- For the week, the Nasdaq was down 0.2% while the S&P was off 0.1%. The Dow dipped 0.2% while the Russell added five points. Year-to-date, the Nasdaq has jumped 11.1% and the S&P has advanced 9.8%. The Dow is up 7.1% and the Russell has popped 6%, for 2025.
- Despite Friday’s slippage, the small-caps and the blue-chips continue to outperform the S&P and the Nasdaq after setting fresh all-time and multi-month highs last week.
- The Dow and the Russell’s relative strength index (RSI) levels closed at 64 and 62. They failed clearing 70 last month and overbought territory. The Nasdaq’s RSI is at 55 and the S&P’s closed at 58 on Friday. RSI has been holding 50 for both since late April with a tiny stretch below this level. If there is a sharp move below 50, it could confirm additional selling pressure.
The bears showed up on Friday to grab the weekly win week while the bulls booked solid monthly gains during an ongoing summer rally. The slight pullback came following Nvidia’s (NVDA) earnings and ahead of a three-day holiday weekend.
The Nasdaq closed at 21,455 (-1.2%) following the late day fade to 21,397. Key support at 21,500 failed to hold. Resistance is at 21,750.
The S&P 500 tagged a low of 6,444 before ending at 6,460 (-0.6%). Support at 6,450 held. Fresh resistance is at 6,500.
The Dow settled at 45,544 (-0.2%) with the low at 45,377. New support at 45,500 held. Resistance is at 45,750.
Earnings and Economic News
Market closed
Technical Outlook and Market Thoughts
For the week, the Nasdaq was down 0.2% while the S&P was off 0.1%. The Dow dipped 0.2% while the Russell added five points. Year-to-date, the Nasdaq has jumped 11.1% and the S&P has advanced 9.8%. The Dow is up 7.1% and the Russell has popped 6%, for 2025.
Despite Friday’s slippage, the small-caps and the blue-chips continue to outperform the S&P and the Nasdaq after setting fresh all-time and multi-month highs last week. The S&P also set a record high on Thursday and the Nasdaq remains near its mid-August all-time high. Given the upcoming holiday, a slight pullback wasn’t the worst price action but we wanted to see fresh resistance levels hold.
The Russell 2000 closed above key resistance at 2,375 on Thursday and a level we wanted to see hold into Friday’s close. This area represents key support from December 12th, 2024 and key resistance from November 22nd, 2024 and we wanted to highlight the importance of these two dates. Continued closes above 2,375 keeps the all-time high from last November at 2,466 in play. Our 2025 price target for the index from February 23rd, 2024 is at 2,500 and 24% higher from when the index was at 2,016.
Friday’s low of 2,359 held fresh and upper support at 2,350-2,300 with the latter representing the top of a previous trading range coming into 2025. There is wiggle room down to 2,250-2,225 and the 50-day moving average on a drop below the 2,275. A close below 2,275 would be a slightly bearish development as it would crack the bottom of the current uptrend channel while signaling a possible near-term top.
The Dow held fresh and key support at 45,000 and represents the bottom of the current uptrend channel. Backup help is at 44,750-44,500 and the 50-day moving average. A drop back below 44,000 would imply a near-term peak for the blue-chips.
The recent record high is at 45,757 following the triple-top breakout on the Fed news. The current uptrend channel is from the top and bottom of the April 7th candlestick and overall market low. The middle of this channel is showing upside to 47,000-47,250 and would come on continued closes above 46,000. Our Price Target from February 23rd, 2024 for the blue-chips is at 50,000.
The Nasdaq failed to hold 21,500 on Friday to keep,risk down to 21,000 and the 50-day moving average in play. A move below 20,500 would be a bearish development and likely confirms a near-term top.
The recent lifetime peak reached 21,803 on August 13th with key resistance at 21,750 holding. Continued closes back above these levels keeps our January 22nd, 2025 price target at 22,000 in focus. Our previous target for the index had been at 20,000 when the index was at 15,996. We recently upped this target (again) to 23,000-23,250 if 22,000 is cleared and held.
The S&P 500 set a new record high of 6,508 on Thursday while holding undefined resistance at 6,500. Our late February 2024 upper end price target at 6,500 for the index was cleared and held. We said on August 11th that closes above this level would be bullish for ongoing upside towards 6,700-6,750.
Fresh support is at 6,450-6,400. A close below 6,350 and the 50-day moving average would imply a near-term top with retest potential down to 6,200. The index has been rangebound between 6,200-6,500 since July 1st with multiple closes above the latter, or below the former, being a good signal for the next major trend.
The Volatility Index (VIX) had closed below 15 for five-straight sessions before Friday’s close back above this level. The 50-day moving average is at 16.22 with key resistance at 17.50. Going forward, closes above 17.50 and then 20 on the VIX would be warning signs to lighten up on bullish positions.
After predicting weakness down to 15-14.50 during earnings season we said there is still a chance 13.50-12.75 comes into play on closes below 14.50-14. Last week’s low kissed 14.12 with Thursday’s close at 14.43 being one day.
The Dow and the Russell’s relative strength index (RSI) levels closed at 64 and 62. They failed clearing 70 last month and overbought territory. The Nasdaq’s RSI is at 55 and the S&P’s closed at 58 on Friday. RSI has been holding 50 for both since late April with a tiny stretch below this level. If there is a sharp move below 50, it could confirm additional selling pressure.
As a reminder, it is important to remember September and October are typically volatile months. With the 2Q earnings season in the books, the market will be trading off economic and geopolitical news. Any curveball will be crucial to watch as most analysts think the market is too expensive. While this might be true, we watch price action and trade the trend so we will know when to turn bearish.
