Markets are growing closer to tradable lows in this orderly and concentrated decline. I continue to view this selloff as a cyclical correction within an ongoing secular bull market that should resume its upward ascent after bottoming in March. At present, trends are down, and it will take time to be able to form attractive setups and achieve some base-building following this recent damage. Tuesday’s breach of January lows by Equal-weighted S&P 500 and DJIA likely postpones an immediate bottom until Friday or early next week. However, it’s expected that lows to this selloff could be achieved within the next two weeks from a timing perspective and potentially as early as Friday. If this breakdown in the Equal-weighted SPX helps the “fear factor” rise further with a capitulatory reading in TRIN (Arms index) or a 1.0 or higher reading in Equity Put/call ratio, this should be helpful towards being able to buy dips with more conviction in this downtrend. At present, it will be helpful to watch for evidence of downtrend lines being broken, which might give some optimism from a structural perspective of a bottom that is currently lacking. Overall, we’re growing closer.
Equities post CPI rally attempt proved rather muted on Wednesday, and Equal-weighted S&P and DJIA, along with DJ Transports all finished lower on the day.
While market breadth was positive by a small amount, only Technology, Financials, and Energy rallied on the session. Meanwhile, the eight remaining sectors out of 11 all finished with negative performance.
Defensive sectors like Consumer Staples and Healthcare were particularly hard hit, and the weakness in some of the Defensive sectors suggests that a Risk-on period for stocks might be right around the corner.
Overall, I don’t make much of Wednesday’s rally attempt given factors like flat market breadth, the lack of structural wave completion and the lack of downtrends being surpassed.
As shown below on this intra-day chart of S&P Futures, the S&P has not exceeded its current downtrend line. Furthermore, the wave structure still shows this move as incomplete from the most recent 3/3/25 swing highs.
Ideally, S&P would fail to make ground on PPI data Thursday, turn back lower, and begin its “final” move of this decline from 2/19 down to the 5500-5550 area.
As discussed in prior reports, 5500 has importance due to confluence of the Fibonacci-based 61.8% level of the rally from last August into February 2025, the 23.6% Fibonacci level of the entire intermediate-term uptrend from 2022 lows into this past February, and an alternate projection wave based on it being double the length of the first move down from December peaks into early January.
Additionally, Bloomberg’s Jess Menton informed that the JP Morgan Hedged Equity Fund (JHEQX) which uses put options to shield against drops in the market, has a giant long put position at the 5650 strike in SPX which expires by end of quarter. This has served as a magnet in the short run, and it’s known that the open interest below the 5500 line is not nearly as large.
Thus, in the short run, it’s thought that the quarter-end portfolio rebalancing might add some support to the area near 5500 while 5650 might hold on gains into end of week.
S&P 500 E-mini Futures
Breakouts in Silver, Gold, and Copper make these all quite timely and technically attractive
While many wait impatiently for a stock market rally, the strength in the metals complex should not be overlooked. Many Precious and base metals continue to show better near-term strength than many stock indices.
Gold, Silver and Copper all made short-term breakouts today, and all are attractive to show additional strength in the weeks and months ahead.
The Daily COMEX Copper Futures chart, shown below, has just advanced to the highest levels since last Spring. It’s thought that a retest of prior 2024 peaks should happen in the months to come.
Copper Futures
Silver futures are also exceeding the triangle consolidation
This week’s move likely should lead Silver up to the high $30’s initially and eventually to the low $40’s.
For the first time in a while, we’ve begun to see both Gold and Silver begin to break out simultaneously, which adds credence to the idea that these breakouts are real and could gain traction.
Overall, Silver looks attractive here for a pushback to new 2025 highs, with the low $40s being the first meaningful upside resistance targeted.
Silver Futures
Gold looks to be making the exact same move, which bodes well for precious metals to join Copper in strengthening in the weeks ahead
While some investors might require a move to new monthly highs, it’s right to consider Gold here technically, expecting a further rally back to new all-time highs. My technical target on Gold lies near $3280.
While Gold has been stronger than Silver in recent months, I expect both to work well in the weeks and months ahead.
CFDs on Gold (USS / OZ)
AAPL break of January lows likely postpones a market rally until this can bottom out
AAPL’s break of January lows is problematic for its technical structure in the near term.
This stock, along with NVDA, remains one of the most important stocks in the US Stock market. It comprises more than 7% of the SPX and more than 9% of QQQ.
As shown below, this violation of January lows certainly creates the impression of a giant consolidation breakdown, which many investors might call a “Head and Shoulders” pattern.
The break of $219.38 does indeed represent the so-called “Neckline” of this pattern. Until this area at January lows can be recouped ($219.38), AAPL will likely show a few more days of selling pressure. This might very well hit $210 before showing much stability.
Apple
