Major market indexes failed at 20-dema resistance earlier in the week, leading to a sharp sell-off on Thursday. Things quieted down on a quiet options expiration day on Thursday as the NASDAQ Composite and S&P 500 held tight along 10-dma support. For now the indexes remain within side bear flag types of formations following a sharp rally off the lows two Wednesdays ago when President Trump declared a 90-day delay on tariffs for most countries other than China. For now, the indexes appear to be consolidating the prior move down in early April, the second leg of what may become a more pronounced bear market as measured by the peak to trough declines in both the NASDAQ and the S&P.
Gold spent the week posting a series of new all-time highs, most recently on Wednesday when COMEX Gold Futures peaked at $3,371.90 on Wednesday before ending the week at $3,341.30. The SPDR Gold Trust (GLD) showed strong volume support off the Thursday lows as the yellow metal does a fair job of holding up near its all-time highs. Silver via the iShares Silver Trust (SLV) has tracked with gold off the lows of two weeks ago but has not matched gold's move to all-time highs. On Thursday it posted a moving average undercut & rally (MAU&R) long entry at the 20-dema which is then used as a selling guide.
The precious metals space is the only bullish area of the market currently, as mining stocks have followed the metals to 52-week highs as the daily charts of the mega-cap miners Agnico-Eagle Mines (AEM), Barrick Gold (GOLD), and Newmont Corp. (NEM) illustrate below. Note the massive shakeouts along 50-dma support two Wednesdays ago after Trump announced the 90-day tariff delay followed by high-velocity rallies to new highs. Thursday's pullbacks were relatively well-contained given the prior upside moves off the lows, and we now watch for 10-dma/20-dema support to come into play as potential references for buyable support.
Investors thinking that tech stocks are "cheap" and therefore irresistible buys given their price declines in 2025 might think twice as this bear market runs its course. Shifts in underlying conditions may imply a re-adjustment of PE-expansions that would at best mute the upside potential of former tech leaders and at worst result in further downside from current levels as this period of valuation adjustment and scaling runs its course.
On Wednesday we reported on Nvidia (NVDA) as a short-sale entry as it gapped below 20-dema and then 10-dma support and it dropped another 5% from there. The company announced Tuesday evening that it expects to take a significant $5.5 billion charge in its upcoming financial results due to new U.S. government export restrictions on its H20 AI chips to China and other unspecified countries. This underscores the potential second-order effects of the tariffs and their impact on tech stock fundamentals. Caveat emptor!
Tariff news will continue to impact the market on a daily and intraday basis, making the current environment as challenging for short-sellers as for anyone trying to buy the dip. It remains a dangerous, volatile, and generally unstable environment from a news flow perspective. Cash remains king.
The Market Direction Model (MDM) remains on a CASH signal.