A Difficult Week as Stocks Alternate Between Gains and Losses
The S&P 500 finished 1.3% lower for the week and the Nasdaq dropped more than 2%, extending a pattern of alternating gains and losses that dates to early June when both indexes set record highs. Energy led all sectors with a 3.8% gain while utilities added 2.4%. Year to date gains were pared back to 10.15% for the Nasdaq and 9.6% for the S&P 500, though the small-cap Russell 2000 remains above 20% for the year.
Escalation in the Middle East conflict and further shipping disruptions in the Persian Gulf and Red Sea sent oil surging to around $90 per barrel on Friday, up from roughly $82 the previous week and $69 as recently as early July. Precious metals were firm, with silver leading the way at 4.6%, gold up 1.3%, and copper gaining 1%. Bitcoin finished near $64,500, off less than half a percent.
Prices of U.S. government bonds fell for the second week in a row ahead of a Federal Reserve meeting, pushing the 10-year Treasury yield to a peak of 4.70% on Thursday, the highest level in more than 18 months, before closing at 4.68% on Friday.
Critical Support Tests Arrive Early Next Week
The S&P 500 finished the week right on key chart support and faces an important test heading into Monday. Support sits at 7,375-80, 7,235-40, and 7,050. Resistance appears near 7,460-80, 7,520-25, and the 7,620-7,680 zone at the all-time high set nearly seven weeks ago on June 2nd.
The Nasdaq 100 closed at 28,128, its lowest close since May 5th, finishing slightly under key chart support. A break below that level could put 27,500 and 26,875 in play.
Despite the surface-level damage, the McClellan Oscillator sits at a fairly neutral -20, reflecting the fact that recent selling has been concentrated in tech rather than broadly spread across the market.
The oscillator would need to reach the -150 to -200 zone to signal a more severely oversold condition and the possibility of an important technical rebound. However, several other oscillator readings and DeMark counts are signaling a possible short-term bottom and pending bounce near here rather than an immediate breakdown.
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
Experience It Yourself
Join Harry’s Live Broadcast Free
Join experienced traders who’ve been refining their edge with Harry’s pattern recognition for 5, 10, even 15+ years.
