SPX is still technically within its bearish short-term consolidation pattern that began nearly five weeks ago, and the last couple of days have produced even more short-term bearish pressure, which could allow for a quick move to briefly undercut January lows. Overall, my thesis is that a short-term low is approaching, but it still might take another 2-3 days before prices reach support. Thereafter, this should allow for a bounce into the Presidential inauguration. However, at present, the short-term breakout in Treasury yields and US Dollar remain bearish factors for Equities and some evidence of Yields peaking will be important to trust any bounce in the Equity market. Bottom line, given Technology stocks like AAPL and NVDA, are both nearing support, I suspect that SPX might attempt a bottom by the end of the week and begin to bounce into mid-to-late January. However, the extent of the breadth deterioration has proven severe in recent weeks. A rapid about-face increase in market breadth will be necessary to avoid February’s expected weakness in Equities, which is increasingly likely given the extent of short-term breadth deterioration.
The near-term picture looks bearish for another 2-3 days before SPX likely encounters support. Tuesday’s weakness directly coincided with hotter-than-expected ISM data, which sent Treasury yields soaring. Overall, the level of yields looks to be less troubling than the upward velocity in Yields, and some change in this will be necessary before having too much confidence in an imminent Equity market recovery.
As daily SPX charts show below, SPX has largely gone nowhere over the last month, but technically, it is down around 2% from this time a month ago.
As noted in recent days, most of the market remains in much worse shape in the short run. More than half the sectors on an equal-weighted basis have dropped more than 5%. However, this is just a short-term consolidation, and I don’t see much trend damage just yet despite the carnage affecting many sectors outside of Technology.
For those who care about near-term technical trends, the most important area lies at 5829 for SPX. I suspect this very well could be tested this week given Tuesday’s pullback. A break of that level would then likely prove short-lived and buyable down near November 2024 lows right near 5700.
This level lies right near the 38.2% Fibonacci retracement zone of the entire rally from August into early December 2024. Thus, while some fret about the bearishness of this near-term pattern, the wave structure in the near-term suggests that weakness into end of week likely could prove buyable.
S&P 500 Index
AAPL likely could bottom by the end of the week
Given AAPL’s importance and weight within SPX and QQQ, this remains a key stock to watch technically for evidence of either bottoming out, and/or support violation.
Technically speaking, my analysis suggests that a quick move under $240 is likely between now and Friday (Thursday is closed for a market holiday).
If AAPL reaches $236.50-$238, this should line up with strong support for shares based on a combination of traditional technical structure (AAPL revisiting prior highs which should now hold as support) along with potential DeMark-related exhaustion.
Given this rare confluence which might be in place by end-of-week coupled with AAPL’s size within S&P 500, I’m willing to bet that AAPL might be nearing a trading low by end of week.
Apple Inc
NVIDIA also looks to be close to support
Along with AAPL, NVDA -3.73% is another large-cap technology behemoth that is nearing support which could prove important for S&P 500 nearing its own support levels.
NVDA’s reversal was thought by many to be extreme, given that the company was thought to have “raised the bar” at the CES 2025 conference (based on Bloomberg comments).
Technically, NVDA still looks a bit premature to bottom out technically, but this is also nearing support which might have some importance if/when this gets to $136.50-$138 into either Wednesday or Friday of this week.
Similar to AAPL, there is some convergence of a couple different areas of trendline support along with DeMark exhaustion on intra-day timeframes which could signal a low by end of week.
Given NVDA’s importance also within SPX and QQQ, I feel the combination of both of these stocks nearing support might be important as a tailwind for SPX which might limit much further downside for the time being.
While I cannot rule out a move to 5700, the risk/reward in the short run could turn poor for bearish posture once SPX nears 5829 into late this week/early next.
Thereafter, a sharp bounce in both AAPL and also NVDA looks likely over the next 1-2 weeks.
US 10-Year Treasury yields nearing important short-term resistance
Overall, I sense that last April’s peak in ^TNX -0.58% , the US 10-year Treasury Note Index, could be an important spot when tested in the days to come.
This lies near 4.74% and is considered a Yield-based area of resistance.
If/when this level successfully holds and results in a turn back lower for Yields, such a move likely would be greeted positively by Equity markets (I make this distinction specifically because Equities have sold off lately in the wake of Treasury yields pushing higher).
However, if 4.74% is exceeded, such a move might also result in SPX undercutting 5829, which is of similar importance to the market.
Thus, keeping a close eye on last Spring’s peaks in yield should be important in the days ahead potentially for the Equity market. Any close over this could result in a further decline for SPX and QQQ. Meanwhile, if yields start to show evidence of holding 4.74% and weakening, my expectation is that this would result in a much-anticipated January bounce for Equity markets which might carry into the US Presidential Inauguration.
US Government Bonds 10 YR Yield
