Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst
Market Rebound
The major U.S. stock indexes fell sharply on Monday but posted big gains over the next four days to rebound from the previous week’s losses. The NASDAQ surged 6.7% for the week while the S&P 500 finished up 4.6% and the Dow rose 2.5%.
The rebound in markets since the April 9 tariff-pause has triggered a 10% rally in the S&P 500 from the low, leaving the index about 10% off its February 19 high. Prices are now at a key area, sitting between the pre-April 2 low and the post-April 2 high. Having moved away from extreme pessimism, any further gains will likely require more tangible developments and agreements with other countries, rather than just signs of easing tension.
Sector, Commodities & Crypto
The NASDAQ’s weekly outperformance relative to other major U.S. indexes stemmed from strong quarterly results from major technology companies and the tech sector’s overall strength during the week. Tech stocks in the S&P 500 surged nearly 8% on average for the week; in contrast, the consumer staples sector was down more than 1%.
Gold’s year-to-date rally was interrupted by a slightly negative weekly result that nevertheless saw the precious metal pass the $3,400-per-ounce level for the first time. Gold crossed that threshold on Monday but pulled back later in the week; on Friday afternoon, it was trading around $3,310—down fractionally for the week but up 24% year to date.
Stocks have also benefited from the tailwind of relatively lower oil prices, which are down sharply from their near-term high above $70 per barrel in early April to currently trade just over $63.
Bitcoin will also look to build on a stellar week, as the world’s largest cryptocurrency jumped 12% and is now back within striking distance of $100,000.
Technical Outlook
Historically, after sizable market declines as the one experienced this year, it takes a while for volatility to return to average levels. More often than not, bottoming is a process, with stocks retesting prior lows. Two notable recent exceptions were the 2018 near-20% decline in the S&P 500 and the 2020 pandemic-induced bear market, where in both cases stocks experienced a V-shaped rebound, helped by a Fed pivot in 2018 and a strong combination of fiscal and monetary support in 2020. With the Fed constrained on what it can do by lingering inflation pressures and the government dealing with the reality of high deficits, I don’t expect a V-shaped rebound to the prior highs this time.
The S&P 500 (SPX) was in a trading range between the April 7 intraday low (4,835) and the prior March 13 low (~5,500), which had shifted from support to resistance once we broke below it during April. Late Friday that resistance was broken with a strong surge to 5,528 (close 5,525.21). Technically significant or an overshoot? We’ll certainly see next week, and it appears to be a very important technical time frame ahead of us that may determine market direction for the next few days and weeks.
In any case, as usual, we at TheTechTrader.com will always “Trade What We See Technically, Not What We Think.”
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