Sharply Divergent Weekly Returns Across the Indexes

A renewed selloff in technology stocks featured the action last week. Shares of semiconductor stocks fell, and several traditionally defensive sectors outperformed, leading to sharply divergent weekly returns across U.S. indexes. The Dow finished 0.6% higher, the Nasdaq dropped 4.6%, and the S&P 500 ended 2.0% lower. For the S&P 500, it was just the second negative result out of the past 13 weeks.

Although the S&P 500 dropped about 2% for the week, notching five straight days of declines, market breadth was positive, as advancing shares frequently outnumbered decliners. This could be setting up a positive internal divergence signaling a possible impending rally.

Growth Versus Value Gap Widens

An index of U.S. large-cap growth stocks lagged its value counterpart by a wide margin last week, widening value’s year-to-date outperformance. The growth index ended 3.2% lower for the week while the value index posted a 0.2% gain. Year to date, the growth index was up just 0.1% versus a 14.4% gain for its value peer.

Meanwhile, the post-IPO exuberance around SpaceX appears to be fading, with shares now down 25% from their peak.

WTI crude oil is trading below $70 per barrel, down nearly $25 from this time last month and over $40 since its 2026 peak. Prices are still above levels seen before the U.S.-Iran conflict, but much of the spike has now reversed.

The price of the most widely traded cryptocurrency briefly fell below $59,000 on Thursday, the lowest level since September 2024. As of Friday afternoon, Bitcoin had recovered some of its latest losses and was trading around $60,000. The cryptocurrency remained well below a recent peak of around $82,000 reached on May 10 and a record high of $126,000 set last October.

Key SPX Technical Levels to Watch

Support near 7,235-50, 7,115, and 7,050. Resistance at 7,425-30, 7,530, and 7,577.

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

A Volatile Holiday-Shortened Week With a Lot to Unpack

Stocks logged modest weekly gains in a volatile, holiday-shortened period, heavily shaped by a hawkish Federal Reserve decision and easing geopolitical tensions in the Middle East. Of the major indexes, the Nasdaq Composite performed best, advancing 2.43%, followed by the Russell 2000 and S&P 500 indexes, which added 1.21% and 0.93%, respectively. The Russell 2000 Index is now up 19% year to date.

Oil Crashes on the U.S.-Iran Peace Deal

Crude oil tumbled nearly 40% from its conflict peak, dropping to its lowest levels since March. The sharp decline was triggered by a U.S.-Iran peace deal that effectively reopens shipping through the Strait of Hormuz and restores massive energy supply to the market.

Gold and Crypto Navigate Mixed Signals

Gold saw turbulence, initially dropping on eased geopolitical concerns before finding temporary support as lower oil prices subdued broader inflation expectations. Cryptocurrencies experienced mild volatility, with Bitcoin generally range-bound. Prices slipped mid-week in response to the Fed’s hawkish posturing and broader market risk-off behavior, though risk assets attempted to stabilize late in the week.

Volatility Swings Sharply Before Settling

An indicator that tracks investors’ expectations of short-term U.S. stock market volatility traded in a wide range, reflecting shifts in the outlook for the Middle East conflict. On Wednesday the Cboe Volatility Index closed at the highest level since April 7. By Friday’s close, however, the VIX was trading nearly 18% below the previous week’s closing level.

The Fed Takes a Hawkish Turn

The FOMC held the federal funds rate steady but took a decidedly more hawkish tone. Updated economic projections removed the previously anticipated rate cuts and showed about half of policymakers leaning toward at least one rate hike later this year. This is a meaningful shift in the policy backdrop that traders need to factor into their positioning.

Key SPX Technical Levels to Watch

SPX support sits near 7,385-7,400, 7,250-60, and 7,020-30. Key chart resistance levels appear near 7,575 and 7,620.

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

HARRY BOXER, THE TECHNICAL TRADER 

A Volatile Week With Modest Overall Gains

The 0.7% returns that the S&P 500 and Nasdaq each posted for the week did not come easily, as stocks sold off on Wednesday before rebounding on Thursday and Friday. The modest overall results left the indexes below the record levels recorded in the first few days of June.

Semiconductors Pull Back After Historic Run

The semiconductor index, which had nearly doubled since the start of the year, pulled back about 12% before partially recovering later in the week. After this historic rally in technology over the past two months, a wobble in semiconductor stocks disrupted the market’s recent calm, triggering a pullback in some of its biggest winners.

Encouragingly, beneath the surface, improving breadth has been signaling a healthier market backdrop, with early signs of rotation and broader participation. Markets have entered the summer in a more volatile but still supportive phase, marked by shifting leadership, a highly anticipated IPO pipeline, and geopolitics coming back into focus.

Small Caps Hit Record Highs

The Russell 2000 small-cap stock index outpaced its large-cap peers by a wide margin, climbing to a record high and extending small caps’ year-to-date performance leadership. The Russell 2000 finished around 4% higher for the week and is now up nearly 19% year to date.

Oil Swings Wildly on Middle East Developments

Oil prices continued to take cues from developments in the Middle East. U.S. crude jumped more than 3% on Wednesday, only to fall on Friday afternoon to the lowest level since mid-April. Oil climbed above $93 per barrel on Wednesday and was trading around $84 on Friday afternoon, down about 6% for the week.

Key SPX Technical Levels to Watch

Support levels at 7,235-45, 7,200, 7,145, and 7,050. Chart resistance appears near 7,485, 7,540, and the 7,590-7,600 zone.

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

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

The Nine-Week Win Streak Is Over, Here’s What the Charts Are Saying Now

Last week the S&P 500 reversed course after nine consecutive weeks of gains, as a Friday selloff in many semiconductor-related stocks weighed on the broader market. The index finished the week down about 2.5% overall, while the Nasdaq dropped 4.7%.

Bond Market Selloff Resumes

The recent bond market selloff regained momentum after a nearly two-week pause, as yields of U.S. government bonds rose in the wake of Friday’s better-than-expected jobs report. The steepest rise came at the short end of the yield curve, with the 2-year Treasury’s yield closing at 4.16% on Friday, well above the previous week’s closing yield of 4.00%.

Bond market trading reflected rising expectations for a U.S. interest rate increase by year end. Friday’s trading in rate futures markets implied a roughly 72% probability that the Fed would lift its benchmark rate by anywhere from a quarter-point to three-quarters of a point by December.

Bitcoin Hits Lowest Level Since September 2024

Bitcoin fell for the fourth week in a row as the price of the most widely traded cryptocurrency tumbled to the lowest level since September 2024. As of Friday afternoon, Bitcoin was trading around $60,000, down nearly 18% for the week. The cryptocurrency is well below a recent peak of around $82,000 reached on May 10 and a record high of $126,000 set last October.

Oil Remains Volatile

The latest developments in the Middle East conflict continued to buffet oil prices. U.S. crude traded in a wide range, briefly climbing above $96 per barrel on Wednesday before settling to around $90 on Friday afternoon. For the week, oil was up nearly 4%.

My Technical Read: One Day Does Not Make a New Trend….But Watch Closely

Friday’s sharp declines may have broken the back of the current sharply rising trends in most major indices. However, downside follow-through will be necessary to indicate that a new downtrend may have started, as one day does not a new trend make.

The sharp thrust downward we experienced Friday could be just the tip of the iceberg, but next week’s price action may be critical in assessing the trend going forward. It is likely that extreme volatility may be ahead, and this makes intelligent stop losses imperative. In my weekend webinar I indicated how many stocks are at or even a bit below key support levels. If these levels get taken out we could see even more substantial declines.

The current McClellan Oscillator reading sits at -28, which is nowhere near extremely oversold. We will likely need to see a reading closer to -160 to -180 or deeper, and an intraday TICK index near -1,300 to -1,500, to indicate the kind of extreme oversold levels from which rallies are born.

Key SPX Technical Levels to Watch

Support near 7,330-33, then 7,175 and 7,050. Resistance lies near 7,460-65 and 7,495-7,500.

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

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

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.