Monday's market action brought sharp upside movement from risk-on asset classes, while defensive areas struggled. We highlight notable technical developments for US and China equities, alongside a pullback in Gold.
Bulls returned to equity markets in force on Monday after positive developments in trade negotiations between the US and China. US Treasury Secretary Scott Bessent announced Sunday evening eastern time that the US and China had reached an agreement to suspend reciprocal tariffs for 90 days following productive talks between the two nations in Geneva (source: cnbc.com). This brings tariffs down to a 10% baseline from each country, with an additional 20% tariff imposed from the US on Chinese goods relating to fentanyl, bringing the total US tariffs on China to 30%. Still, this is substantially less than the 125% level that had been reached due to escalating tensions after the beginning of April.
Investors cheered the news Monday, leading to major improvement for most US indices. The S&P 500 (SPX), Nasdaq-100 (NDX), and Russell 2000 (RUT) each gained more than 3% intraday. Semiconductors doubled that gain, as the VanEck Semiconductors ETF (SMH) climbed over 10%. Chinese equities also saw sharp upside action, as the growth-oriented KraneShares CSI China Internet ETF (KWEB) advanced nearly 6%. On the other hand, safe haven assets plunged, with the SPDR Gold Trust (GLD) dropping about 3%. Today, we will review the current technical pictures from some of these representatives to better understand where things stand as risk-on trades intensify.
Domestic Equities
Domestic equities soared broadly on Monday, with all major representatives across the various size and style classifications gaining at least 2% for the day. Consumer discretionary led the way to the upside for US sectors, as (XLY) climbed 5%, followed by a 4.6% gain for technology (XLK). Utilities (XLU) were the only broad sector representatives to post losses Monday, which is not surprising given their typically defensive tilt.
This improvement led the default chart of the S&P 500 SPX to 5800, its highest level since March. Monday’s high water mark of 5845.37 officially notched a 20% rally from the April 7 lows of 4835.04. The chart returned to a buy signal at the end of April and pushed through further resistance from March/early-April Monday. We have also seen the default chart maintain a positive trend throughout the recent volatility, as it came within a few boxes of testing that trendline in April before turning back around. From here, the only overhead resistance seen is at the all-time highs from the beginning of this year at 6100. The index is not in overbought territory, with a weekly overbought/oversold (OBOS) reading of about 36% at the time of this writing Monday. The chart is up on a stem though, with initial support not seen until 5150. It would not be surprising to see a pullback toward the middle of its current trading band near 5500 given the magnitude of the recent move. Still, the long-term technical picture remains favorable, and the near-term picture has shown more consistent improvement.
Chinese Equities
Chinese equities also saw strong rallies across the board after the 90-day pause was announced. The broad MCHI climbed over 3% intraday and is now testing its negative trendline that was initiated in April. More focused areas like the KraneShares CSI China Internet ETF KWEB saw sharper intraday moves of more than 5%. This fund has experienced some interesting movement over the past several months. It reached a multi-year higher at $39 back in October after the Chinese government announced large-scale stimulus measures. We then saw the fund experience increased volatility over the next few months, but it stayed well north of the pre-stimulus range in the mid-$20s. The beginning of 2025 saw consistent improvement with AI-related tailwinds that failed to push to the October 2024 level, only to have the fund turn back around when tariffs were announced. Again, the decline marked a higher low for the fourth consecutive time since early 2024, and we now see KWEB pushing back toward a test of its trendline in the mid-$30s. The current technical picture is mixed as KWEB carries a 3.48 fund score (prior to Monday’s move), but the recent improvement should be taken as a firm positive. Notable overhead resistance can be seen from $35.50 to $38.50, with additional resistance expected at the October 2024 highs of $39. Initial support can be seen on the default chart at $30 and $28.
Gold
Gold was one of the few assets to show downside action on Monday, with the SPDR Gold Trust GLD shedding about 2.8% to notch its largest daily decline since November 2024. The 1% trend chart of GLD is especially helpful in identifying important technical levels. This chart still looks at only the price action of GLD, but each box is kept to a 1% move rather than a defined point value. This can help smooth out the action over time to create a more consistent technical picture.
The 1% trend chart for GLD shows a double top formation around $315 that serves as the all-time chart high last reached on April 21. The chart has since turned lower, getting close to a double bottom formation if it drops to $296. We have seen GLD give three consecutive buy signals with steady improvement since breaking out of a consolidation range at the end of 2024. The fund was also overbought prior to the most recent reversal, with a weekly OBOS reading north of 100% for two consecutive weeks in mid-April. It is rare to see Gold get that extended, so consolidation is not surprising. Key support from here to monitor sits at around $296, while the fund would give its first sell signal of the year with a potential move to $293. From there, further support can be seen near $273 and $263.
