Semiconductor Rally Drives S&P 500 Index Toward 7,450 as Breadth Weakens

Semiconductors Carry the S&P 500

The standout movers today are MU (+12.77%) and SNDK (+11.88%). These moves can be attributed to AI memory demand, tight supply and strong earnings momentum. We also have AMD (+8.39%) that is riding strong data-center numbers and QCOM (+8.93%) getting a lift from AI-chip optimism, smartphone recovery hopes and an analyst upgrade. Stocks adding more firepower are INTC (+6.74%), DELL (+6.80%), AVGO (+4.10%), CSCO (+4.07%), PANW (+4.00%), AMAT (+5.76%) and TSLA (3.96%).

But not all stocks are up. APP (-6.66%), CRM (-3.25%) and WFC (-3.54%) indicate that there are selective selling in software and financials.

It’s a pretty strong rally to end the week.

S&P 500 Heat Map Shows Semiconductor Led Strength

S&P 500 Index Heat Map

Source: TradingView

US Jobless Rate Holds Steady

The unemployment rate met forecasts, confirming that the US labour market is steady. The soft-landing narrative for the US economy is still intact. This may mean that there is less urgency for the Fed to cut rates, particularly when energy prices remain elevated.

US Unemployment Held at 4.3% in May, Matching Forecasts

Bar Chart Showing US Unemployment Rate

Source: TradingView

S&P 500 Hits Fresh Highs as Breadth Start to Wobble

We are seeing some bearishing divergence on the S&P 500 when looking at its short term breadth indicator. While the Index is making all-time highs, less than 50% of the stocks in the Index are above their Daily 20-SMA. That’s not a good sign so there may be some exhaustion in the short term as the stocks within the Index take a breather.

S&P 500 Index Pressing Toward 7,4500 while Short Term Breadth Below 50%

S&P 500 Daily Breadth Indicator

Source: StockCharts

S&P 500 Renko Pushing to All Time Highs, Again

Nice push higher on the S&P 500 Index when looking at the Renko. The Supertrend has maintained its positive structure and the RSI is in the high 60s and not even crossed into overbought territory yet which means there is still more room to go for the Index. Additionally the Z-Score SMA has turned higher but it is above 1 so there may be some little more to go higher before a slight pullback is expected. A very good looking bullish structure for the S&P 500 Index.

12-Brick Renko Shows S&P 500 Making New All Time Highs

S&P 500 12-Brick Renko

Source: TradingView

The Verdict

Current Trend Direction: Bullish

Bias: Positive

Support Levels: 6,525, 7,000

Resistance Levels: 7,450, 8,150

Medium Term Path: We should be hitting 7,450 on the S&P 500 early next week. From there I expect that we may get a couple flat or down days as the markets reassess the happenings within the Index. The S&P may consolidate between 7,275 and 7,320 before making another push higher past 8,000.