Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst
S&P 500 Retreats After Strong Run
After a strong run in financial markets, with the S&P 500 up more than 20% since its April 8 lows, we may be on the verge of experiencing increased volatility as markets digest higher tariffs and a softer jobs market.
A gauge that measures investors’ expectations of short-term U.S. stock market volatility surged nearly 22% for the day following Friday’s weaker-than-expected jobs report. The Cboe Volatility Index climbed to its highest level in a month and a half and surged nearly 37% for the week.
The strong sell-off on Friday capped a rough week that sent major U.S. stock indexes to weekly declines of around 2% to 3%. The S&P 500 and NASDAQ retreated from record highs in a week packed with news about tariffs, jobs, GDP, earnings, and U.S. Federal Reserve policy.
Despite Weekly Declines, July Closes Strong
However, for the month of July, U.S. stock indexes climbed for the third month in a row as the S&P 500 added 2.2% and racked up 10 record closing highs. Information technology was the top-performing sector for the third consecutive month; over that stretch, tech stocks gained nearly 28% on a cumulative basis.
Key Technical Levels and Sector Strategy
Going forward, KEY technical price support exists near SPX 6200, then 6130, at the 50-day moving average. Below that, we see additional support near 6059-60 and then 5943-45. First KEY technical resistance looks to be near 6990–6300.
Keep in mind that we are also in the midst of the second-quarter earnings season, and thus far over 80% of companies have beaten earnings expectations – which means corporate earnings growth remains on track to be positive this year.
We are also likely to see the Federal Reserve cut interest rates this year, and the new tax bill to kick in starting in 2026 should be supportive of market sentiment.
Markets are now pricing in about an 80% chance that the Fed cuts rates in September, well above the 38% probability after the Fed meeting, according to CME FedWatch.
In this backdrop, traders may want to continue to favor U.S. large-cap and mid-cap equities. From a sector perspective, having exposure to growth and value sectors, including consumer discretionary, financials and health care, may be where to concentrate positions.
However, we also recommend tightening stops and/or increasing hedge positions, such as BEAR ETFs and/or entering short positions to protect portfolios.
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