Impressive progress in NVDA vs. SOX, despite Wednesday's decline

Despite the ongoing volatility, last week’s volume and price action suggested a good likelihood of a short-term low in place for US stocks, which might now be followed by a push higher in a “2-steps forward, one-step back” type process into May.  Multiple technical factors came together last week to show an inflection coinciding with breadth and volume capitulation at a time when sentiment had reached the most negative levels in years. Technology’s rebound from support last week is certainly a reason for optimism, and along with strength in Financials, it arguably should be able to drive markets higher in the months to come. Thus, while trends and momentum remain negative from mid-February, seasonality and cycles show a rally developing following signs of tariff fatigue from Equities, and breadth has improved following the best one-week performance in SPX since 2023.  Going forward, SPX 5500, QQQ-466.43 and DJIA-40,661 remain key areas to exceed to have confidence, and these likely are tested and exceeded sometime this week.    At this point, it remains premature for me to consider this a bear market, nor that the US Economy should enter a recession.

Wednesday’s technical weakness fails to shake the near-term optimism, and it would take a move down under 50% of the recent low to high range to think that a larger retest might be forthcoming.

Meaningful late day buying appeared in NVDA as well as Technology which helped markets to bounce in the all-important final 30 minutes of the day.   Breadth overall finished at less than 2/1 negative breadth in Advance/Decline along with Volume which proved far less negative than the positive breadth which accompanied the rally last week.

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