Near-term and intermediate-term technical trends remain bullish for US Equities, but it’s thought that the rally in US Stocks likely will face resistance at marginally higher levels, which might limit the rally to 6500-6600 before some consolidation gets underway. Overall, despite some of the minor concerns regarding Elliott-wave patterns nearing completion, seasonal/cyclical periods of weakness approaching and waning breadth, it’s going to be necessary to see evidence of US Equity index prices turning down in a manner that would help to add conviction to these concerns. Both the US Dollar and US Treasury yields seem to be headed lower in the weeks to come, and this is thought to be helpful for US risk assets. Overall, while it’s proper not to grow too complacent in August, it’s also proper to let this rally run its course until the market demonstrates evidence of starting to weaken. For now, it still appears that the path of least resistance remains higher. If/when SPX gets under early August lows at 6212.21, it will be proper to discuss a pullback getting underway. At present, with NVDA earnings on deck, and this stock having formed a bullish triangle pattern, it’s difficult to be too negative just yet on the broader market.
No meaningful net change on the US Stock market on Monday, but some encouraging strength out of Technology that prevented indices from showing much damage, given that 8 sectors out of 11 saw negative performance.
This week looks important given Retail earnings from stocks like WMT along with Friday’s Jackson Hole speech by Fed Chair Powell. Yet, stock indices haven’t shown much weakness since early August despite this month lining up to show potential seasonal and cyclical weakness.
If anything, August has shown market breadth improving over the last few weeks, which had been a technical issue in the latter part of July.
I’ll forego a discussion of ^SPX technicals until price shows some evidence of something more meaningful technically. However, it’s worth relaying that ^SPX-6481 looks important as near-term resistance for ^SPX, while 6437 looks important as support. Breaks of either side of this one-week range could have importance in leading to follow-through over the next week.
Until then, it’s proper to show how the Retailing sector has been faring, given a plethora of Retail-based earnings set to hit this week.
As shown below, the SPDR S&P Retail ETF has improved given the breakout of an intermediate-term triangle pattern, which had been formed in late 2021. Despite no net upside progress since this former peak nearly four years ago, the recent technical improvement looks positive and could drive the Retailing sector higher this week following its recent breakout.
XRT 2.87% is analyzed given its broad-based nature (78 holdings and one is greater than 2.5% of total). The top 10 holdings in XRT 2.87% make up just 17% of the total, which makes this a very well-diversified way to participate in Retail stocks.
While XRT 2.87% showed a minor stallout near last November 2024’s peaks at approximately $85, this level doesn’t appear to be a major area for resistance. The breakout of the larger pattern from 2021 takes precedence and should allow XRT to push up to $94.
(Note, I added WMT 0.03% to my Upticks list in the July 2025 addition.)
S&P Retail SPDR – XRT
Consumer Discretionary looks to be pushing higher, and could experience 2-3 more weeks of potential outperformance before stalling out
Recent outperformance by Consumer Discretionary looks important, as the relative charts appear to be breaking out above prior peaks from early 2025 as well as mid-2023.
This could allow for another 2-3 weeks of outperformance from “Discretionary,” and it looks early to try to fade this sector heading into Retailing earnings this week.
RSPD/RSP
Small-caps could begin to outperform SPY 0.84% in the next four months
The outperformance in Small-caps over SPY 0.84% this past month (with two more weeks until the end of August) has caused ratio charts of IWM 1.60% (Russell 2000 ETF) vs. SPY 0.84% to reach new multi-month highs.
While IWM 1.60% has outperformed the Equal-weighted ^SPX since April 2025 lows, it’s largely been flat vs. SPY 0.84% .
This past few weeks of outperformance looks to be helping to change this for the better, and supports the idea of further relative strength out of Small-caps.
The monthly ratio chart, shown below, of IWM 1.60% /SPY 0.84% will officially confirm monthly “buy” signals on this ratio of Small-caps to SPY 0.84% (13 Countdown signal) on any month-end close of this ratio above the level of April’s 2025 close.
While two weeks are remaining before this monthly chart will technically be complete, it’s notable that both TD Combo and TD Sequential are now both present on this monthly chart, and this buy signal could be confirmed by the end of August.
Overall, a break of the existing downtrend from 2021 would suggest that a period of strong relative strength in IWM 1.60% vs. SPY 0.84% has begun which might result in outperformance of Small-caps over the next four months of 2025.
Bottom line, many investors have avoided Small-caps in recent months, but the strength in recent weeks looks important and bullish, technically. I expect Small-caps can start to outperform SPY 0.84% on a tactical four-month basis, and more evidence of this thesis could be confirmed by the end of August. Stay tuned.
IWM/SPY
Magnificent 7 ETF still looks quite premature to peak
As shown below, there looks to be insufficient grounds to think the “Mag 7” is peaking out when eyeing DeMark’s weekly exhaustion indicators.
These signals based on TD Sequential and/or TD Combo, were prescient in both mid-and late 2024 in forming weekly exhaustion signals which signaled a peak in price on MAGS 1.26% the Roundhill Magnificent 7 ETF.
Thus, to kick off the week following August expiration, we see that current counts look to show a 8 and 9 count for TD Sequential and TD Combo, respectively.
Thus, while a correction certainly could be possible in the weeks ahead it would have a higher likelihood from a risk/reward perspective of happening once this count reaches 13 on a weekly basis.
Thus, in plain English, the MAGS DeMark count on weekly charts suggests another potential 4-5 weeks before this would materialize in a way that has happened in recent years. (Note, QQQ’s weekly chart also looks early by 3-5 weeks using these same weekly indicators.)
Roundhill Magnificent Seven ETF – MAGS
