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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