U.S. equities staged a relief bounce on Friday, attempting to salvage a bruising week marked by accelerated volatility and renewed valuation concerns. Despite Friday’s broad-based advance across all eleven sectors, the gains proved insufficient to erase substantial weekly losses. The technology-heavy shed 2.7% for the week, while both the S&P 500 and registered declines exceeding 1.9%. Technical indicators underscore market fragility, with momentum gauges flashing “Extreme Fear” as the S&P 500 closes at $6,603, testing critical support near its 100 day moving average.
On Saturday, I mentioned in the Weekly Compass: “Since the will be out on Wednesday, and the market is so looking forward for a rate cut in December, a disappointment in the market could trigger a solid visit to the 20 weekly average also considering the H.O. signal”. The publication can be read here:
The low of the week was precisely the 20 weekly average as the chart below indicates, that moving average presented confluence with $6,527, one of the support levels modeled last Friday in this edition for the week that just ended.
The following two-hour charts present the price action during the week for SPX, :, and ; they are three of the securities that I model every Friday for the week ahead. The blue line is the central level, where clearly there was rejection since last Monday morning, setting bearish momentum and providing subscribers strong reasons to stay bearish, along with the Hindenburg Omen signals studied recently and the candlesticks and indicators presented in the Weekly Compass.
The gap up on Thursday was encouraging considering the consolidation that the price was showing during the week at the first support level, however, momentum faded and the central weekly level was never conquered to flip momentum in favor of the bulls.
The bounce on Friday morning occurred at the second support level for the SPX and QQQ, but again, the next support line acted as resistance and the bounce vanished on Friday afternoon.
Is the Bottom In? – Macro
The catalyst for Friday’s turnaround emerged from dovish commentary by New York Fed President John Williams, whose remarks suggesting “near term” rate reduction prospects galvanized sentiment following Thursday’s sharp selloff. Futures markets swiftly repriced the probability of a December policy easing to 75%, jumping from roughly 40% just one day prior. However, this optimism confronts a significant challenge: policymakers will navigate the December decision without critical October and November and labor data, a consequence of the prolonged government shutdown. Economic anxiety is further reflected in the University of Michigan’s index, which deteriorated to 51 in November as concerns over persistent elevated prices and labor market stability intensified.
Underlying the week’s turbulence was a fundamental reassessment of the artificial intelligence investment thesis, where concerns about an AI-fueled valuation bubble overshadowed even exceptional corporate performance. Nvidia (NASDAQ:), the sector’s bellwether, ended Friday slightly negative despite delivering earnings that exceeded expectations on Wednesday. This disconnect signals that robust fundamentals may no longer suffice to support elevated valuations, particularly as investors question the sustainability of current AI spending rates and monetization timelines.
Risk aversion remained evident across speculative assets despite Friday’s equity rally. While the retreated 12.2% to 23.2, suggesting a temporary easing of defensive positioning, cryptocurrency markets continued their decline. extended its slide to trade as low as $82,000, putting the digital asset on pace for its worst monthly performance since the 2022 market collapse. This persistent weakness in speculative corners suggests underlying risk-off sentiment may prove more durable than a single day’s equity bounce would indicate.
Technical Indicators are oversold as presented below, the bounce for the SPX/SPY and NDX/QQQ happened right at the 20 weekly average in confluence with the weekly levels mentioned above, and the 100 daily moving average, there is fear in the market but the bounce vanished during the afternoon as the charts above present. A bottom must be proved next week with the consolidation of the central weekly level updated below.
I consistently model in my homepage the technical indicators and Support & Resistance levels for the following securities to provide a broad market perspective and empower your trading decisions:
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Indices & Futures: SPX, NDX, DJI, IWM, ES=F, NQ=F
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ETFs: SPY, QQQ, SMH, TLT, GLD, SLV, DIA, SH, PSQ
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Major Stocks: AAPL, MSFT, GOOG, AMZN, NVDA, META, TSLA, BRK.B, LLY, WMT, AVGO, COST, JPM, PLTR, NFLX
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Crypto & Related: Bitcoin, ETH, IBIT, MSTR
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Leveraged ETFs: TQQQ, SQQQ, UDOW, SDOW, UPRO, SPXS, URTY, SRTY
Let’s study some charts:
BITCOIN: BTC reached extreme oversold levels relative to the lower Bollinger band and the RSI. The bullish hammer suggests a bottom is in, and the price could bounce to the 20MA as it did in the past. Bullish divergence coming is possible (meaning a lower low in price and higher low in RSI).
: Over the last months, bullish Stochastic crossovers with a visit to the lower Bollinger Band have validated market bottoms. A bottom may be in, and the setup looks complete.
This informational content is not intended to be investment advice.
