Testing Resistance Ahead of Earnings
AI leadership held, the feared breakdown failed to deliver, and earnings will decide whether the S&P 500 can finally break free from its trading range
Hello, my friend. I hope this finds you in exceptionally good spirits this summer weekend.
All things considered, the stock market continues to hold up remarkably well, even as many investors periodically check their portfolios between summer vacations.
Last week brought another collection of challenges:
Reversals in leading semiconductor stocks
Higher Treasury yields
Renewed difficulties with Iran
Sharp swings in oil
And what happened?
The dip buyers showed up. Again.
Reflecting the summer hammock pattern like the photo above:
The S&P 500 and Nasdaq Composite finished higher as investors continued buying weakness across AI-related technology and mega-cap growth stocks.
Once again, one down week was followed by two advancing weeks, just as we saw in June, keeping the higher trading range intact.
Beyond the S&P 500 and Nasdaq, the Dow, small caps, mid-caps, and several economically sensitive sectors were weaker by comparison.
Despite that uneven participation, the market passed several important tests.
Stocks absorbed:
Renewed geopolitical escalation
An eight-basis-point increase in the 10-year Treasury yield
Sharp semiconductor profit-taking
Higher oil prices
Multiple attempted technical breakdowns
And still avoided meaningful technical damage.
The S&P 500 remained above 7,500. Semiconductors stabilized. Failed breakdowns attracted buyers. Momentum and swing systems returned to buy signals.
Most importantly, price is now sitting directly at resistance.
The S&P 500 closed Friday at 7,575, two points beneath the lower boundary of the decisive 7,577–7,620 resistance zone.
In sum, price action is beginning to improve within this period of consolidation.
The next step is to prove that improvement can hold and develop into the next leg higher.
Performance Matrix
The tables below show where the money went, where it refused to go, and which trends are doing more than merely surviving.
This week’s message is fairly clear.
Mega-cap growth and AI leadership took back control, with Meta and NVIDIA doing most of the heavy lifting. Energy, oil services, commodities, agriculture, and selected international markets also joined the party.
Several speculative and economically sensitive groups were not invited.
Cannabis, space, lithium, airlines, homebuilders, and alternative energy remained under pressure.
So yes, this was a risk-on week.
It was not a buy-everything-with-a-ticker week.
Capital continued rewarding established leadership, improving trends, and price action already supporting higher prices. Weak structures were still punished without much sympathy.
That is why these tables matter.
The S&P 500 may be testing resistance, but beneath the surface, stocks, sectors, industries, and asset classes are already placing their bets.
Let’s now review the setup at resistance, the three forces likely to determine the next move, what would signal a bull trap, and how I am positioning around the consolidation.
