Tech & Consumer Discretionary Lead Market Rebound as Volatility Expectations Rise

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

Tech and Consumer Discretionary Lead Market Rebound

Equity markets rebounded this past week, led by strong performance among technology and consumer discretionary stocks. NASDAQ surged 3.9% for the week and eclipsed a record high, regaining ground lost in a sell-off the previous week and is now up more than 11% YTD.

The S&P 500 added 2.4% and is ahead 8.6% for the year so far, finishing at 6,389.5—less than a point below its record set less than two weeks earlier. An index of U.S. large-cap growth stocks outperformed its value style counterpart by a wide margin for the second week in a row and extended its year-to-date performance edge. A growth benchmark added 3.2% for the week versus 1.4% for a value index.

Volatility Signals and Earnings Strength

Day-to-day volatility has been picking up, VIX has been seeing signs of life, and the VIX term structure is steep, referring to the CBOE Volatility Index (VIX). October VIX futures reached nearly 21 versus under 17 on Friday for spot VIX, implying participants expect more volatility in the coming months. That often correlates with pressure on Wall Street.

The odds of a 3% to 7% pullback in stocks appears higher than average at this juncture. With 90% of S&P 500 companies reporting quarterly results, the corporate earnings season is winding down. Earnings results have been stronger than expected, as 82% of S&P 500 companies have beaten analyst estimates, with an average upside surprise of 8.5%. As a result, forecasts for earnings growth have been revised sharply higher to 9.7%, from 3.8% at the end of the quarter, showing that prior downgrades appear to have been overdone.

Oil, Gold, and Fed Policy Outlook

The price of U.S. crude oil fell more than 5% for the week to the lowest level in more than two months. Oil was trading below $64 per barrel on Friday afternoon, down from $70 as recently as July 30 and about $75 in mid-June.

The price of gold futures briefly climbed to a record high on Friday, reaching as high as $3,500 per ounce in afternoon trading before slipping below that threshold. At the start of 2025, gold was trading around $2,630. Chances of a Fed rate cut next month are around 90%, according to the CME FedWatch Tool. That certainly should add to volatility.

Key Technical Levels

Back to equities, Technically, the 20-day moving average for the S&P 500 index has held on tests this week and may remain a support point. It currently sits at 6,318. The all-time high close of 6,389 appears to be a resistance point, as the index touched it on Friday and then sold off.

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