TGIF,
Here are links to two CNBC segments from early this morning - live chart analysis on the big wall and a panel discussion.
More importantly:
“A hero is someone who has given his or her life to something bigger than oneself.” — Joseph Campbell
Thank you to all who have given the greatest sacrifice.
Enjoy Memorial Day Weekend.
Trading boxes will matter again soon
We haven’t talked about trading boxes lately, and we know the reason why: the SPX has had barely a pause since pivoting in late March. But now, in hindsight, we can put some of the price action from the last eight weeks into the context of ranges or trading boxes. From this perspective, the latest pause appears to be one of those periods.
The best-case scenario from here is not to see the rip-roaring rally from April suddenly rekindle. Rather, it is to see these digestion phases resolve to the upside. We recall how prevalent this was from last April through December, with seven straight trading box breakouts helping keep the uptrend intact.
This became especially helpful once the pace started to slow in May ’25. It showed us that overbought conditions, MACD sell signals, and simply seeing momentum slow were not necessarily precursors to a bigger drawdown.
That’s the blueprint we’ll be watching to see develop again going forward. As always, nothing is guaranteed, and thus any range that is meaningfully breached to the downside will need to be respected just as much as a breakout would.
RSP – Nearing a big breakout zone
RSP outperformed SPX yesterday, and even though it wasn’t by much, the gain pulled the ETF closer to its highs. From a pattern viewpoint, it is now close to breaking out from this potential four-month inverse head-and-shoulders pattern.
What can get it there?
Rotation.
We’ve recently showcased attractive patterns from key sectors that can help drive that outcome — XLF, XLI, and XLC, to name three. Rotation is what can help this uptrend persist beyond the biggest technology names, and movement into areas showing strong foundations like this would be a worthwhile next step.
NDX – Comparing the breakouts
The NDX is now up 29% from its March low — a huge move in about seven weeks. That pace most likely will not last, but looked at from another angle, it doesn’t appear overly extended just yet.
The index is now 12% above its former 2025 highs, and when looking back at prior breakouts to new highs since 2022, this advance ranks among the smallest before another corrective phase materialized.
In other words, while some digestion will be needed, history suggests this type of move alone has not necessarily marked an extreme.
QQQJ – Breaking out to new highs
While RSP outperformed SPY yesterday, QQQJ bettered QQQ — and notably, it also made a new high, while QQQ did not. This is one example of how rotation within growth can work, with money moving into the second-largest 100 Nasdaq names rather than remaining concentrated in the mega caps.
Indeed, various technology and growth stocks have performed well over the last two months, but others have lagged and may now be in position to potentially take the leadership reins from here.
Said differently, this kind of rotation would be constructive for the broader uptrend, as it could help sustain momentum without relying on the same handful of names that have carried much of the recent advance.
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