Stocks Climb for Second Straight Week as Oil Surges and Volatility Drops

Technical Stock Market Briefing for Day & Swing Traders
| By Harry Boxer, Technical Market Analyst

Market Strength Continues, but Resistance Lies Ahead

Last week, the major U.S. stock indexes recorded their second positive week in a row, rising around 1% to 2% for the week. The results pushed indexes to their highest levels in more than three months.

Just two months after the April 8 low, stocks have mounted an impressive recovery, with the S&P 500 gaining nearly 20% since then. However, it remains approximately 3% below its record high and lags behind some of its international large-cap peers.

An index that tracks U.S. small-cap stocks outperformed its large-cap counterpart by a wide margin during the week, although small caps continued to lag larger stocks on a year-to-date basis. The small-cap index was up 3.2% for the week versus a 1.6% gain for its large-cap peer.

Despite U.S. stocks’ overall positive week, two sectors commonly regarded as defensive segments of the market finished in negative territory. Stocks in the S&P 500’s consumer staples and utilities sectors were down 1.5% and 1.0%, respectively, the worst among the index’s 11 sectors.

Volatility Eases, Oil Surges, and Summer Catalysts Loom

An index that measures investors’ expectations of short-term U.S. stock market volatility fell for the eighth week out of the past nine. On Friday afternoon, the CBOE Volatility Index fell to a level of 16.8, down from 18.6 at the end of the previous week and far below a recent peak of 52.3 on April 8.

The price of U.S. crude oil surged more than 6% as the commodity climbed to its highest price in six weeks. The gain offset modest price declines for oil over the previous two weeks.

Summer isn’t typically associated with tests, but this year may be an exception for markets. After a solid run supported by resilient fundamentals, investors now face a season that could bring meaningful catalysts. From potential trade developments and tariff headlines to evolving Fed policy and fiscal debates, the months ahead may test the recent momentum and shape the market’s direction for the second half of the year.

The July 9 expiration of the 90-day pause on “reciprocal” tariff rates and the Aug. 12 end of China’s 90-day pause pose potential catalysts for volatility.

However, markets seem to be starting to look ahead, setting their eyes on the possibility of more stimulative fiscal and monetary policies in 2026. The markets have technically always discounted the future 6–9 months ahead, and what we are currently seeing in terms of price improvement and momentum appears to be proving this scenario.

Sector Strength and Participation Warning Signs

Still, much of the upside came from the three growth sectors—information technology, communication services, and consumer discretionary—which together account for over 50% of the S&P 500. Tech earnings grew 20%, communication services surged 33%, and consumer discretionary rose 8%, helping to restore investor confidence in this part of the market that fell briefly out of favor earlier this year.

Although these three sectors have typically led the markets, it may be a sign of narrower participation. I have always preferred the markets to have broader participation, and this should be closely monitored, as it may indicate that the markets are nearing an area that could prove formidable in terms of resistance. As such, additional price progress may be more difficult than we’ve seen since the April lows.

In any case, we at the techtrader.com will always “Trade What We See, Not What We Think.”

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