The Bears Are Growling. Can They Bite?
RLT Newsletter
Monday’s gap higher ultimately faded throughout the session. That price action can be viewed as a retest of Friday’s bearish retest gap on both SPY and QQQ. Each index rallied back to test its broken trendline before sellers stepped back in, leaving the market looking increasingly vulnerable to the final flush lower that we’ve been anticipating.
SPY Daily Chart
QQQ Daily Chart
Looking across the broader market, the short-term technical picture continues to favor the bears. DIA has now joined IWM with a bearish 10-day EMA setup and appears ready to resolve lower. RSP is showing similar weakness, while the semiconductor space continues to deteriorate. SOXX still looks likely to work its way down toward the 100-day SMA, which would represent roughly another 10% decline from current levels.
DIA Daily Chart
An Apple a Day Keeps the Bears Away
One notable exception to the weakness remains Apple. AAPL is the one mega-cap technology stock that has avoided getting caught up in the circular AI financing and capital expenditure spending race. If Apple can pull back slightly into its rising 10-day EMA and the prior all-time high breakout area around $320-$318, I’ll be watching closely for buyers to step in. As long as AAPL holds the $311 pivot, I believe it remains well positioned for another run to fresh all-time highs. For momentum traders, AAPL continues to be one of the cleanest charts in tech, making it far easier to trade than many of the names currently trapped in “Choptown.”
AAPL Daily Chart
GOOGL reports earnings this Wednesday after the close, and it will kick off of the key earnings for this season.
From an Elliott Wave perspective, the chart appears to have completed a five-wave advance into the recent highs, terminating almost perfectly at the 1.618 Fibonacci extension of Wave 4 and the psychologically significant $400 “grandma number.” This information says we should continue to pull back.
If earnings trigger a break below the 100-day SMA, I believe the odds increase substantially for a swift move toward the 200-day SMA or possibly for a retest of the $305 gap below.
On the other hand, if GOOGL gaps above the $375 resistance level and buyers show conviction, I would expect the stock to push into new all-time highs, with the $425-$430 area becoming the next logical upside target before momentum begins to cool.
If management continues to aggressively ramp AI-related capex, it’s difficult to see the market rewarding that strategy indefinitely. We’ve already watched investors punish several semiconductor names despite excellent earnings because future spending continues to outpace expectations. At some point, even exceptional revenue growth is no longer enough to justify ever-increasing capital expenditures, and GOOGL may soon face the same scrutiny.
GOOGL Daily Chart
Check out the Monday Afternoon Swing Room below, where I dive into these charts and many more, breaking down the technical analysis, key support and resistance levels, and exactly what I'll be watching over the next week or two.