Short-term trends in US Equities remain bullish, and Monday’s push higher on above-average market breadth gives some confidence about a coming push back to new monthly highs. While a rally over February peaks should happen this Summer, it’s hard to make a technical call for an immediate breakout. Both SPX and QQQ likely will find resistance near February highs that allows for consolidation in late June ahead of a push back to new all-time highs. Meanwhile, both Treasury yields and the US Dollar are likely to begin trending lower in the weeks to come. While some of the Haven trades like Japanese Yen, Gold turned briefly lower on Monday, I’m still bullish on both for progress in the months to come. I favor Industrials, Financials, Technology, and Utilities, while Emerging markets also have appeal given the drop in the US Dollar. For Tuesday, all eyes are on NVDA, which has improved its technical situation and is likely to help the Semiconductor sector begin to strengthen more sharply following a difficult early-year decline.
Monday’s push higher on above-average breadth suggests that last week’s consolidation has run its course and a move back to new monthly highs likely can occur over the next 1-2 weeks.
While the combination of the Elliott-wave count coupled with DeMark indicators and cycles shows the possibility of minor peaks in mid-June, for now, Monday’s strong finish for US Equities likely allows for an uninterrupted rally back to challenge and briefly exceed May peaks.
As shown below, I expect a move up to a resistance zone starting at 6000 up to 6150 which could be challenged as the market closes out the month of May. NVDA’s earnings could be a catalyst towards further strength in Technology which has already outperformed all other 10 Equal, and Cap-weighted ETF’s over the past month.
S&P 500 Index
Small-cap Growth has just broken out vs. Value
Small-cap growth has finally begun to kick into gear in recent weeks, rallying sharply to exceed last year’s highs.
This is a bullish development that should allow for further near-term outperformance in Small-cap Growth vs. Value.
While many have refrained from discussing Small-caps lately, given that 1st Quarter underperformance proved to be so dramatic, it’s worth noting that IWM is set to outperform the Equal-weighted S&P 500 for the month of May.
However, the chart below makes more of a compelling case for why Small-cap managers should be favoring Growth, not Value, as the Russell 2000 slowly but surely begins its comeback.
Small-Cap Growth/Small-Cap Value
NVDA’s gains help its technical structure ahead of earnings
NVDA’s 50% gains in just the last seven weeks have helped its technical structure at a time when it was sorely needed.
Following nearly a year of sideways trading, despite the swings (NVDA made a peak at $140.76 back on 6/20/24 nearly one year ago), its momentum and patterns have improved for the better in the last month.
Its move above $120 back on 5/12/25 was the first constructive move for the stock since the early April bottom. This helped to regain prior lows from early February which had been successfully tested twice already.
Thereafter, its push above $127 on 5/13/25 helped to break out of the downtrend, and volume has been expanding in recent weeks.
Technically, Monday’s close at multi-day highs following nearly a week of consolidation was also helpful, and should help NVDA push higher to test February peaks at $143.44 with an eventual test of $153.
While the stock arguably has more to do in order to immediately make the argument for new all-time highs, I expect this does happen in the months to come.
Weekly MACD has crossed back to positive territory, giving the stock some necessary momentum ahead of earnings.
Overall, I like positioning for further gains ahead of and post earnings, expecting NVDA to push higher to test and eventually exceed all-time highs.
NVIDIA
Software might give way to Semiconductor outperformance following the lagging in “Semis” since last Fall
One interesting ratio chart I often find useful is to track how Software is faring vs. Semiconductors.
The IGV, Ishares Expanded Software ETF, is featured in ratio form vs. the Ishares Semiconductor ETF (SOXX) below.
While Software broke out of a multi-year downtrend vs. Semiconductor stocks last October based on this ratio chart breaking out, it’s recently been faltering and might now give way to a possible breakout back to the downside.
When tracking DeMark-related signals on this ratio, we see below that the (IGV/SOXX) relative chart now shows two separate counter-trend exhaustion signals after this recent runup.
My thinking is that if NVDA surprises on its earnings tomorrow, NVDA’s strength might cause some short-term outperformance in Semiconductor stocks, which should help this ratio break down to the downside. Overall, this looks like something to watch carefully in the days ahead, which might warn of Software beginning to lose its relative strength vs. Semis after a six-month period of outperformance.
IGV/SOXX
