Stocks Rebound in Holiday-Shortened Week; Nasdaq and S&P 500 Lead

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

Stocks Bounce Back After Recent Consolidation

U.S. stocks rebounded during the holiday-shortened week, although major indexes faced some selling pressure late in the week and finished below their best levels. The Nasdaq Composite led the way, gaining 2.01%, followed by the S&P 500 Index (1.88%).

The old Wall Street adage states, “Sell in May and go away.” However, this year investors did just the opposite. We saw a nice surge in May, with the S&P 500 rising 6.2% (after falling nearly 6% in the first four months of the year). The NASDAQ finished about 9.6% higher for the month.

Historically, since 1980, there have been six times that the S&P 500 moved higher by 5% or more in May. In all six cases, the market was higher in the next 12 months following this move.

Since its April 8 lows, the S&P 500 has climbed over 18%. Last week both Nasdaq and the S&P 500 indices advanced near 2%.

Recent results have left the S&P 500, the NASDAQ, and the Dow little changed on a year-to-date basis, despite the market downturn from late February to early April.

Technical Indicators to Watch

Last week the SPX experienced a technical “throwback” to its 200-day Simple Moving Average (SMA), and support kicked in this week, meaning the index bounced off this indicator, which is what you want to see if you are bullish. However, the SPX failed to make a “higher high,” which makes the bounce a little more suspect.

At this point, it appears the index is in a 100-point trading range period of consolidation, likely between 5,767 and 5,968. Therefore, we’ll have to let time dictate direction, but a move above the recent high of 5,943 would be considered bullish, and a drop below 5,767 would be considered bearish.

Sector Performance in May

The leading group relative strength performance in May saw Information Technology +10.2%, Consumer Discretionary +9.7%, and Communications Services +8.6%. Nine of eleven groups experienced gains while Energy remained unchanged. Only Health Care saw a negative performance with a 5.9% loss for May.

Crypto, Gold, and Oil Pause

After making a new all-time high the previous week, Bitcoin and the rest of the crypto market pulled back significantly last week. Bitcoin managed to remain within its prior week’s range as investors digested gains.

Likewise, gold and oil both spent the week consolidating within their recent ranges.

Treasury Yields Retreat

The yield of the 30-year U.S. Treasury bond fell back below the 5.00% threshold a week after it climbed to the highest level since 2023 amid concerns about the long-term outlook for U.S. government debt. The 30-year yield ended the week around 4.91%, down from a recent peak of 5.09% on May 21. Shorter-dated Treasury yields also retreated, with the 10-year yield finishing at 4.39%.

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

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