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

Markets Face a Key Test as Early Gains Reverse Sharply

The major indexes declined during the holiday-shortened week. With markets closed Monday in observance of Presidents’ Day, stocks started the week trending higher on Tuesday, leading to the S&P 500 closing at record highs on Tuesday and Wednesday. However, sharp losses in the latter half of the week erased those early gains, sending the major indexes lower by week’s end.

Friday’s session was particularly weak, with the indices finishing at or near key short-term support. The small-cap index (IWM) and the transportation index (TRAN) were both negatively diverging throughout the week, leading the broader indices lower. In fact, the Russell 2000 is now negative on the year.

Meanwhile, China-based stocks surged, with tech giant Alibaba (BABA) rallying over 15% on strong earnings. Energy minerals, electronic technology, and communications were the strongest-performing sectors during the week, while retail trade, commercial services, and health services lagged.

Elsewhere, gold hit new all-time highs, while Bitcoin and the crypto market remained relatively flat, with Bitcoin still trading firmly within January’s range.

The Bigger Picture: Market Trends in 2025

Despite early-year volatility, global stock markets have mostly trended higher in 2025. As of February 20, the S&P 500 is up about 4%, while the MSCI World Index has gained 5%. This is noteworthy given the market’s strong performance in 2023 and 2024.

Mega-cap technology stocks entered 2025 somewhat vulnerable after the “Magnificent 7” surged over 150% between 2023 and 2024. While their valuations remain extended, they’re not at the extreme levels seen during the 1999 Tech Bubble, thanks to robust earnings growth for most of these companies.

Last year, tech stocks drove over 50% of the S&P 500’s returns, with the Magnificent 7 dominating the first half of 2024. This year, performance has been mixed, with only two of the seven outperforming the S&P 500.

So far in 2025, 10 of the 11 S&P 500 sectors are positive, with financials, energy, and healthcare leading while technology and consumer discretionary have lagged.

What’s Next? A Critical Market Test Ahead

Next week should provide key clues about the market’s near-term direction, as major support levels are likely to be tested early in the week. A break below these levels could lead to a sharp pullback and a test of lower support zones. This is shaping up to be a pivotal test of market resilience—will stocks extend their intermediate uptrend, or will outside pressures finally lead to meaningful technical damage?

Either way, we’ll, as 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 S&P 500 and the NASDAQ recorded weekly gains, bouncing back from negative results over the previous two weeks.

The S&P 500 finished just four points shy of a record high set three weeks earlier, while the NASDAQ and the Dow were around a percentage point below their all-time peaks. The NASDAQ led domestic indices with a gain of 2.6%, while the S&P 500 advanced 1.5%.

As measured by Russell indexes, small-cap stocks lagged, with the Russell 2000 Index trailing the S&P 500 Index by 146 basis points (1.46 percentage points) for the week. Year-to-date, the Russell 2000 is ahead just 2.23%, trailing the S&P 500 (+4%) and the NASDAQ (+3.7%).

Even though the indices experienced modest weekly gains, there wasn’t a corresponding expansion in market breadth. On a week-over-week basis, the S&P 500’s breadth ticked up slightly to 60.80% from 60.00%—not exactly encouraging. Typically, broader participation suggests healthy investor sentiment and supportive technicals. Various data points help convey market breadth, including advancing vs. declining issues, the percentage of stocks within an index that are above or below a longer-term moving average, and new highs vs. new lows.

Russell 2000 Struggles to Break Resistance

The Russell 2000 index (RUT), which closed at 226, remains in a sideways trend and is still struggling to push above resistance at the 50-day Simple Moving Average (SMA), which finished the week at 227.13. Additionally, the 50-day SMA, a measure of the intermediate-term trend, has been rolling over—another bearish signal. We’ll be watching this index closely next week.

European Markets Outperform & Leadership Rotation Underway

European equity markets are outperforming so far in 2025. The German DAX is up 13% year-to-date, and the broader Stoxx 600, a proxy for European large-cap stocks, is up 10%, both outpacing the S&P 500.

A leadership rotation also appears to be underway, challenging tech’s dominant position. Earnings growth for the S&P 493 (S&P 500 minus the Magnificent 7) is accelerating after a two-year lull. The Magnificent 7 (Apple, Microsoft, Amazon, Alphabet, Meta, NVIDIA, and Tesla), which comprise about a third of the S&P 500’s weight, have lost some of their luster in 2025. Even though the group contributed more than half of the S&P 500’s gains over the past two years, performance is lagging this year. Sales growth in Q4 2024 was at its slowest since 2022, and increasing AI competition, coupled with rising spending, is raising valuation concerns. The group currently trades at a 35% premium to the broader index.

Strong Earnings and Precious Metals Surge

For Q4, financials, health care, and real estate joined the traditional growth sectors (tech, communication services, and consumer discretionary) in delivering double-digit profit growth. The broader S&P 500 is on track for its highest quarterly earnings increase in three years, with profits growing 17% year-over-year, exceeding earlier expectations of 12% growth.

Gold climbed to a record high in volatile trading on Friday, reaching as high as $2,964 before pulling back in the afternoon. Silver also saw a strong rally before stalling, briefly touching $34 per ounce, its highest level in over a decade.

As always, we’ll be “Trading 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

Market Overview

U.S. stocks slipped to start the week amid the imposition of tariffs and subsequent trade negotiations involving the United States, Canada, Mexico, and China.

However, stock indexes regained some ground, ending with fractional declines for the week after some of the tariffs were temporarily rolled back. Expect to see moderation in returns and increased market volatility ahead.

The stock markets in the U.S. and Canada are positive this year thus far, despite the uncertainty around U.S. policy and tariffs. The S&P 500 is up about 2.5%, and the Canadian TSX is up about 2.9% year-to-date. Bond markets are also positive.

From a market perspective, after two back-to-back years of solid gains in the U.S. and low volatility during this period, we might expect to see moderation in returns and increased market volatility ahead.

Technically, both the Nasdaq 100 and S&P 500 indices saw pullbacks on Friday from their recent declining top-line resistance levels after three consecutive positive sessions from Tuesday through Thursday. As a result, their recent consolidation patterns have extended.

Key Support and Resistance Levels

Key short-term support exists near the NDX 20,975–21,000 and SPX 5,905–5,925 zones. I’m closely monitoring these key levels for possible violations. On the upside, key resistance now exists near the NDX 21,950–22,000 zone and in the SPX 6,121–6,128 zone.

The Russell 2000 index (RUT) has been trading sideways over the past couple of weeks and, like the SPX, appears to be up against near-term resistance. For the RUT, that resistance level is at the 50-day Simple Moving Average (SMA). Until the index can register more than one close above this moving average (as it did on Wednesday this week), the near-term technical outlook might be considered bearish.

Group strength leadership over the last month was seen in the basic materials, financials, and consumer defensive sectors. Last week, basic materials also led. The consumer cyclical sector was by far the worst performer over those time periods.

Commodity Highlights:

• Gold: The price of gold set a record high for the second week in a row, extending a nearly three-month price surge for the precious metal. On Friday, gold briefly traded above the $2,900-per-ounce level for the first time before retreating slightly to around $2,890 in afternoon trading. Twelve months ago, gold was trading just above $2,000.
• Crude Oil: The price of U.S. crude oil fell for the third week in a row amid escalating trade tensions and related concerns about a potential softening of oil demand. The commodity was trading around $71 per barrel on Friday afternoon, down from a recent high of about $80 per barrel on January 15.

Final Thoughts

As always, we’ll continue to monitor the markets technically and report back to you on any important changes. Remember to always “Trade What You See Technically, Not What You Think.”

Harry Boxer, The Technical Trader

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

Profit-taking set in last week, but the indices managed to finish mixed. Both the Nasdaq (-1.6%) and S&P 500 (-1%) lost ground, while the DJI managed to gain a paltry +0.3%.

However, my main concern at this point is the negative divergences in the Transportation Index (-1.8%) and the IWM ETF tracking the Russell 2000 (-1.45%). The failure of these indices to quickly rebound next week could prove ominous.

Technology stocks were down on the week but rebounded from Monday’s sharp sell-off, which was sparked by Chinese AI startup DeepSeek. The company’s AI model reportedly performs comparably to those of leading U.S. technology companies, despite being developed at a fraction of the cost and requiring less computing power.

The major U.S. stock indexes recorded positive results in January, regaining upward momentum after the S&P 500 and the Dow posted negative results in the final month of 2024.

In January, the Dow climbed more than 4%, the S&P 500 added nearly 3%, and the Nasdaq finished almost 2% higher.

For the quarter, S&P 500 earnings are on track to grow roughly 12%, which, if achieved, would be the strongest pace since 2021. Earnings growth is expected to be broad as well, with seven of the 11 sectors forecast to report higher earnings. Strong earnings momentum is expected to carry over into 2025.

It’s also notable that following the presidential election, markets have shifted gears, and a speculative frenzy has taken hold in areas such as crypto and lower-quality/unprofitable growth stocks—a sign that investor sentiment is becoming increasingly positive, if not one-sided.

The price of gold rose more than 1% for the week, eclipsing the precious metal’s previous record high set three months earlier. On Friday, gold was trading above the $2,800-per-ounce level for the first time, with an afternoon price of around $2,830. Twelve months ago, gold was trading slightly above $2,000.

Corporate earnings season ramped up last week, with four of the “Magnificent 7” companies reporting. Apple, Microsoft, and Meta delivered strong results, above estimates for both earnings per share and revenue, while Tesla missed on both measures. Despite disappointing results, Tesla shares traded higher on optimism over the favorable regulatory environment, new, more affordable models, and autonomous vehicles, including Robotaxi.

For the quarter, S&P 500 earnings are on track to increase about 12%, which, if achieved, would be the strongest pace since 2021.

Earnings growth is expected to be broad as well, with seven of the 11 sectors forecast to report higher earnings. Strong earnings momentum is expected to carry over into 2025. This trend could be a driving force for the extension of the bull phase, but there are plenty of concerns out there that could stall the rally, if not at least initiate a pullback/retest of sorts.

My concern is obvious when taking all of the factors into play, but we will always “Trade What We See Technically, Not What We Think,” and as a result, we’ll let the market action tell us what to do.

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

The major U.S. stock indexes climbed for the second week in a row, with a rally on Thursday pushing the S&P 500 above the record high set seven weeks earlier.

The Dow and the NASDAQ also recorded weekly gains but remained around 1% below the records they set last month.

Specifically, the S&P 500 advanced 1.7% for the week (3.7% year-to-date), with the Nasdaq gaining 1.7% as well (3.3% year-to-date). The Dow Jones Industrial Average (DJI) led with a weekly gain of 2.2% (4.4% year-to-date).

The leading sectors last week included communication services, which gained 4% (6.3% YTD), and healthcare, which advanced 3% (5% YTD). The biggest laggard was energy, down nearly 3%, although it remains up 6% for the year so far.

Technology experienced a comeback last week ahead of Q3 earnings, with the tech, energy, and communications sectors leading the market over the past month. The AI frenzy and semiconductor surge have driven growth in tech stocks, with software companies also showing strong momentum.

Growth stocks outperformed value shares for the first time this year, as measured by Russell indexes. Large-cap indexes generally outperformed their smaller-cap peers.

Bitcoin prices set a fresh all-time high above $109,000 earlier in the week, fueled by optimism over the incoming “crypto-friendly” administration. Over the weekend, Bitcoin was trading around $104,900.

Overseas, European markets have been even more robust, with France, Germany, and Italy all recording gains of 8–9% early in the year.

Chinese stocks rose amid news that President Trump may be taking a softer stance on China tariffs. The Shanghai Composite Index added 0.33%, while the blue-chip CSI 300 was up 0.54%. In Hong Kong, the benchmark Hang Seng Index gained 2.46%, according to FactSet.

The price of U.S. crude oil fell more than 3%, snapping a string of four weekly gains. On Friday afternoon, oil was trading around $74 per barrel, down from a recent high of more than $80 per barrel on January 15. Year-to-date through Friday, oil remains up about 5%, supported by strategic investments and China’s renewed economic support.

Technical Outlook:

In my weekend webinar, I’ll be showcasing dozens of stocks in strong rising trends, and I suspect many will continue their upward momentum despite their lofty levels. It’s shaping up to be a stock-picker’s market. For my specific stock picks, log into thetechtrader.com and subscribe for free – no credit card required.

As always, “Trade What You See Technically, Not What You Think.

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