KEY
TAKEAWAYS
- The S&P 500 is struggling to interrupt above key resistance ranges.
- It is a headline-driven market on the market, with shares reacting rapidly to geopolitical and coverage adjustments.
- The Cboe Volatility Index (VIX) signifies buyers are nonetheless unsure.
The inventory market’s motion on Wednesday was a bit like attempting to choose a dinner spot with pals—a lot of forwards and backwards, however no actual course.
The market began out larger and went up and down with out a lot of a directional bias till the Fed made its anticipated rate of interest determination and Fed Chairman Jerome Powell’s press convention. Inventory costs dipped decrease, however proper earlier than the shut, one other headline transferring occasion surfaced: President Trump introduced the rollback of some chip-related restrictions. This information gave the market a lift into the shut.
Here is how the broader indexes closed:
- The Dow Industrials ($INDU) completed up 0.70%.
- The S&P 500 ($SPX) rose 0.43%.
- The Nasdaq Composite ($COMPQ) added 0.27%.
Tech Leads, however Alphabet Takes a Hit
When it comes to sector efficiency, Know-how got here out on high, adopted by Shopper Discretionary and Well being Care. On the flip aspect, Actual Property, Communication Providers, and Supplies have been the laggards.
The primary purpose behind the stumble in Communication Providers was Alphabet, Inc. (GOOGL), which dropped by a whopping 7.26%. Why the selloff? An Apple exec testified that Apple’s browsers have been dropping search site visitors to Google’s AI instruments.
The StockCharts’ S&P 500 MarketCarpet (under) displays Wednesday’s worth motion.
FIGURE 1. STOCKCHARTS MARKETCARPETS FOR MAY 7, 2025. It was largely inexperienced with some pockets of pink.Picture supply: StockCharts.com. For academic functions.
General, Wednesday’s efficiency is leaning extra constructive than unfavorable, however is it sufficient to interrupt by means of essential resistance ranges?
Resistance Ranges within the S&P 500
To get a clearer image, we have to take a look at the every day chart of the S&P 500 ($SPX).
FIGURE 2. S&P 500 FACING A LOT OF HEADWINDS. THE 61.8% Fibonacci retracement stage is a resistance stage the index is struggling to interrupt above.Chart supply: StockCharts.com. For academic functions.
The S&P 500 is sandwiched between its 50- and 200-day easy transferring averages (SMAs). The Fibonacci retracement ranges drawn from the February excessive to April low present that the 61.8% retracement stage is proving to be a cussed ceiling. Add to that the downward-sloping 50-day SMA, and the market might have a tricky time transferring larger. To go away the downtrend within the rearview mirror, the S&P 500 must break above its 200-day SMA with the required follow-through to maintain it above that stage. Up to now, the worth motion means that the S&P 500 will face headwinds to get to that stage.
Information Strikes Markets, Just like the Chip Shock Right this moment
Keep in mind, the market’s worth motion is like driving a rollercoaster powered by headlines. This may generally ship technical evaluation right into a disarray.
Take, for instance, at this time’s information about lifting the chip restrictions, which despatched semiconductor shares larger. The VanEck Vectors Semiconductor ETF (SMH) jumped 2.05% (see chart under).
FIGURE 3. DAILY CHART OF SMH. Will the semiconductor ETF have the ability to escape above its Might 2 excessive?Chart supply: StockCharts.com. For academic functions.
Just like the chart of the S&P 500, SMH must work more durable at breaking its downtrend. The one ray of hope is that Wednesday’s transfer reached the Might 2 excessive. The draw back: it wasn’t capable of break above it. This reveals buyers are cautious about semiconductors and the general fairness market.
Volatility Says It All
The warning amongst buyers will be seen clearly within the chart of the S&P 500 vs the Cboe Volatility Index ($VIX).
What’s attention-grabbing is that whereas the VIX fell when the S&P 500 rose from mid-April, the VIX hasn’t dropped to its common stage of 19. It is nonetheless buying and selling above it, which is one other level that will increase the chance of additional draw back in equities.
The Backside Line
There’s a lot occurring: geopolitical tensions, commerce deal updates, coverage shifts. Any of those can jolt the market in both course.
It was encouraging to see tech shares and semiconductors bounce on Wednesday, however that does not imply we’re headed again to the times of development inventory management. Should you’re an investor, particularly one managing retirement cash or nearing retirement, one of the best strategy is to be affected person. We’re not out of the woods but.
As at all times, keep alert and stick along with your funding plan.
Disclaimer: This weblog is for academic functions solely and shouldn’t be construed as monetary recommendation. The concepts and methods ought to by no means be used with out first assessing your personal private and monetary state of affairs, or with out consulting a monetary skilled.
Jayanthi Gopalakrishnan is Director of Web site Content material at StockCharts.com. She spends her time arising with content material methods, delivering content material to coach merchants and buyers, and discovering methods to make technical evaluation enjoyable. Jayanthi was Managing Editor at T3 Customized, a content material advertising company for monetary manufacturers. Previous to that, she was Managing Editor of Technical Evaluation of Shares & Commodities journal for 15+ years.
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