Friday’s market action saw the S&P 500 Index (SPX) reverse down into a column of Os on its default chart, falling from 5950 to 5800. This pullback is not a major move, especially when considering the extended run we have seen from the core US market benchmark over the past few weeks. This move also leads us back toward the middle of the current trading band, which is positioned at 5500 (based on Thursday’s market action). Considering the move objectively, this simply looks like normalization after a sharp rally.

Of course, nothing seems simple about the current market environment. Even the normalization doesn’t feel normal, given the warning lights of treasury yield uncertainty and credit downgrades (as we discussed in yesterday’s feature). The uncertainty surrounding market action over the past several weeks has led to significantly more chart movement than we would typically see.

One way to quantify this statement is by examining the spread between the top and bottom of the trading band for the default SPX chart. The trading band is derived from the weekly overbought/oversold calculation. Our Overbought/Oversold Whitepaper outlines the construction of these readings as follows:

To compute an OBOS value, we take ten weeks (50 days) of price data and use that information, along with a volatility calculation, to compute a “trading band” for the security. The location of the current price on this trading band is then expressed as a percentage. If the current price reaches the top of the trading band it is 100% overbought and if it reaches the bottom, it is 100% oversold

So, the Top corresponds with 100% overbought, while the Bottom corresponds with -100% (100% oversold). Readings can certainly go beyond these bands, but they are helpful guidelines for potential mean reversion in a given security/index, like SPX.

Examining the spread between the top and bottom of the trading band can help contextualize the current market action. A wider spread means more realized volatility, while a tighter spread means less chart action has occurred. The average spread between the top and bottom going back through 1950 sits at around 15%. Based on the market action last week, the spread between the top and bottom was double the average at around 32%. We saw an even higher spread between the two in the week ending on May 2, when the reading surpassed 34%. That was the highest spread we have seen since the pandemic in 2020. Other large spread can be seen from market shocks, with the highest reading coming during the hysteria in 2009.

Spreads like we saw this month are rare, but they are not unprecedented. It is important to note that they also do not persist for prolonged periods of time. Even in the most extreme cases, the spread will spike and then retract as volatility tapers off. There is certainly the potential for another spike down the road, but markets will at least take a breather in between the events. This suggests that the consolidation we have experienced over the last week could continue as we head into June, allowing the market some time to digest the heightened action that took place earlier this month.

With the US Equity indices consolidating and/or pulling back slightly this week, an opportunity to assess holdings that rallied off recent lows has been offered. The popular stocks that many clients and advisors have monitored are the Magnificent Seven, which had been behaving more like a “Subpar Seven” for much of the year – as noted in our last update on March 19th. At that time, six out of the seven stocks were underperforming the S&P 500 Index with the lone exception being Meta Platforms META. Following the week of “Liberation Day”, all seven stocks were underperforming the S&P 500 on a year-to-date basis (12/31/2024 – 4/4/2025), but since then, each has rebounded to varying degrees. Today’s feature will look at each of the Mag Seven and discuss the technical picture along with potential next steps that could be taken.

Through Thursday’s close, Meta Platforms (META) and Microsoft (MSFT) have rallied back into positive territory on a year-to-date basis and are the only two of the seven that outperform the S&P 500. Nvidia (NVDA) has rallied to lag SPX by just 30 basis points after having lagged the index by more than 15% at points during April. Amazon (AMZN)  and Google (GOOGL/) are now down 7% and 9% for the year, while Tesla (TSLA), and Apple (AAPL) are all down double digits year-to-date with Apple being down almost 20%.

Meta Platforms (META) – Internet – While most of the Mag Seven stocks fell to their near-term chart lows during the week of “Liberation Day,” Meta ultimately fell to its chart low in the back half of April before reversing back into a column of Xs on its trend chart on 4/22. The stock returned to a buy signal after reporting earnings to kick off May before rallying to $656 early last week and reversing into a column of Os during Friday’s (5/16) trading. META has maintained an acceptable 3 technical attribute rating for more than two years and sustained a positive trend on its default trend chart since January 2023. Those seeking to add to an existing position may consider adding shares on the pullback here, depending on cost basis. Meanwhile, those looking to initiate a new position would be best served looking for consolidation in the lower $600 range, which would then develop support close to current trading levels. Note that resistance lies at current chart levels and in the $680 range, while the all-time chart high from February lies at $736.

Microsoft (MSFT) – Software – After finding lows in early April, MSFT alternated signals through the middle of the month before reversing higher on the 22^nd and returning to a buy signal, as well as shifting its trend back to positive on April 30^th. The trend flip increased MSFT up to a 3 for 5’er after the stock briefly fell down to a 2 for the first time in more than a decade. May’s action brought the chart to match the December 2024 high mark at $456, one box below the stock’s all-time high from July 2024 at $464 and below the top of the 10-week trading band. Both long-term holders and those seeking new exposure would be best served by looking for a pullback to the lower $400 range or consolidation in the mid $400s before adding exposure. With the chart’s extended column of Xs, support can be found in the $390 to $400 range, while the bullish support line now resides at $356.

NVIDIA (NVDA) – Semiconductors – Similar to Microsoft, NVDA found lows in early April before alternating signals and reversing back into a column of Xs in the latter part of the month. May’s action saw it return to a buy signal with a triple top break at $116, which also flipped the trend back to positive. Last week’s action brought the trend chart up to the mid $130s, reversing the market RS chart back into a column of Xs on 5/14. The trend change along with the market RS chart reversal in Xs brings NVDA back up to a 5 for 5’er in technical attribute rating. Considering earnings upcoming on Wednesday next week, investors are likely to hit pause on adding additional exposure until post report. Post earnings and barring the stock maintains its technical picture, those seeking to add to an existing position may consider adding shares here or on further pullback into the lower $120 range, depending on cost basis. Meanwhile, those looking to initiate a new position would be best served looking for consolidation in the lower $130 to $120 range, which would then develop support close to current trading levels. Note that resistance lies at $142, while additional may be found around $150 with the all-time chart high residing at $152.

Amazon.com (AMZN) – Retailing – AMZN found its chart lows in early April before returning to a buy signal in the latter half of the month. May’s action brought about a positive trend along with additional buy signals as the stock rallied to $212 during last week’s trading, clearing resistance that dated to March. The trend change increased AMZN up to a 4 for 5’er, and the stock has maintained an acceptable TA rating since early 2023.  Those seeking to add to an existing position or initiate new exposure may consider adding shares here on the pullback. Note the stock’s all-time chart high from January resides at $240.

Alphabet (GOOGL) – Internet – After finding lows in early April, GOOGL has alternated signals since then, most recently returning to a buy signal by breaking a double top at $166. This week’s action has brought the stock into the $170 range and flipped the trend back to positive during Thursday’s (5/22) trading, clearing resistance that dated to March. The trend flip increased GOOGL up to a 3 for 5’er in technical attribute rating after the stock fell down to a 2 in late March. Okay to consider here on the pullback. Initial support can be found at prior resistance in the mid $160s, while additional may be found in the $148 to $150 range.

Tesla (TSLA) – Autos and Parts – TSLA found its chart lows in early April before returning to a buy signal in the latter half of the month. May’s action brought it back to a positive trend along with an additional buy signal as the stock rallied to $352 earlier this week. Though TSLA gave a sell signal during Thursday’s trading, it is an initial sell signal following a notable rally and a sign of reprieve at the moment. The trend flip earlier this month increased the stock to a 5 for 5’er, and the stock has now moved into the top quintile of the Autos and Parts sector matrix. Those seeking exposure to TSLA would look for a return to a buy signal in an actionable range – currently a very broad one in the $300 to mid $330 range – before adding. Current support for the chart may be found at prior resistance around $300, while additional may be found at $272 and $260.

Apple (AAPL) – Computers - AAPL found its chart lows in early April before returning to a buy signal just over a week later. Since that time, the stock has tested the bearish resistance line and failed to penetrate it after three attempts, with the most recent rejection occurring after the chart reversed into Os during Thursday’s trading. Following Trump announcing there would 25% tariffs on iPhones on social media, the stock fell to test support at $194 during Friday’s action. AAPL still maintains a 3 technical attribute rating, but those seeking to add to or initiate exposure to the stock would be best served looking for the stock to rallying back into a positive trend and clear current resistance at $212 before doing so. Beyond current resistance, additional may be found in the $240 range, while the stock’s all-time chart high lies at $260. Beyond current support at $194, additional may be found at $190 and $184.

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