Despite the ongoing volatility, last week’s volume and price action suggested a good likelihood of a short-term low in place for US stocks, which might now be followed by a push higher in a “2-steps forward, one-step back” type process into May. Multiple technical factors came together last week to show an inflection coinciding with breadth and volume capitulation at a time when sentiment had reached the most negative levels in years. Technology’s rebound from support last week is certainly a reason for optimism, and along with strength in Financials, it arguably should be able to drive markets higher in the months to come. Thus, while trends and momentum remain negative from mid-February, seasonality and cycles show a rally developing following signs of tariff fatigue from Equities, and breadth has improved following the best one-week performance in SPX since 2023. Going forward, SPX 5500, QQQ-466.43 and DJIA-40,661 remain key areas to exceed to have confidence, and these likely are tested and exceeded sometime this week. At this point, it remains premature for me to consider this a bear market, nor that the US Economy should enter a recession.
Wednesday’s technical weakness fails to shake the near-term optimism, and it would take a move down under 50% of the recent low to high range to think that a larger retest might be forthcoming.
Meaningful late day buying appeared in NVDA as well as Technology which helped markets to bounce in the all-important final 30 minutes of the day. Breadth overall finished at less than 2/1 negative breadth in Advance/Decline along with Volume which proved far less negative than the positive breadth which accompanied the rally last week.
However, it goes without saying that the lack of progress has proven to be frustrating for market bulls, and despite some compelling evidence that markets likely have made a low for April, the lack of a move back above SPX-5500 keeps the trend along with weekly momentum negative, for now.
Drilling down on the specific rally within QQQ, daily charts show that the downtrend from February remains intact, despite a bounce strong enough in the last week that caused daily momentum indicators like MACD to turn positive.
Technology proved to be the strongest sector in rallying off the lows, and Technology gained +11.77% over the rolling five-day period ending 4/15/25, outperforming SPX by more than 300 basis points (b.p.).
I view this trend as requiring a move back up to 471 to have some positive feelings about the structure, which is starting to turn more positive. Dips in trading Wednesday did not break 435 before rallying sharply to close at 444.18.
Unfortunately, having a strong conviction about an immediate rally will prove difficult unless we see evidence of that in Thursday’s trading into early next week. Technically, I still feel markets will likely push higher to 471 in QQQ initially. However, a daily close under 435 would shake that conviction, postponing the near-term rally in the short run. Overall, the risk/reward seems favorable, but this “Two-step forward, one-step backward” type pattern is difficult for bulls and bears alike.
Invesco QQQ Trust
NVDA “down day” doesn’t shake conviction about a rally into May
Despite NVDA falling by 6.87% on Wednesday, its daily momentum still benefitted from the rally off the lows from 4/7, and MACD turned positive on daily charts.
It’s important to note that NVDA rallied over 30% between the lows of 4/7 ($86.62) and the peaks of 4/9 at $115.10. Thus, one day of falling ~7% is certainly not an encouraging step forward. However, the broader picture is starting to show evidence that NVDA can start to rally, given structural and momentum—based improvement.
Wednesday’s decline does move back below the ongoing downtrend but does not suggest an immediate retest of lows.
In the days ahead, $100.45 (Wednesday’s intra-day low) is certainly important, as is $97.20-$97.25. Remaining above $97.20 is paramount towards expecting a rally back to $120-$122. For now, I like NVDA to continue showing gradual strength between now and August to rally back to new all-time highs. However, the downtrend below requires some more strength above $120 to begin to have more conviction about NVDA beginning a more linear rally back to its all-time highs. (That also likely requires SOX to recoup 3300.)
NVIDIA Corporation
NVDA breakout vs. SOXX looks meaningful
The period between 4/7 to 4/16 showed some encouraging progress in NVDA relative to the Philadelphia Semiconductor Index (SOX), breaking a relative downtrend on the ratio chart of NVDA vs SOXX (Ishares Semiconductor ETF) going back since last October.
This looks like a meaningful and positive development, and Wednesday’s setback in NVDA did not detract from this recent show of relative strength in the last couple of weeks.
Overall, NVDA looks to be a clear favorite, technically speaking, vs. buying into SOXX as a way to play the Semiconductor space. I expect that NVDA should continue to show better relative strength in the weeks and months to come.
Bottom line, for those who are seeking exposure to this part of Technology, owning NVDA itself still looks to be an attractive choice technically, regardless of Wednesday’s minor setback.
SOX requires a rally back above 4300 to have more faith in the Semiconductor sector
As shown below, SOX certainly has some work to do, in order to recoup the prior area of pivot support that marked a former area of support for the entire technical structure for SOX going back since early last year.
While a bounce looks likely in SOX between now and July/August, given reasons like oversold conditions, evidence of SOX bottoming technically in the short run, and short-term momentum improvement, it requires proof of regaining 4300 before being able to have more conviction in Semiconductor stocks.
As discussed above, it’s right to consider NVDA a better technical bet in the short run than owning a basket of Semiconductor stocks at present.
Philadelphia Semiconductor Index
Corporate insiders bought shares at the fastest pace in 16 months in March
Interestingly enough, despite many companies voicing notable concern regarding tariff-driven uncertainty, this hasn’t stopped them from scooping up shares of their own companies’ stock.
Data compiled by the Washington Service shows that 180 corporate insiders bought their own stock in the first two weeks of March. This tipped the buy/sell ratio to 0.40, keeping it near the highest levels since late 2023.
This optimism from corporate executives certainly contrasts with the broad risk-off mood and is seen as a positive sign.
