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.”
Join The Tech Trader Community For Free & Master the Market with Technical Analysis
Level up your trading by gaining access to real-time market insights, expert technical analysis, and actionable trade setups from 50-year veteran trader and expert analyst, Harry Boxer.
