Another Week, More ALL TIME HIGHS

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

Calm Markets Power Higher While Traders Watch for Fed and Earnings Volatility

Summer temperatures are heating up, and so is the stock market. Investors have little to complain about so far this season, with the S&P 500 climbing steadily and not registering a single move greater than 1% in either direction for over a month. This stretch of low volatility and consistent gains includes 11 new highs in the past 30 days.

The S&P 500 and the NASDAQ pushed their record levels higher for the fourth week out of the past five as those two indexes and the Dow on Friday closed more than 1% higher for the week. Since June 20, the S&P 500 has risen more than 7%, while the NASDAQ has added almost 9%.

Earnings on Deck: Could Microsoft, Meta, Apple, and Amazon Break the Calm?

A packed week of earnings, Fed policy, and economic data could shake that calm, but the prevailing trend is upward. With rate-cut pressure intensifying, markets are watching closely for hints of easing, potentially starting in September.

This coming week will be the busiest of this earnings season, with almost 40% of the S&P 500 companies reporting results, including many among the Magnificent 7 (Microsoft, Meta, Apple, Amazon).

Rising Complacency, Falling Volatility — and a Warning for Speculators

The summer’s calm may be tested and although complacency is rising, so is the risk of near-term volatility. A market gauge that tracks investors’ expectations of short-term U.S. stock volatility fell 9% for the week, extending a recent decline that’s pushed the index to the lowest level in five months. The Cboe Volatility Index on Friday closed at 14.9, down from a recent high of 21.6 on June 17.

Meme-stock mania appears to be making a comeback with some retail traders reigniting interest in heavily shorted stocks, driving big price swings that are often disconnected from fundamentals and can reverse violently. This behavior could be a sign of froth, but a broader measure of investor sentiment based on the AAII survey (American Association of Individual Investors) indicates that we appear to be still far from the euphoria that tends to show up at market peaks.

What Comes Next: Volatility, Seasonality, and Sound Strategy

However, Fed decisions could stir volatility. Seasonality also cautions against overconfidence, as late summer and early fall tend to bring more market turbulence. A run-of-the-mill pullback or correction is inevitable, though difficult to time. Traders will be best served by avoiding the temptation to chase extremely speculative investments.

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

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