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Small caps have struggled to put together any meaningful sustained rallies over the last few years, despite putting together numerous constructive technical pictures over the same timeframe. Recent action for the Russell 2000 has all of the markings of a similar kind of move to those seen throughout 2023 & 2024, where seemingly convincing price action ultimately saw further struggles and relative underperformance against large cap names.

We will start our diagnosis with a simple, top level look at the Russell 2000 (RUT). Sitting on a string of now seven consecutive buy signals, movement off of 2025 lows has certainly been constructive. The stair stepping pattern leaves plenty of support nearby as the index ultimately has gained nearly 2% this year. For some readers who may be just using the absolute picture in your analysis, this price action would signal it is time to go and pick up exposure to the group as we move into August.

For those of us willing to dig a bit deeper around the platform, however, the rally becomes somewhat less convincing. For starters, small caps remain relative laggards against other parts of the investable universe. Starting broadly by a simple 3.25% relative strength chart between RUT & SPX (below), one can see that relative price action favors the core of the market. In fact, small caps sit at multi-decade level relative lows at the time of this writing, speaking to the lack of upside participation seen from the group.

Speaking of participation, a relatively small number of small cap stocks exhibit favorable technical pictures evidenced by NDW’s technical indicator report. ^BPSCAP, which measures the percentage of small cap stocks trading on PnF buy signals sits at 37%. Take this value and compare it to ^BPLCAP, which suggests over 70% of large cap stocks trade on buy signals. Furthermore, broader asset allocation tools like DALI and the Asset Class Group Scores page continue to favor large cap options over the small cap counterparts.

All this to say, take the current small cap picture as a lesson that it is important to consider more than absolute price movement along in your analysis. While a productive small cap environment would almost undoubtedly be a tailwind for major markets, the current reality is that the group has been unable to sustain meaningful upside action over the last few years. For those with exposure, continue to tread lightly. For those without exposure, continue to hold off broadly speaking until more relative improvement is earned.

Earnings season kicks into high gear this week, with increased attention given to some of the largest stocks in the market. There are 161 of the S&P 500 constituents set to report earnings this week, representing about 31% of the companies in the core US benchmark. This includes four Magnificent 7 stocks, looking at Microsoft MSFT, Meta Platforms META, Amazon AMZN, and Apple AAPL. We also see other notable companies like Visa V, Mastercard MA, and Exxon Mobil XOM.

According to the FactSet Earnings Insight report, we have already seen roughly 34% of companies in the S&P 500 report their results from the second quarter of 2025. From those companies, 80% reported a positive EPS surprise which is on pace to be the highest percentage for a single quarter since Q3 2023 (FactSet). However, the actual earnings surprise percentage is lower, as the average EPS beat is 6.1% above expectations, lower than the 5-year average (9.1%). In other words, the breadth of companies beating expectations is higher than normal, but the magnitude of those beats is more muted.

Typically, the summer earnings season arrives during an otherwise quiet news cycle. Kids are home from school, more people are out of the office traveling, and market participation dissipates in favor of extracurricular life interests. Even though out of office emails have still been prevalent this July, the news cycle is anything but quiet. Fresh headlines around tariffs and trade deals roll in almost every day. We also have a Fed rate decision this week. This can make it easy to look past notable events like earnings releases. Today, we will review the current technical pictures of the four largest companies reporting this week, highlighting important support and resistance levels to monitor.

Meta Platforms, Inc. META – Earnings Expected After Market Close Wednesday, 7/30

Meta pushed higher on the last day of June to notch a new all-time high at $744 after giving three consecutive buy signals since April. This improvement moved the stock back to a 5 for 5 TA rating as it showed relative-strength (RS) improvement against the market and its peers. We have seen META maintain a favorable long-term technical picture for years, as it has been in a positive trend since early 2023. It also ranks in the top quartile of the favored internet sector RS matrix. After rising sharply to end June, META has consolidated in recent weeks to present a more actionable position closer to the middle of its trading band. The technical picture remains strong here. Overhead resistance is seen at the all-time highs of $744. If we get a negative reaction after earnings, look toward initial support at $696 and $680. Further support can be seen near the bottom of its trading band at $624.

Microsoft Corporation MSFT – Earnings Expected After Market Close Wednesday, 7/30

Microsoft has gone vertically higher since April, reversing up from $356 and ascending in a single column to new all-time highs at $512. This stock has maintained an RS buy signal against the market since 2015, speaking to its long-term technical strength. We also see that MSFT is in the top quintile of names in the favored software sector RS matrix. While the technical picture is robust, MSFT is in overbought territory. There is not any near-term support offered on the default chart, however, the more sensitive 2-point chart shows multiple support levels between $502 and $490.

Amazon.com Inc. AMZN – Earnings Expected After Market Close Thursday, 7/31

Amazon has shown steady improvement over the last few months, but has not yet reached new all-time highs. The stock pushed higher in April to move back to a positive trend and give four consecutive buy signals while ascending to the current chart level at $236. That is just below the all-time high of $240 from January. The stock has a 4 for 5 TA rating and sits in the top third of the favored retailing sector RS matrix. The technical picture is favorable here, however, AMZN is nearing overbought territory. Notable overhead resistance is seen at that $240 high from January. Initial support is not seen on the default chart until $198. Near-term support can be seen on the more sensitive 2-point chart at $208.

Apple Inc. AAPL – Earnings Expected After Market Close Thursday, 7/31

Apple has not seen the same level of technical improvement as many of its mega cap counterparts in recent weeks. The stock has a 3 for 5 TA rating after moving back to a positive trend at the beginning of July, leaving it in a suitable position. However, we have seen a notable consolidation range for the stock between $194 and $216 for the past couple of months. This lack of improvement has led it to remain in a column of Os against its peers and the market. The stock also sits near the bottom of the computers sector RS matrix. The long-term technical resilience is still intact, but AAPL lacks the near-term improvement to be considered favorable in its current position. If we get a positive reaction after earnings, look toward a potential breakout through overhead resistance at $224. Further resistance can be seen from $244 to the all-time highs at $260. Initial support can be seen at $196 with strong support seen at $194 and $190.

Daily Option Ideas for July 28, 2025