at thetechtrader.com, we “Trade What We See, Not What We Think.”

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Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

Markets remained volatile this past week, with the S&P 500 dipping into correction territory on Thursday, falling 10% from its February 19 high—its first 10%+ correction since 2023. While the S&P 500 surged 2.1% on Friday, recovering some losses, it still ended the week down 2.2%—its fourth consecutive weekly decline.

Nasdaq & Small Caps Under Pressure

The technology-heavy Nasdaq hit a low down 14% for the year before rebounding slightly. Meanwhile, the Russell 2000 Index, a benchmark for small-cap stocks, came close to entering a bear market, defined as a 20% decline from a recent high. The Russell finished the week down over 16% from its November 2024 high and dropped 1.4% for the week.

What’s Working in This Market?

Despite the sharp pullback in U.S. stock markets, certain areas of financial markets have outperformed and remain positive for the year:

• Value and cyclical sectors have outperformed tech and AI stocks
• Bonds have outperformed stocks as investors seek safety
• Many international markets, including Europe and China, are up 8%-10% YTD

Within the S&P 500, five of its 11 sectors are positive this year. Health Care, Utilities, Consumer Staples, and Energy lead the gainers, while Consumer Discretionary (-15%) and Information Technology (-12%) are the biggest laggards.

Gold & Silver Surge to New Highs

Gold prices set a new record on Friday morning, briefly surpassing $3,000 per ounce for the first time. Silver also rallied past $34 per ounce, reaching its highest level in five months. Year-to-date, gold has climbed over 13%, showing continued strength as a safe-haven asset.

Market Rotation & Valuation Adjustments

Coming into the year, the U.S. stock market, particularly mega-cap tech stocks, was extended from a valuation perspective. Investors have rotated away from higher-valuation stocks, applying downward pressure to broader market returns.

However, pullbacks like these are normal. Historically, markets experience one to three corrections of 5% to 15% per year, making this a standard market reset rather than a major structural breakdown.

What’s Next?

With market volatility increasing, expect more extreme swings in the days and weeks ahead.

At TheTechTrader.com, we will always “Trade What We See Technically, NOT What We Think.”

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Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

U.S. stocks declined during what ended as the worst week for some major indexes since early September. Trade tensions weighed on the market as the S&P 500 fell for the third week in a row and posted its steepest weekly decline since last September. The index lost -3.1%, faring slightly better than the NASDAQ’s -3.4% loss.

The S&P 500 is now down about 2% for the year, while the technology-heavy Nasdaq is down about 6%. After two years of 20%+ returns in the S&P 500, though, some period of consolidation and pullback was probably warranted, and thus far, markets are acting orderly.

Defensive Sectors Take the Lead

Markets have taken a defensive posture in recent days. Defensive sectors, like health care and consumer staples, are leading, while momentum and technology sectors are lagging. Bond markets have provided support as well, with Treasury yields moving lower since January, in part because additional Fed rate cuts have now been priced in by markets.

The NASDAQ entered a correction on Thursday, as sharp declines for many of its technology stocks left the index more than 10% below the high reached a couple of weeks earlier, as well as its record level set nearly three months ago. While the S&P 500 and Dow were also down sharply from their recent peaks, those indexes didn’t fall below the 10% correction threshold yet.

An index of U.S. large-cap growth stocks lagged its value counterpart by a wide margin, extending the value equity style’s year-to-date comeback following growth’s market leadership in 2024. The growth index closed down 3.9% for the week on a total return basis, while a value index fell just 2.4%.

Market Rotations & Sector Shifts

Perhaps what is most notable are the rotations in the market happening underneath the surface. Investors are taking a more defensive posture across asset classes. In stocks, defensive, or “recession-proof,” sectors are now showing leadership, including health care and consumer staples. The lagging sectors are those that have had the strongest momentum and rise in valuations, including technology (whose highest weights are in Apple, Microsoft, and NVIDIA) and consumer discretionary (whose highest weights are in Amazon and Tesla).

A Key Technical Rebound?

Also worth noting is that Friday’s midday bullish reversal moved the S&P 500 back above its 200-day Simple Moving Average (SMA), which could help stabilize investor confidence near-term. While I don’t think we are done with volatility for the month of March, Friday’s price action appears to be an encouraging development, if only from a near-term trading perspective.

Traders will need to stay nimble in this higher volatility environment, but I believe the near-term setup is relatively bullish, given the numerous oversold indicators we saw late last week:

✔️ SPX dropping to longer-term support at the 200-day SMA
✔️ Sub-30 RSI readings on the NDX/RUT
✔️ A 25+ reading on Cboe’s Volatility Index (VIX)

As a result, I’m looking for Friday’s potentially important bullish reversal to continue near-term.

However, these are VERY volatile times, and the intermediate direction is not crystal clear. Next week should prove vital in determining if we are at or near a KEY market turning point.

In any case, we always “Trade What We See Technically, Not What We Think.”

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Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

Last week, the indices were driven lower by mega-cap tech, with the S&P 500 briefly erasing its year-to-date gains—though it remains 15% higher than a year ago.

A combination of growth concerns, trade tariff uncertainty, and deteriorating consumer confidence contributed to the recent pullback phase.

During the week, the S&P 500 briefly fell below last year’s closing price, erasing its year-to-date gains and dropping 4.5% from its all-time high reached on February 19. Over the past two years, the Magnificent 7 have driven more than 50% of the index’s gains, but this year, the group has shifted from leader to laggard, entering correction territory while the broader index has remained rangebound over the past three months.

The market’s mostly positive momentum from January and early February reversed course in the final two weeks of the month. The NASDAQ took the biggest hit among the major U.S. indexes, retreating around 4.0% in February, while the S&P 500 and the Dow declined 1.4% and 1.6%, respectively.

Investor Sentiment at Extreme Lows – A Contrarian Signal?

Souring investor sentiment has helped take some froth out of the market. According to the American Association of Individual Investors (AAII), the percentage of investors now bearish (expecting a decline in the next six months) jumped to 61%—the highest since September 2022, when the S&P 500 was down more than 20% from its peak.

However, sentiment is often a contrarian indicator—historically, whenever the bull-bear spread has been this low, the extreme pessimism has led to above-average forward three-month returns.

NVIDIA (NVDA) Earnings: Good, But Not a Blowout

With six of the Magnificent 7 stocks already lagging the S&P 500, all eyes were on NVIDIA (NVDA) last week as the AI bellwether reported quarterly earnings.

As expected, demand remained strong, with sales rising 78% year-over-year, exceeding consensus estimates by 32%. While still impressive, this was the smallest positive surprise in eight quarters. The company also warned that profitability would be lower than anticipated as it rushes to roll out its new chip design.

The result? The stock dropped 8.5% following the release, highlighting how high expectations have made it harder to impress investors.

Are We Overdue for a Market Correction?

The last 10%+ correction for the S&P 500 was October 2023—more than a year ago. Historically, the market averages one correction per year over the past century, which suggests we could be overdue.

However, the sideways consolidation over the past three months may actually be a bullish corrective pattern, setting up for a continuation of the broader trend.

Bitcoin’s Sharp Decline

February’s sharp Bitcoin decline accelerated into the final week of the month. On Friday, Bitcoin traded around $84,500, down 12% for the week and 18% for the month, after trading above $108,000 in January.

Looking Ahead

Short-term market dips or technical corrections are nearly impossible to avoid. However, I still believe equities have the potential to build on last year’s strength, though gains may be more moderate, and volatility will likely remain higher as market leadership shifts.

As always, we will be “Trading What We See Technically, Not What We Think.”

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