The past week saw the indices stretch their rallies to more new all-time highs on the S&P 500 & Nasdaq indices.
Gold and Bitcoin also tagged new highs as well. International markets in Germany, India, Japan, and Australia also reached new all-time highs.
However, in the U.S., after extending the gains for most of the week, Friday saw distinct intraday sharp reversals lower. The NDX & SPX experienced engulfing reversal bars that often mark important highs. Was it just pre-weekend profit taking, computerized trading programs/algorithms? We’ll have to see next week if they get downside extensions to confirm that an important top may have been made.
While breadth during this rally has expanded somewhat, market direction remains largely at the whim of big tech. That was once again the case this past week. Apple endured a 7-day losing streak before closing higher on Friday, while Nvidia pushed higher despite some volatility during the week and a big negative reversal on Friday. Nvidia—which has added roughly $1 trillion in market cap in 2024 alone—is now one of the world’s largest companies. Now a distinct market leader it is likely quite a bit ahead of itself and could lead the indices lower on at least a retracement/ retest
At the end of the week, the key indices, Nasdaq (-1.2%) & S&P 500 (-.03%) actually finished with weekly losses. Still, the S&P 500 remains near all-time highs and is still up nearly 25% since late October without a 5% or more pullback. Equity markets may be due for a period of consolidation or pullback, although I do not see a deep or prolonged correction or bear market (a 20% or more pullback) just yet.
As to market direction just ahead, I’ll need to see more technical evidence, such as poor technical breadth on any subsequent rallies and/or the failure of the indices to take out significant resistance when rallies do occur. Those are the kinds of technical clues as evidence of a weaker trend that may need to extend to test even lower levels.
And remember, trade what you SEE not what you think!
By HARRY BOXER
Veteran Trader, Expert Technical Market Analyst & Founder of TheTechTrader.com
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