Short-term trends are bullish while market breadth has improved this week, given the broadening out in sector performance to help relieve Technology. SPX has now officially joined NDX back at new all-time highs, while both DJIA and RSP have achieved minor breakouts, which keep their own trends bullish and extending higher. Given the broadening out in the US Stock market this week, the lack of counter-trend exhaustion and ongoing subdued sentiment, my view is that the push to new all-time highs will prove difficult to fade right away. Bond yields could very well diverge from the US Dollar’s weakness and bounce into mid-July as the Yield curve starts to re-steepen. Meanwhile, precious metals likely begin to turn back up in July, and Gold should push back to new all-time highs. Overall, I don’t sense that markets show much stalling out until after the Independence Day holiday, and even on a minor dip post 7/4, it’s likely that July should mirror the historically bullish seasonality trend in post-Election years that’s been working thus far in 2025. This calls for July strength in Equities, which might not show much consolidation until the month of August, which might prove more important.
The key takeaway of this past week is that not only did ^SPX achieve new all-time highs, but did so on expanded leadership from many important sectors like Financials and Industrials, with the DJ Transportation Average having made a short-term breakout which should be helpful for this leading index going forward.
New all-time highs as breadth expands is typically quite bullish and doesn’t suggest it’s right to attempt to fade this move back to new highs right away.
The key technical issue over the last month had been that breadth had receded so dramatically on the selloff into April that some rapid recovery would be needed to help restore the market’s intermediate-term momentum.
On a short-term (3-5 day basis), the ability to have closed well up in its daily range today is bullish for the idea of upside follow-through into next week. Initial targets could materialize near 6235, and my view is that US Stock indices likely hold up into the Independence Day holiday before any type of minor consolidation gets underway.
Furthermore, DeMark-related exhaustion signals which were present on 6/9, 5/16 of 2025 and also at 12/5 and 11/7, 10/15 and 9/26 of last year’s (2024) minor peaks are still roughly a week away from possible completion.
If ^SPX were to rally through next week, there would be a possibility of these lining up just after the 7/4 holiday, when the Relative Strength index (RSI) likely would have exceeded 70 on daily charts. At present, giving upside targets in price won’t be as effective until time factors also line up, and these are clearly premature. However, a push up to 6235 looks to materialize initially in my view.
S&P 500 Index
This week’s broadening out in sector participation is constructive
While not many sectors managed to beat ^SPX’s performance this week, given its Technology weighting, it was encouraging to see several sectors start to show better-than-average relative strength, which had been lagging since mid-May.
As shown below, five sectors managed to beat the Equal-weighted S&P 500 in performance over the last week: Technology, Financials, Communication Services, Consumer Discretionary, and Industrials.
Each of these sectors returned more than 2% on the week, and many sector ETFs successfully joined Financials in achieving breakouts of the six-week range-bound consolidation that began back in May.
Yesterday’s chart of RSP breaking out of its range helped to illustrate this broadening, and the performance statistics of the individual sectors is shown below.
Note that Technology’s outperformance has proven so dominant that it has reclaimed the top spot on a 1 week, one month and three-month basis given its recent strength.
Invesco S&P 500 Equal Weight ETF
Post-election year, July tends to be bullish
Given that the historical seasonality tendencies have played out incredibly accurately thus far in 2025, it’s worth continuing to pay attention to what these say going forward.
As shown below the early year pullback was clearly shown to be possible using the average of the last 75 years of trading before many understood that Tariffs could become a reality this year.
Furthermore, following weakness into the Spring, a strong rally tends to happen into June ahead of some minor consolidation. This also played out nearly perfectly.
Thereafter, seasonality trends show the possibility of a strong rally throughout July into August before a selloff gets underway.
Given the broadening out in sector leadership this past week along with lackluster sentiment and no DeMark daily signals present, I am not of the opinion that a major selloff gets underway in July. If breadth starts to dissipate in the next month while sentiment gets more bullish, that could set the stage for a fall correction.
At present, while a minor 2-3 day pullback could happen at any time after this move, I’m skeptical it plays out until after the US Independence Day holiday late next week.
Copper’s rise should allay fears about recession
Interestingly enough, the rise in China’s Equity market in the last month has helped to spur on rallies in both Silver as well as a breakout in Copper this past week.
Furthermore, as many investors know, Copper normally is seen as a possible recession gauge, as it is essential in construction, manufacturing, and electrical applications and tends to be highly sensitive to economic conditions. Thus, if Copper is beginning a meaningful rally back to highs, this might help to allay fears for those who feel that a recession might be right around the corner.
Looking at daily charts in Front-month Copper futures since Fall 2024, it’s evident that this week’s minor breakout in COMEX Copper to new multi-week highs looks very constructive technically. My view is that this week’s rally should lead Copper to rally up to $5.50/lb. initially in the weeks ahead, with a possibility of $5.75 into August before any consolidation gets underway.
The narrowness of the consolidation range in Copper that has now been exceeded should help this begin to rally back towards new 2025 highs, and it appears like the start of a large rally should now be underway.
Investors could consider Global X Copper Miners ETF (COPX), or the US Copper Index Fund ETV (CPER) as ways of participating in a further rally in Copper.
Additionally, stocks like Freeport McMoran (FCX) look attractive here and should be starting a move back to the mid-$50s.
Copper Futures
