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 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 be 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.
Monday showed several encouraging signs with regards to further breadth expansion coupled with strong leadership out of both Technology and Financials. Interest rates showed evidence of reversing some of the spike from late last week which seems to be a technical positive.
In the near-term, a rally which began last Monday looks to extend further this week technically with key initial resistance coming in between 5525-5565 that likely halts this rally up near an important intersection of trendline resistance.
While levels of strong technical resistance coinciding with prior March lows and the ongoing downtrend from mid-February have yet to be broken, the signs of SPX pushing higher on roughly 4/1 bullish breadth as some of its key constituents like AAPL 1.94% and NVDA -1.33% begin to make important moves off the lows.
The first real test looks to occur around 75-100 points higher, and I suspect this can happen this week.
S&P 500 Index
AAPL remains one of the more important stocks to watch technically as markets begin their stabilization process
As shown below, AAPL has begun to make a meaningful push higher off its lows over the past week. Price briefly exceeded March lows before a minor reversal Monday. However, monthly charts (not shown) show AAPL to have successfully recouped enough of its recent damage to have held its intermediate-term uptrend on a monthly basis going back since 2023.
Furthermore, the recent strength has also been helpful for AAPL to have held above prior peaks from the last year on monthly charts.
On a daily basis, a rally up to approximately $216 looks possible over the next week, which would help to fill the recent gap created on the late March/early April gap down on heavy volume.
At present, AAPL still remains trending lower, so watching this stock carefully for evidence of breaking its downtrend will be important.
Apple Inc.
NVDA likely to push up to 120-2 initially
Stocks like NVDA are even more positive within the Semiconductor space and have risen to both recoup prior lows from March as well as exceed the downtrend from February.
This is an encouraging step for NVDA, which remains the 2nd best performing stock within all of the Philadelphia Semiconductor index (SOX).
Initial resistance lies at $120-$122 and could be tested on further strength over the next week.
Overall, I like NVDA along with AVGO and TSM as the Semiconductor stocks to favor in a sub-sector that is struggling to stabilize following its recent breakdown.
Evidence of SOX regaining 4300 would be highly encouraging for this part of Technology to begin showing more meaningful strength. However, NVDA is one to consider overweighting for now given its strength within the sector and recent technical progress.
NVIDIA Corporation
Treasury yield cycle looks to peak in April and turns lower into August
It’s unlikely, in my view, that Yields are on the verge of big breakouts to extend the recent spike.
Rather, my daily cycle composite shows that yields should be close to peaking out and turning back lower to test monthly lows in the coming weeks.
While the dramatic surge in yields caught many off guard last week, Monday’s pullback in yields was encouraging.
Furthermore, the cycle composite seems to peak out in mid-April and fall into August of this year. Thus, while Equities very well might outperform Treasuries given their 1st Quarter underperformance, I also expect Treasuries to rally over the next four months with yields falling to new lows for 2025.
Treasury Yield Cycle
