DOW Friday Closing Price - 43819
SPX Friday Closing Price - 6173
NASDAQ Friday Closing Price - 22534
RUT Friday Closing Price - 2171
The SPX and the NASDAQ made new all-time highs this week after China signed a tariff deal with the U.S., tension between Israel and Iran eased, dovish Fedspeak, and some corporate earnings coming in higher than expected. On the negative side "but ignored by the traders", GDP was revised downward, showing that the economy contracted at an annualized rate of 5% (instead of the previous estimate at 2%), inflation moved slightly higher (increased by .1%), personal income came in lower than expected (first decrease since 2021), and Canada cancelling trade/tariff talks with the U.S.
The negative reports came in later in the week and with the NASDAQ having made a new all-time intraweek and daily closing on Wednesday and the AI industry getting additional positive news, momentum was on the side of the bulls and the negatives were ignored. All indexes closed near the highs of the week and further upside above last week's highs (DOW at 43966, SPX at 6187, NASDAQ at 22603, and RUT at 2189) are expected to be seen this week.
This week, two of the most important reports of the month come out, with the ISM Index report coming out on Tuesday (expected to be 48.3%) and the Jobs report on Friday (expected to be 127k). Both of these reports are expected to show that Manufacturing remains in a contraction scenario (under 50%) and that Jobs remain healthy but at a more moderate pace than May. Lower than expected reports would bring in selling interest.
As of right now, the bulls are in control, but the fundamentals do not "clearly" support higher prices. In looking at the SPX fundamental projections at the beginning of the year were for the index to go as high as 7100 with the median estimate being 6400, Now analysts are saying 6600 is the highest it could go to but now many saying that 5200 could be seen with 6000 being the median estimate. With the index closing at 6173 on Friday, it is evident there is more downside that upside likely to be seen the rest of the year.
As far as what the charts say, it is also evident that neither the SPX nor the NASDAQ can be used right now to predict what levels can be reached where automatic selling is seen, given that there are no resistance levels above (new all-time highs). As such, it is the DOW that is the important index as far as resistance levels above. On an intraweek basis, there is minor resistance at 44033 and then stronger at 44486. On a daily closing basis, the 44303 is a short-term indicative resistance, which if broken would signal higher prices with new all-time highs being probable. With the index closing at 43819 on Friday, another 484 point gain could be seen this week.
As far as the SPX and the NASDAQ are concerned, the previous all-time highs are what is important. In the SPX the previous all-time high daily close is at 6144 and the weekly one is at 6114. A close below both of them would be a signal that the top to the rally has been found. In the NASDAQ, those same levels are at 22175 and 22114. It is clearly evident that of both of these indexes, the latter is more indicative as this rally has been driven mainly by the Tech Industry.
As of today, there is nothing that is dependable as this market has recently rallied more on emotion, and daily news about Trump's actions, than on tangible fundamental facts. Having said that, generally and historically the summer months have been negative to the market with earnings and growth being slow. July starts on Tuesday and common sense (with all of the above considered), suggesting that the likelihood of this particular run up continuing is low. In addition, and probably as important as the economic news, there is very little more that Trump can say or do at this time, that would give the bulls new ammunition. The opposite is actually more likely.
www.motherjones.com
