Market struggles to test resistance as selling pressure seemingly mounts. The S&P 500 began the week by breaking below the 50-day moving average and finding support at the 100-day. A brief rally attempt on Tuesday and Wednesday pushed price back above the 50-day, but the move lacked follow-through and quickly faded, with the index ultimately closing the week back around the 100-day moving average.
QQQs showed a similar pattern, briefly reclaiming the 50-day moving average midweek before rolling over. Price now sits below declining 10, 21, and 50-day moving averages, with a flat 100-day acting as overhead resistance and the 150-day currently providing support.
IWM remains relatively constructive by comparison, continuing to consolidate around the 50-day moving average. However, in the context of broader market weakness, this relative strength alone is not sufficient to sustain a convincingly bullish sentiment.
Themes in play
- GLD/SLV – Gold and silver both showed solid follow-through after their breakout on Monday, before a brief midweek pullback toward the 10-day moving averages. Friday then saw renewed strength and continuation of the trend. The overall move still appears strong and intact, though at current levels there are few clean or low-risk entry points.
- ITA – Spent the majority of the week consolidating around the 10-day moving average following the strong move the prior week. The theme has held up relatively well compared to the broader market. If overall conditions improve, this sector could offer constructive setups.
- SMH – Attempted to break out of its consolidation range earlier in the week, but the move was met with heavy selling pressure. Price ultimately reversed and finished the week back below the 10 and 21-day moving averages.
- REMX – Delivered a solid breakout this week and managed to hold the bulk of its gains despite broader market weakness into the close. Similar to ITA, it is showing relative strength and could present quality setups should market conditions stabilise.
- NLR / URA – Saw a brief bounce off the 10 and 21-day moving averages before pulling back. The broader structure remains constructive, with tightening price action suggesting a potential base formation. A pickup in overall market momentum could support a breakout attempt.
- LIT – Broke out earlier in the week before retracing toward the 10 and 21-day moving averages amid broader selling pressure. Despite the pullback, price continues to hold up relatively well and may offer opportunities if market conditions improve.
- IBLC – Briefly pushed above the 10 and 21-day moving averages before fading and pulling back, reflecting the lack of sustained momentum in growth-oriented areas.
- CLOU / HACK – Appeared to break down from a bear flag structure before stabilising. If broader market weakness continues, this area could see further downside continuation.
Key Observations & Focus for the week
Recent price action is indicating that a breakdown is becoming a higher probability. Selling pressure seems to be increasing as we spend more and more time around longer term moving averages. QQQs appear to have formed a lower high double top, and while the S&P 500 continues to trade largely within a channel, rallies are becoming shorter-lived and selling pressure appears to be gradually building.
That said, sentiment can shift quickly, and a few strong sessions could alter the near-term outlook. Remaining flexible and responsive to price action is key in this environment.
This week I will be evaluating both long and short opportunities, depending on how price develops. Key areas of focus include:
- REMX, to assess whether strength persists following its recent breakout and pullback.
- Semiconductors, aerospace/defence, and lithium, for potential bounces off key moving averages after recent retracements.
- Nuclear/uranium, for a possible breakout from its tightening base structure.
- Cloud computing and cybersecurity, for signs of continued downside follow-through if broader weakness resumes.
There remains a significant degree of uncertainty in overall market direction. While recent price action leans cautiously bearish, there are still some pockets of strength. Until clearer trend confirmation emerges, it’s critical to stay adaptive