The market does not always follow the same script or sequence, but bear markets end with a bottoming process marked by specific stages. These include capitulation, a short-term reversal-thrust, a follow-through thrust and long-term regime change. The first two stages mark downside excess and the initial turn around, while the latter two signal strong follow through. Today’s report will look at the first two phases, and preview the last two

Phase 1: Capitulation

The capitulation phase of a bear market occurs when traders throw in the towel. Downside momentum and selling pressure accelerate. Usually, the capitulation phase occurs after an extended decline, and this phase is the first step to a bottom. The chart below shows SPY with Bollinger Bands (200,3), %B (200,3) and S&P 500 Percent Above 200-day SMA ($SPXA200R). Signs of capitulation emerge when %B is below 0 and/or fewer than 20% of S&P 500 stocks are above their 200-day SMAs. The blue dashed lines show capitulation in June 2022, September 2022 and early April 2025. Note that we initially covered this capitulation phase in a report on April 8th.

Phase 2: Short-term Thrust Signals (ZBT)

Thrust signals trigger when there is an upside “thrust” from an oversold extreme. The Zweig Breadth Thrust is perhaps the most famous thrust indicator these days. We covered the ZBT extensively over the last few weeks and introduced a strategy using this indicator. The chart below shows the S&P 1500 ZBT indicator in the lower window (10-day EMA of S&P 1500 AD%). A thrust signal triggered on April 24th and stocks followed through with further gains.  

Two Down and Two to Go

The capitulation phase showed excessive selling pressure and the thrust phase marked a short-term reversal. These are bullish events, but the market cup is not yet half full. SPY remains below its 200-day SMA and the late March high (see chart above). Medium-term thrust indicators have yet to trigger and long-term breadth remains bearish. The 14% surge over the last 17 days is impressive, but keep in mind that SPY surged 10% in nine days in March 2022, which was a bear market bounce.

TrendInvestorPro produced a report this week covering the four phases – and what to watch going forward. Click here to take a trial and get immediate access.

• Phase 1: Capitulation
• Phase 2: Short-term Thrust Signals
• Phase 3: Medium-term Thrust Signals
• Capitulation and Thrust Indexes
• Phase 4: Long-term Indicators turn Bullish
• Short-term Improvements, but Longer Term 

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In the truncated week due to one trading holiday, the markets extended their gains and closed the week on a positive note. While remaining largely within a defined range, the Nifty continued consolidating above its 200-DMA while not adopting any sustainable directional bias. While the Index continued defending its key support levels, it oscillated in the range of 535.10 points. Volatility continued moving higher; the India Vix surged by 6.41% to 18.26 on a weekly basis. While staying positive, the headline index closed with a net weekly gain of 307.35 points (+1.28%).

From a technical standpoint, the Nifty has kept its underlying bias intact; it is currently consolidating above the 200-DMA positioned at 24050. The 50-week MA is placed at 23962. This makes the 24950-24050 a strong 200-point support zone for the Nifty for the coming weeks and the foreseeable short term. So long as the Index keeps it above this 200-point support zone, it will just consolidate and not show any major drawdowns. However, any violation of 24900 will increase the possibility of some corrective retracement. Watching Nifty’s behavior vis-à-vis the zone of 23950-24050 would be crucial over the coming days.

The geopolitical tensions between India and Pakistan remain ingrained in the market behavior; the rise in Vix shows increased hedging activity by the market participants. Monday is likely to see a stable start to the day; the levels of 24550 and 24780 are likely to act as resistance levels. The supports come in at 24050 and 23900. The trading range is expected to stay wider than usual.

The weekly RSI stands at 57.92. While the RSI has formed a fresh 14-period high, it remains neutral and does not show any divergence against the price. The weekly MACD is bullish and trades above its signal line.

The pattern analysis shows that on the daily chart, the Nifty crossed above the 200-DMA a few days ago; now, it is consolidating just above this important level. It has penetrated the 50-week MA placed at 23962, and this level is now expected to act as support in the event of any corrective retracement. Importantly, the Nifty has resisted the rising trendline pattern resistance near 24600. This trendline begins at 21130 levels and joins the subsequent rising bottoms.

The coming week will require a more cautious approach as the markets not only deal with key resistance levels but also with geopolitical tensions that remain embedded in the backdrop. The investors will need to move away from the stocks that have risen over the past weeks and move to those sectors and stocks that are readying for a fresh move. While focusing more on low-beta stocks, the leverage, too, needs to be curtailed. The Index has risen over 2500 points over the past three weeks, and if it consolidates a bit, it should not surprise the market participants. A highly cautious and stock-specific approach is advised for the coming week.

Sector Analysis for the coming week

In our look at Relative Rotation Graphs®, we compared various sectors against the CNX500 (NIFTY 500 Index), which represents over 95% of the free-float market cap of all the listed stocks.

Relative Rotation Graphs (RRG) show the Nifty FMCG index has rolled inside the leading quadrant. The PSU Bank, Infrastructure, and Consumption Index are also inside the leading quadrant. The Metal, Commodities, Financial Services, and Nifty Bank Index are also inside this quadrant, but they are giving up on their relative momentum. However, these groups may continue to outperform the broader markets relatively.

The Services Sector Index has rolled inside the weakening quadrant.

While the Nifty IT index continues to languish inside the lagging quadrant, the Midcap 100, Auto, Realty, and Pharma Indices are seen improving their relative momentum while being inside the lagging quadrant.

The Nifty Media, PSE, and Energy Indices are inside the improving quadrant; they are expected to better their relative performance against the broader markets.

Important Note: RRG™ charts show the relative strength and momentum of a group of stocks. In the above Chart, they show relative performance against NIFTY500 Index (Broader Markets) and should not be used directly as buy or sell signals.  

Milan Vaishnav, CMT, MSTA

Consulting Technical Analyst

www.EquityResearch.asia | www.ChartWizard.ae

With the major averages logging a strong up week across the board, and with the Nasdaq 100 finally retesting its 200-day moving average from below, it can feel like a challenging time to take a shot at winning charts.  You may ask yourself, “Do I really want to be betting on further upside after an incredibly strong April?”

When the macro environment feels less certain, I find it’s helpful to go back to tried-and-true technical analysis approaches.  By identifying stocks with constructive chart patterns, we can hopefully focus our attention on names that could do well regardless of the overall market movements in the coming weeks.

With that bottom-up investing justification in mind, let’s review three recent earnings names that are showing strong technical profiles going into next week.

Visa Inc. (V)

Both Visa (V) and Mastercard (MA) reported earnings, and both stocks experienced an upside follow-through after their quarterly report.  Visa has been pounding out a consistent pattern of lower lows and lower highs since the end of February, but this week appears to have broken that downtrend pattern.

After Tuesday’s earnings release, Visa completed a move out of the downtrend phase by breaking trendline resistance using the major peaks from February and March.  Wednesday’s up day pushed V back above the 50-day moving average, a level which had repelled a previous breakout attempt in mid-April.  MA has now broken above its late March, and a similar move next week would suggest a retest of all-time highs for Visa.

Coca Cola Co. (KO)

The Consumer Staples sector pulled back this week, and leading names in the sector such as Coca Cola (KO) experienced a brief drop post-earnings.  KO is demonstrating a cup-and-handle pattern, although we’ve not seen the breakout that would serve to confirm a bullish outlook.

We’ve used the Annotations tool to draw a rectangle marking the resistance zone from the September 2024 peak.  Subsequent peaks in March and April 2025 have retested this same range, forming the cup-and-pattern which often precedes a strong upthrust.  The trigger for this pattern is a confirmed break above the rim of the cup, and with this week’s pullback, investors will have to wait for this bullish confirmation. 

We’ve noted the bearish momentum divergence in recent months, with the higher price highs in March and April marked by weaker RSI peaks.  With this bearish divergence clearly signalling a weaker momentum profile, we would need to see a valid break above $74 on stronger RSI readings to negate the divergence and confirm an upside breakout.

CME Group Inc. (CME)

Since I discussed the exchanges with Jay Woods on my Market Misbehavior podcast back in February, I’ve been following the resilient uptrend of higher highs and higher lows.  The daily chart features a series of consolidation patterns followed by upside breakouts that have led to further gains.

This is the kind of chart that I think about when someone asks, “But if you’re buying the new highs list, isn’t that too late?”  The chart of CME shows that new highs often lead to even more new highs.  And when a stock like CME Group keeps pulling back to an ascending 50-day moving average, I’m reminded the essence of trend-following is to remain invested in charts that continue to work.

In the immortal words of legendary technical analyst Paul Montgomery, “The most bullish thing the market can do is go up!”

I had the pleasure of heading back into the StockCharts TV studio this week to shoot the “Top Ten Stocks for May 2025” video with Grayson Roze.  Visa was one of the five stocks I contributed.  Check out the other nine in this week’s video!

RR#6,

Dave

PS- Ready to upgrade your investment process?  Check out my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice.  The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.  

The author does not have a position in mentioned securities at the time of publication.    Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

Riches are found in reactions—your reactions to changes in the markets. By this, I mean that if you spot a change in money flowing from one asset class to another, one sector to another, one industry to another, before the masses notice, you will be rewarded handsomely. My experience has been that your profits will accumulate dramatically and consistently.

A fine example of this principle in the corporate arena is the global footwear and accessories retailer, Aldo. The company has 1,600 stores in 80 countries and is immensely profitable. Their secret sauce: quick reactions to market trends. When they identify a change in fashion trends, they’re 50 percent quicker than their competition in designing, producing and delivering the hottest styles. Yes, fifty percent faster, and that’s gold to their bottom line.

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In simplistic terms, your personal collection of ChartLists is like giving a runner a bicycle or giving a Jeep driver a Porsche. ROI (return on investment of your time and efforts) becomes supercharged. Your ChartLists allow you to become a “force of consistency.” They will also help you embrace one of Charlie Munger’s key investment tenets, “Try to be consistently not stupid.”

To achieve this end, I humbly suggest that you could best start with the Stock Market Mastery ChartPack.

Assembling your portfolio of ChartLists is analogous to building your custom dream house. There are sensational books of checklists that systematically ask you a comprehensive series of questions and bring up features you should consider. The end result should be a custom home you love, that fits you perfectly, and that accommodates your unique lifestyle. Think of the Stock Market Mastery ChartPack, then, as an extensive checklist—a buffet of pre-populated and organized ChartLists, from which you build your own custom collection of ChartLists that fits your investing methodology perfectly and facilitates your personal Investor Self. These 80 ChartLists are carefully structured, all pre-populated with expertly designed charts and a carefully-crafted organization to maximize your precious time and insights. Indeed, nearly all the informational breadcrumbs the market has to offer will be made clear to you and offer you a profitable trail to follow. Your reflexes and reactions just got supercharged. It is that easy.

Trade well; trade with discipline!

Gatis Roze, MBA, CMT

StockMarketMastery.com

• Author, “Tensile Trading: The 10 Essential Stages of Stock Market Mastery” (Wiley, 2016)
• Developer of the “Stock Market Mastery” ChartPack for StockCharts members
• Presenter of the best-selling “Tensile Trading” DVD seminar
• Presenter of the “How to Master Your Asset Allocation Profile DVD” seminar

We just wrapped up a busy week jam-packed with key economic data and big tech earnings. And we have some positive news: the market held up pretty well. May is off to a good start.

Strong earnings from META Platforms (META) and Microsoft (MSFT) gave the stock market a boost. Together, their strong performance helped the Nasdaq Composite ($COMPQ) break above its 50-day simple moving average (SMA).

On Friday, the rally got an extra shot in the arm from a better-than-expected jobs report—177,000 jobs added vs. 135,000 expected. That helped fuel a market-wide rally, with all the major indexes ending the week in positive territory. The Dow Jones Industrial Average ($INDU) closed up 1.46%, the S&P 500 ($SPX) up 1.42%, and the Nasdaq Composite ($COMPQ) up 1.41%.

A quick glance at the Equities panel (US Indexes tab) in the Market Summary page shows that the S&P 500, Dow Industrials, Russell 1000, and the Wilshire 5000 had nine consecutive up days. This is quite the reversal after trade war outcomes spooked investors. The weekly streak isn’t too shabby either, with many indexes displaying four consecutive up streaks. More indexes are now trading above their 50-day moving averages compared to a few days ago.

What Does This Mean Going Forward?

After a negative statistic in the Q1 GDP growth, the strong jobs report put recessionary fears in the rearview mirror. However, this also lowers the chances of the Federal Reserve cutting interest rates in the May FOMC meeting. And looking at the CME FedWatch Tool, the probability of a rate cut in June has dropped to 36.4%, so it may be July before we see a rate cut. But this scenario could change between now and June.

Does this week’s price action mean the equity market is reversing? One thing is clear: The situation is much more positive than it was three weeks ago. But to get an objective view, it’s best to focus on the charts.

The Technical PoV

The daily chart of $SPX below shows that Friday’s close basically wipes out the “post Liberation Day” losses. Essentially, all the volatile action that took place in the last month was an emotional reaction to the uncertainty that investors were battling against. It was an emotional roller coaster. Now that the S&P 500 is back to the high of April 2, does it mean things have returned to business as usual?

FIGURE 1. DAILY CHART OF S&P 500. The index closed at around the same level it did on Liberation Day. Chart source: StockCharts.com. For educational purposes.

Seasonally, May is a good month in the stock market, as are June and July. You can see this in the seasonality chart of the S&P 500. The data supports some of the price action we’re seeing, especially among sectors and industry groups.

Sector Snapshot

All 11 S&P sectors closed in the green on Friday. For the week, Industrials, Technology, and Financials were the leading sectors. It’s interesting to note that Friday’s leading sector, Financials, is showing signs of recovery after the April fall. The daily chart of the Financial Select Sector SPDR (XLF) shows the ETF trading above its 50- and 200-day SMAs. Its relative strength index (RSI) is also rising.

FIGURE 2. DAILY CHART OF XLF. The ETF broke above its 50-day moving average and its relative strength is also rising. Chart source: StockCharts.com. For educational purposes.

Of the three, the Technology sector is technically the weakest. It’s trading below its 200-day SMA, and its 50-day SMA is below its 200-day SMA. To see strength return to the broader market, the Technology sector needs show technical strength.

The Nasdaq Composite Bullish Percent Index ($BPCOMP) is at 46.52. It showed a reversal from a level just above 20 and crossed above 30, indicating a bull alert. A cross above 50 would be a favorable bull signal.

FIGURE 3. NASDAQ COMPOSITE BULLISH PERCENT INDEX. After a sharp reversal from above 20, $BPCOMPQ crossed above the 30 level and is approaching the 50 level. Chart source: StockCharts.com. For educational purposes.

Keep an eye on this chart, since a break above 50 could be an early signal of improving breadth in the Nasdaq Composite.

At the Close

While the stock market’s price action seems to have regained some of its momentum, there needs to be more confirmation to suggest a trend reversal. Keep an eye on the charts of the broader indexes, sectors, and the BPIs. Look for technical indicators to confirm the rally’s strength and keep an eye on interest rate expectations.

End-of-Week Wrap-Up

• S&P 500 up 2.92% on the week, at 5686.67, Dow Jones Industrial Average up 3.0% on the week at 41,317.43; Nasdaq Composite up 3.42% on the week at 17,977.73.
• $VIX down 8.86% on the week, closing at 22.64.
• Best performing sector for the week: Industrials
• Worst performing sector for the week: Energy
• Top 5 Large Cap SCTR stocks: Palantir Technologies, Inc. (PLTR); Duolingo Inc. (DUOL); Summit Therapeutics PLC (SMMT); MicroStrategy (MSTR); Roblox Corp (RBLX)

On the Radar Next Week

• Earnings season continues with Berkshire Hathaway (BRK-B), Palantir Technologies (PLTR), Taiwan Semiconductor Manufacturing Company (TSM), Novo Nordisk (NOVO-B.CO), Ford (F), Advanced Micro Devices (AMD), and several others reporting.
• ISM Services PMI
• Fed Interest Rate Decision/Press Conference
• Fed speeches from Kugler, Goolsbee, Waller, Williams, and others on Friday

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

I feel like the short-term risk is turning once again and I’ll explain why in my analysis below. Please don’t misunderstand. I suggested a bottom was in place a few weeks ago and I LOVE what has been happening in terms of manipulation/accumulation and I LOVE the fact that we were able to quickly regain both the 20-day EMA and 50-day SMA on our major indices.

However, here are the four major indices and where they’re at currently on their respective charts and their next key overhead resistance levels:

Dow Jones

We did manage to close just above the 50-day SMA here, but the Dow Jones still appears vulnerable to me. Given the fact that the S&P 500 has room to run up to what is now major price resistance at 5782, I could see the Dow Jones moving a bit higher to challenge the late-March high at approximately 42750. That could serve as a neckline.

S&P 500

20-day EMA resistance? No problem, went right through. Gap resistance 5500? Ditto. 50-day SMA resistance. Ditto. This rally has been impressive. Key levels of price resistance have failed and this tells me that we’re not going to violate the low at 4835. It’s set in stone, in my opinion. There are still a couple of key resistance levels on the S&P 500 that we’ll have to deal with next week. The first will be the early-April rebound attempt that failed near 5700. Today’s intraday high was 5700. The next one, however, will be the biggest on the chart and that’s where we last failed in late March – at 5782.

NASDAQ 100:

Looks similar to the S&P 500, but I did add the RSI to this chart. During downtrends, RSI 60 tends to be rather big resistance. We see many rallies fail at or near that level. The NDX just crossed RSI 60….barely. At our Friday intraday high, the NASDAQ 100 pulled within 100 points (less than 0.5%) of the late-March high near 20250. I don’t know if we turn here or not, but I do know the risks are elevated.

Russell 2000:

The 197 level offered great price support on multiple occasions, so when we see a heavy-volume breakdown like we saw in early April, we should recognize how important it is to clear that same price resistance on the way back up. We did so on Friday with gusto. I absolutely LOVE the sudden accumulation that’s taken place in the IWM. I believe that will result in a much larger move at some point later this year. But are we due for another round of selling first, perhaps at upcoming price resistance levels marked above? We’ll soon find out.

Be careful ahead, especially if a rising-volume, reversing candle prints on our major indices sometime next week.

Sentiment

Check out this 5-day SMA of the equity only put call ratio ($CPCE):

We just hit 0.55, showing the most complacency we’ve seen in the past 5 weeks or so. Extreme low readings have previously marked corrections and/or cyclical bear markets and that was one key topping indicator that I discussed back in January/February. Other prior moves down to 0.55 have also resulted in short-term tops. I thought the current .55 reading was worth pointing out for this reason.

Seasonality could also play a role. Early May (through the 5th) tends to provide historical tailwinds, but the middle part of May (6th through 25th) has a history of being rather challenging. The 5th is Monday, so given everything I’ve discussed above and knowing that our bullish seasonal window could soon be closing, watch for a potential reversing candle as a sign to think about reducing risk (covered calls, S&P 500 puts for insurance, moving to cash, etc.).

I’m not ready to definitively call a short-term top here, but I do want to point out that the SHORT-TERM risks of being long right now are growing. Do with that what you may.

If you’d like to follow more articles of mine, please CLICK HERE to join the tens of thousands who’ve already subscribed to our FREE EB Digest newsletter. There is no credit card required and you may unsubscribe at any time.

Happy trading!

Tom

This week, we’re watching three high-profile names–Palantir (PLTR), Uber (UBER), and Coinbase (COIN)–as they gear up for earnings. These stocks could offer up some interesting setups with favorable risk/reward entry points. Let’s break down what’s happening with each one.

Palantir (PLTR): Watching for an AI-Driven Breakout

PLTR stock almost got back to its all-time highs after a sell-off that saw the stock price drop by as much as 47% from its February peak. Two key factors will be in focus: AI and government-backed contracts.

Palantir’s Artificial Intelligence Platform (AIP) is a big piece of the puzzle. Analysts anticipate commercial revenue to increase by 35% year-over-year, driven by the company’s efforts to penetrate industries such as healthcare, energy, and finance.

Government contracts account for about 55% of the company’s total revenue. Investor concerns revolve around the ability to secure and maintain these contracts amid potential Department of Defense budget cuts.

FIGURE 1. DAILY CHART OF PLTR STOCK. The stock closed below its all-time high and has a history of big gaps on earnings day.Chart source: StockCharts.com. For educational purposes.

Technically, PLTR stock is at a key inflection point. The stock closed right under its all-time high and has a history of big gaps on earnings day. It traded higher in five of the last six earnings reports, with an average gain of 21%.

Watch the gaps… Gap ups tend to continue in that direction and lead to sustained uptrends. Use any upside gap to enter and manage risk, with stops set to exit if it starts to reverse and fill. A gap in this case, and given its momentum, could see shares eclipse the $150 mark.

On the downside, there are several levels of support. The biggest area is in the purple-shaded area surrounding the 50-day moving average. The $84 area would fill the gap from last earnings and could become a solid floor, going forward.

Either way, it’s a coin flip technically entering earnings, but the next move should set up interesting entry points.

Uber Technology (UBER)

Uber’s stock price has performed extremely well compared to the rest of the market this year. The stock is up 40% year-to-date. As UBER heads into earnings on May 7, expectations are rising. The stock price has already broken out and is trading near all-time highs.

Last quarter’s guidance fell short of expectations. That will be a big focus again. Investors will also be looking to see if UBER can sustain gross bookings numbers. They’re supposed to grow by 17%-21% year-over-year. We may also hear about Uber’s strategic moves in the evolving landscape of autonomous transportation.

FIGURE 2: DAILY CHART OF UBER STOCK. Uber has been trading in a broad range in the past year.Chart source: StockCharts.com. For educational purposes.

Technically, Uber shares have traded in a broad range in the past year. During this time, there was one failed breakdown and one failed breakout. We enter this week’s report on the heels of another breakout.

This could be an example of price leading the news. We will find out when Uber reports on Wednesday morning. An upside target of $100 should be in the cards, with confirmation of this move out of this rectangular neutral trend. If it fails to hold above the $80/$82 level, then a drop to its key moving averages is likely.

While the stock is nearing overbought territory, shares have remained overbought for an extended period during major moves higher. Use any break below 70 in the relative strength index (RSI) to take profits or sell.

Coinbase (COIN): Looking to Break a Losing Streak

Coinbase will be looking to snap a four-quarter losing streak post-earnings when it reports on Thursday. Shares of the cryptocurrency platform have been quite volatile and began the week lower by -16.5% year-to-date.

Investors will be looking for insights into Uber’s ability to capitalize on increased trading volumes, along with any news on plans to diversify revenue streams and strategically position itself within the current regulatory landscape.

FIGURE 3: DAILY CHART OF COINBASE STOCK PRICE. Fibonacci levels help identify areas of interest.Chart source: StockCharts.com. For educational purposes.

Technically, shares have taken quite a ride over the past two years. The Fibonacci extension lines on the chart demonstrate the significance and help identify levels of interest where traders may gain opportunities.

The stock remains in its near-term downtrend going back to its December peak. The floor seems to be established for now, with support levels around $180 and major support by the “golden ratio” around $150. If there is any weakness, then look to these levels to possibly add to the name.

The upside seems more challenging. Shares remain weaker than many of its peers and are still mired in a near-term downtrend with clear resistance around the 200-day moving average at $226. If COIN were to break and close above this threshold, then there is a lot to reverse given a much clearer reward than risk set-up. For now, it’s one to watch to see what price action does when the company reports on Thursday afternoon.

Discover the top 10 stock charts to watch this month with Grayson Roze and David Keller, CMT. They break down breakout strategies, moving average setups, and technical analysis strategies using relative strength, momentum, and trend-following indicators. This analysis covers key market trends that could impact your trading decisions. You don’t want to miss these insights into market dynamics and chart patterns that could impact your trading decisions.

This video originally premiered on May 1, 2025. Click on the above image to watch on our dedicated Grayson Roze page on StockCharts TV.

You can view previously recorded videos from Grayson at this link.

When you’re lost in the woods, you reach for a compass to find true north. In the markets, it’s not so simple, as the landscape is always shifting. If there is a “true north” in this terrain, it might be better understood as a characteristic—strength and momentum over time, rather than a single stock or sector.

With sentiment muddled and signals mixed, how do you cut through near-term noise and find the “true north” in a shifting market landscape? This is where StockCharts’ MarketCarpets comes in. You can think of it as a visual compass that can help you reorient and recalibrate.

What MarketCarpets is Saying Now

All MarketCarpets readings use the five-day setting, since shorter time frames are particularly susceptible to noise in the current context.

FIGURE 1. MARKETCARPETS S&P VIEW. Lots of green, but I want to see a reduction.

On Thursday morning, there were more bullish greens than bearish reds. They represent S&P 500 stocks performing better relative to others—specifically from a ‘long only’ (bullish) perspective. But what do those greens have in common?

The answer is that most, if not all, are Information Technology sector funds.

Technology Sector Leads the Charge in S&P 500

If you select the S&P Sector ETFs group, Technology is the strongest among all 11 S&P sectors.

FIGURE 2. MARKETCARPETS SECTORS. Technology is far ahead of most other sectors, which read bullish.

If you follow financial news, you’re probably well aware of how certain tech companies are performing, especially in light of the current earnings season.

But not every investor wants to risk allocating capital toward individual stocks, given the volatility of today’s geopolitical environment, where news on a given day can cause markets to soar or slump. So, conservative investors, particularly those in or nearing retirement, might want to opt for a sector ETF instead, like the Technology Select Sector SPDR Fund (XLK).

Why is technology outperforming?

Six Reasons Tech Stocks are Outperforming in 2025

Here’s a quick breakdown of what’s going on:

• AI and cloud boom. Enterprise-focused giants are thriving due to surging AI demand.
• Earnings confidence. Big tech’s strong earnings are keeping investor sentiment positive despite market volatility.
• Tariff mitigation. Tech companies are proactively shifting supply chains to soften tariff impact.
• Tariff relief. Temporary exemptions on key tech products give hardware makers a short-term boost.
• Long-term innovation appeal. Investors see AI, chips, and automation as long-term growth drivers.
• Stable revenue streams. Tech firms with enterprise and software services offer more stability than consumer-driven sectors.

Technology Sector Overbought? Market Breadth Says Maybe

That’s a lot of fundamental talk, but what does the technical picture look like? Let’s start by analyzing market breadth with the S&P Technology Sector Bullish Percent Index ($BPINFO) chart.

FIGURE 3. TECH SECTOR BPI. Most tech stocks in the sector are ultra-bullish, but that can also signal overbought conditions.

The Bullish Percent Index (BPI) is at 85, meaning 85% of all stocks within the sector are triggering Point & Figure Buy Signals. Above 50% is bullish, but above 70%, let alone 85%, XLK is straddling ultra-bullish to overbought.

If you look at the magenta rectangle, you can see where XLK’s trend is situated—at the point of recovery following a two-month tumble. However, it’s still below its 200-day simple moving average (SMA), and, as the saying goes, nothing good happens below the 200.

XLK’s Price and Volume Action: A Closer Look

Let’s zoom in on a daily chart.

FIGURE 4. DAILY CHART OF XLK. It broke above resistance, but can it sustain upward momentum?

XLK’s recovery effort gained momentum with a notable gap up on Thursday. Positive momentum is reinforced by a rising Relative Strength Index (RSI) above the 50 level, suggesting XLK still has room to run.

From a volume perspective, the On Balance Volume (OBV) indicator is trending higher, signaling increased buying pressure. A 20-day SMA is overlaid to show how OBV is performing relative to its average. However, the Chaikin Money Flow (CMF), hovering flat near the zero line (see blue circle), indicates accumulation with hesitation.

Key Support Levels to Watch If You’re Bullish on XLK

If you’re considering a long position in XLK, keep an eye on these key technical levels:

• Initial Support – $205. The breakout level around $205 (marked by the blue dotted line) should act as the first line of support on any pullback.
• Secondary Support Zone – $185 to $187.50. If $205 fails, the yellow-shaded zone becomes the next support range. But note: if price falls here, the $205 breakout level may flip into resistance.
• Critical Support – $172.50. A drop toward $172.50 could signal deeper technical weakness. That’s why the area is shaded red—to underscore its importance.

In each case, monitor the CMF for confirmation. A rising CMF, especially in the first two support zones, would suggest continued buying pressure—a bullish signal. Conversely, if CMF dips below the zero line, it would signal growing selling pressure, reinforcing a more bearish outlook.

At the Close

The tech sector is leading the charge, but you have to estimate whether momentum is real or just generating noise. MarketCarpets works like a compass, helping you visually navigate market conditions and spot patterns. Pair it with tools like RSI, OBV, CMF, or any other preferred tool in your analytical toolbox to create well-defined setups and exits. In a market environment driven by sentiment, headlines, fear, and FOMO, having a solid technical foundation is more important than ever.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your personal and financial situation, or without consulting a financial professional.

In this video, Joe demonstrates how to use the 18-day and 40-day moving averages to identify trade entry points, assess trend direction, and measure momentum. He breaks down four key ways these MAs can guide your trading decisions—especially knowing when to be a buyer. Joe also analyzes commodities, noting recent weakness, and highlights key technical levels to watch on the SPY, QQQ, and IWM. The session wraps with detailed viewer stock chart requests.

The video premiered on April 30, 2025. Click this link to watch on Joe’s dedicated page.

Archived videos from Joe are available at this link. Send symbol requests to stocktalk@stockcharts.com; you can also submit a request in the comments section below the video on YouTube. Symbol Requests can be sent in throughout the week prior to the next show.