Near-term and Intermediate-term technical trends remain bullish for US Equities, and the push back to new all-time highs this past Thursday helped to reverse the minor downtrend that had begun to emerge earlier in the week for DJIA and Equal-weighted SPX. Technology’s strength has helped to drive recent performance and has solidified this sector as being the best performing out of all major S&P sectors on a 1-week, 1-month, 3-month, and 6-month basis. However, the strong relative strength in other sectors like Financials and Industrials has helped to add some appeal to this rally over the last month, and the broadening out helps to add conviction to its durability. Despite the minor bounce in both Treasury yields and the US Dollar in recent weeks, no deterioration has happened to risk assets, and sentiment has not yet become bullish despite a 25% SPX rally in the last 14 weeks. Overall, it’s still right to favor that this rally can continue into August before some consolidation gets underway, which gels with post-election year seasonality.
US trade progress has helped to add even more gains to global Equity markets following completed deals with the Philippines, Indonesia, and, most importantly, Japan, which agreed to a 15% tariff on imported Japanese goods. The US is now reported to be close to a deal with Europe, which has caused some outperformance in Europe this week, given a surge in the Euro Stoxx 50 index and STOXX Europe 600 index, both of which rose more than 1% on Wednesday.
Short-term inflation expectations broke down sharply today, while the bond auction produced the strongest demand since April of last year.
At some point this steady stream of optimism likely will cause sentiment to jump to speculative levels which would warn of a selloff as nearly 80% of US companies have beaten 2Q earnings thus far and Meme stocks have been making a comeback.
Yet that time still seems early at present and it’s my thought that sentiment likely reaches extremes into next month coinciding with a cyclical/seasonal peak for US Equities.
As shown below, despite the largest three-month rise in risk appetite on record according to the Bank of America Fund Manager Survey for July, investor sentiment still lies near neutral territory.
Thus, despite being at a five-month high, this sentiment gauge lies nowhere near as high as seen in late 2024 nor in 2021 ahead of the Bull Market peak. This is just one particular gauge of sentiment, but it seems to directly fall in line with low CTA exposure to Equities and a low AAII Bull-Bear spread. When these gauges all start to turn exorbitantly positive, it will be time to pay attention. However, at present, the poll below seems to be a good fit for sentiment at large when including both Institutional and Retail polls. Overall, Investors still seem to be concerned about rising inflation despite no evidence of this in recent months, and most sentiment gauges are neutral, not bullish or speculative.
NIKKEI rises to within 2.5% of all-time highs from last Summer
Today’s US/Japan trade deal was greeted enthusiastically by the NIKKEI, which rose in its strongest 1-day gain since April, and Transportation (Autos) provided the biggest lift. Aside from the UK’s 10% deal, Japan’s deal is one of the lowest among major partners that have reached a bilateral agreement.
NIKKEI closing in on all-time highs from last Year (which had broken out above prior 1989 peaks before consolidating. Today’s push up to 41,171 is a minor breakout and the highest close since July of 2024, approximately 2.5% below those record levels from last July.
This is technically a very positive move for Japan’s equity market, given weekly momentum improvement, though I suspect that 42,426 might prove important initially as resistance. Overall, I suspect that last Summer’s 42,426 peak in NIKKEI might serve as the same resistance as all-time highs in DJIA 0.55% and/or RSP 1.31% might face before showing some consolidation in August. Furthermore, Technology sectors like SOX are also approaching meaningful resistance near all-time highs, which might have some importance.
Consolidation in NIKKEI over the next few months would make Japanese Equities quite attractive from a risk/reward standpoint, and I suspect a larger Q4 rally should be in store. EWJ 0.15% does look to have upside potential between now and mid-August, followed by consolidation into October before a push back to the mid-$80s.
NKY Index
Temporary stallout in SOX, but a push back to new all-time highs still looks likely into August before any real resistance
The chart below highlights the weekly chart of SOXX -0.43% the Ishares Semiconductor ETF which is an ETF which seeks investment results which correspond to the ICE Semiconductor Index.
Thus, as this chart shows below, there’s been a minor stalling out over the last two weeks after the big rally off April 2025 lows. Yet, $250 is not seen as technical resistance of any importance for SOXX in my view. Given that DeMark indicators remain approximately four weeks away from triggering weekly TD Combo signals, not unlike what many US benchmark indices also show, I suspect that a push up to 275 is likely for SOXX into August. If a retest of highs were to happen by mid-August, one could make the case for paring down risk in the Semiconductor stocks ahead of the Fall season. At present, this sub-sector still looks appealing ahead of Technology earnings.
Semiconductor Ishares ETF – SOXX
TSLA has pushed up to key triangle resistance ahead of earnings
(The following was written ahead of TSLA earnings on Wednesday afternoon, 7/23/25)
TSLA -0.15% looks appealing to me technically speaking, heading into earnings, given its progress up to test the upper range of its intermediate-term triangle pattern this week. This marks the first of the Magnificent Seven to report earnings, and many analysts have made a point to mention that TSLA -0.15% might post the sharpest drop in revenues in more than a decade. Despite this gloomy outlook by Bloomberg Intelligence, along with being mentioned that it should no longer be lumped together with the other “Mag 6” peers, its technicals have begun to steadily improve in recent weeks.
Overall, I find it appealing to consider TSLA -0.15% at current levels for the following reasons:
- The stock’s pattern has formed a “coiled spring” by moving near the apex of its recent triangle pattern. Formations like these typically produce breakouts, and given the improvement in momentum in recent weeks, I believe this should be an upside breakout.
- Cycle composite looks positive for TSLA -0.15% and trends up most of the 2nd Half of 2025. Following a dismal pullback in the 1st half, which aligned with the cyclical projection, TSLA -0.15% ’s cycles seem to indicate that higher prices are likely in 2H.
- As mentioned above, daily momentum has now joined weekly and monthly in being positive based on the MACD indicator with all three above their respective “Signal line”.
- Sentiment still seems negative on TSLA, with many analysts not discussing the Robotaxi rollout, the Full-Self Driving, nor TSLA -0.15% ’s push into Artificial Intelligence and use of Robots (Occulus) Thus, while sentiment became understandably poor when TSLA -0.15% became a “political stock” I sense that many aren’t focusing on its future.
Overall, $343 looks important at present as an initial hurdle, followed by $357.54. Options pricing heading into Wednesday’s trading seems to imply a possible 6% move in either direction.
Given that TSLA -0.15% ’s rise last quarter coincided with a worse than expected earnings report, it’s difficult to use earnings as a way to value TSLA -0.15% in my view. Bottom line, I expect a coming breakout above this triangle pattern and expect TSLA -0.15% should begin its climb back to all-time highs.
IF its projection aligns with ^SPX, then a push higher over the next few weeks looks possible, followed by a dip in late August. Thereafter, continued gains should be possible, which help TSLA -0.15% get back to $488, which is the first meaningful resistance target if/when May 2025 peaks at $367.71 are exceeded.
Tesla, Inc.
