Nothing Bearish About How the Market Closed This Week

The S&P 500 and Nasdaq 100 QQQ delivered their fourth straight day of gains to close the week, but momentum cooled substantially after three days of gains greater than 1%. The DJIA and Russell 2000 finished flat. After a series of very strong breadth days, breadth was just barely positive on Friday.

The good news is that some mixed messages about tariffs and trades didn't kill the market this time. There is still talk about negotiations progressing, but the time frames are very uncertain, ranging from a week to months. The market was satisfied with upbeat comments this week, but it wants to see some actual results pretty soon.

In addition to more optimism about trade and tariffs, a big boost this week was the view that a Fed rate cut may now come as soon as June. President Trump was extremely unhappy with Fed Chair Powell's hawkish tone, and that spooked the market, but by the end of the week, fed fund futures had reflected about a 60% rate cut in June.

Technically, the indices and many stocks cut through some key overhead resistance and have strong momentum, but it is becoming a bit frothy, and some consolidation is likely needed. Big moves off of lows tend to be very powerful since so many folks are out of position, and shorts add fuel when they are squeezed. However, reversals can be abrupt as well if there is just a spark of bad news.

Many investors breathed a sigh of relief as the extremely strong breadth helped to lift the entire market. This was not one of these narrow Magnificent Seven rallies that cover up broad weakness. This was the whole market moving up in tandem, and there is nothing bearish about that.

Earnings season picks up steam next week with many big names reporting. We will also have plenty of tariff drama to help keep volatility elevated.

Have a great weekend. I'll see you on Monday.

At the time of publication, DePorre had no positions in any securities mentioned.