Stocks Rally on AI Sentiment Shift But the Next Few Sessions Could Be Decisive
Last week the latest turn in shifting sentiment about AI and semiconductor prospects lifted the major U.S. stock indexes, as each finished around 2% higher for the week on Thursday before Friday’s pre-holiday market closure. The Dow climbed to a record high, while the S&P 500 and the Nasdaq still remain below the peak levels they recorded on June 2.
Best Quarter Since 2020 Now in the Books
As the second quarter concluded on Tuesday, the Nasdaq ended up more than 21% higher for the three-month period while the S&P 500 climbed nearly 15%, the biggest quarterly gains for both indexes since 2020. The Dow added 13%, its best quarter since 2022. The results marked a sharp shift from this year’s first quarter, when the indexes sustained their largest quarterly declines in nearly four years.
Oil Extends Its Decline Into July
The price of oil fell at the start of July, extending the previous month’s 20% decline. U.S. crude was trading around $68 per barrel on Thursday afternoon, well below the commodity’s $87-plus level at the end of May. Thursday’s price was roughly in line with oil’s level in late February, before the Middle East conflict escalated.
Bitcoin and Gold Struggle to Recover
The price of Bitcoin climbed on the first two trading days of July, but the modest gains did not come close to offsetting its sharp decline in June. The price dropped by more than 20% in June, ending the month below $59,000 after closing out May at nearly $74,000.
A modest weekly gain for gold did little to soften the precious metal’s sharp decline from a record high set more than five months ago. Gold was trading around $4,140 on Thursday, well below its peak of more than $5,500 reached in late January and down from around $4,800 as recently as mid-April.
My Technical Read: Nine Weeks of Consolidation — or a Top?
From an overall perspective the S&P 500 has now spent about nine weeks in a pattern that may be construed as either a consolidation or a topping pattern, and is near a point where I believe it may be ready to make a more distinct directional move.
The next few sessions may very well reveal what the market’s intentions are.
Key SPX Technical Levels to Watch
Support near 7,290-7,300, 7,235-50, and 7,050. Resistance at 7,540-75, 7,620, 7,750, and the 7,900-8,000 zone.
In any case, as we always do at TheTechTrader.com, we will “Trade What We See, Not What We Think.”
— HARRY BOXER, THE TECHNICAL TRADER | www.thetechtrader.com
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