Posts by The Trend Letter

Market Recovery or Temporary Relief? Key Insights on S&P 500 & Gold

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The S&P 500 closed higher for the second consecutive day, marking a positive turn after four weeks of negative results. The index rose 0.6% to 5,675.12, showing signs of recovery after entering correction territory last week. However, Tesla and Nvidia bucked the trend, with Tesla down 5.36% to $236.55 and Nvidia down 1.98% to $119.27.

Key drivers included weaker-than-expected retail sales data, which raised expectations for potential Federal Reserve rate cuts later this year. Investors are also closely watching the Fed’s two-day meeting starting Tuesday, where rates are expected to remain unchanged.

Technical Analysis of the S&P 500:

The S&P 500 successfully pushed through and closed above its previous support level at 5670. This marks the first test of the current rally. The next challenge will be to surpass the early January low at 5775 (red horizontal line), which is expected to present stronger resistance.

These tests are crucial in determining whether this rally represents a ‘buy the dip’ recovery or a ‘sell the rip’ dead cat bounce. Previously, when the S&P 500 was trending within its upward channel, declines within the channel offered ‘buy the dip’ opportunities. However, with the index now below that channel, any bounce must demonstrate strength by breaking through key resistance levels to avoid the risk of further downside.

It’s important to note that losing support at 5,670 has left the S&P 500 vulnerable to potentially testing its next key support level just under 5,400.

Gold Update:

Gold has experienced an impressive surge over the past two and a half years, climbing 85% since November 2022. Currently, it is testing the upper boundary of its uptrend channel (white circle), which suggests that this resistance level is likely to hold. As a result, a pullback or consolidation appears probable. Such a correction would be a healthy development for gold, allowing it to build momentum and gather strength for its next potential move higher.

Navigate Market Volatility with Confidence

The current market environment presents both challenges and opportunities for investors. As we navigate through this period of uncertainty, it’s crucial to stay informed and make strategic decisions.

Now is the perfect time to subscribe and gain trusted guidance in these uncertain markets. Our mission is to help investors make well-informed decisions when it matters most.

To support you, we’re reopening our Special Offers from the WOFC 2025 Conference—giving you 33%–57% off regular subscription rates. Claim your exclusive discount today!

Stay ahead of the curve—seizing market opportunities starts here!

Martin

Market Update: Key Levels, Tech Rebounds & Apple’s Warning Sign

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On Wednesday, March 12, 2025, U.S. stock markets closed with mixed results. Tech stocks led the gains, with Tesla climbing 7.59%, Palantir rising 7.17%, and Nvidia advancing 6.42%. In contrast, consumer stocks lagged, as Target fell 4.86%, Procter & Gamble declined 2.74%, and Walmart edged down 2.56%.

he S&P 500 and NASDAQ Composite saw a rebound, but until proven otherwise, this remains a bounce within a broader downtrend. For the S&P 500 to shift back to a more bullish stance, it must first reclaim its previous support level at 5,670 (upper green line) and then break through its 200-day moving average (200-DMA) at 5,737 (wavy magenta line). Until that happens, this rally is more likely a “sell the rip” dead cat bounce rather than a “buy the dip” recovery.

Previously, when the S&P 500 was trending within its upward channel (yellow lines), each decline within the channel presented a “buy the dip” opportunity. However, now that the index has fallen below that channel, any bounce must prove its strength by breaking through these key resistance levels. Until then, the market remains at risk of further downside.

As highlighted throughout the week, losing support at 5,670 has left the S&P 500 vulnerable to testing its next key support level just under 5,400 (lower green horizontal line).

For those less familiar with technical analysis, think of support and resistance levels like floors and ceilings in a building. When a stock or index falls below a support level (the floor), that level then acts as resistance (the ceiling). To regain a bullish trend, the index must move back above those resistance levels.

Apple Update:

We’ve been closely monitoring Apple as it recently closed below the neckline of a Head and Shoulders pattern. This technical formation consists of three peaks: a central, higher peak (the head) flanked by two lower peaks (the shoulders). The pattern is confirmed when the price breaks below the neckline, a key support level connecting the lows between the peaks.

This breakdown is a significant bearish signal, indicating a shift from an uptrend to a downtrend. It suggests that selling pressure has overtaken buying pressure, often leading to further price declines as traders interpret it as confirmation of the pattern. A stronger confirmation occurs if the breakdown happens with increased trading volume.

If this move is validated in the coming days, it could be a major development, highlighting potential weakness in one of the best-performing tech stocks of the past decade.

Navigating Market Volatility

If you’re looking for guidance in navigating these volatile markets, now is an opportune time to subscribe to our services. Our mission is to help investors make informed decisions during uncertain times.

To support this, we’re reopening our Special Offers from the WOFC 2025 Conference, providing 33%–57% off regular subscription rates. Click here to take advantage of these exclusive discounts!

Stay vigilant and be ready to adapt—spotting trend changes is what we do!

Martin

Markets in Motion: S&P 500 & Bitcoin in Focus

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Following up on yesterday’s update, the S&P 500 closed lower again today, though the decline was far less severe than yesterday’s bloodbath.  Some of the Magnificent 7 stocks actually closed in the green today.

The market downturn continues to be driven by escalating trade tensions between the United States and Canada. President Trump initially announced an additional 25% tariff on Canadian steel and aluminum imports—raising the total to 50%, effective Wednesday. However, reports emerged near the time of this writing that Ontario is suspending its 25% energy surcharge on  exports for US electricity and that Trump will delay the tariff increase, keeping it at 25%. These constant shifts in trade policy have made equity markets increasingly volatile and uncertain.

Technical Analysis of the S&P 500:

The S&P 500 failed to regain its previous support level at 5,670 (green horizontal line) and instead closed down 42 points to 5,572. As highlighted in yesterday’s update, this failure to rally above 5,670 confirms the current bearish tone. If this pattern persists, the next key support level is just below 5,400 (second green horizontal line).

If the S&P 500 can rally and close back above 5,670 tomorrow, a short-term rebound may be possible. While this wouldn’t necessarily signal the market’s ultimate bottom, it could indicate a relief rally. For a more sustained recovery, the index would need to reclaim its position within the uptrend channel (yellow lines) that it fell out of two weeks ago. This would require a rally back to the 6,000 level (red horizontal line,  and red circle).

Bitcoin Update:

Bitcoin broke through its key support level at 92.5K in late February and dropped to a low of 75.4K today before rebounding to 83.2K at the time of this update. While bitcoin is highly volatile, it often serves as a strong indicator of broader market sentiment. A rally in bitcoin suggests a risk-on sentiment in speculative sectors, while a decline signals a risk-off market environment.

Our models indicate that bitcoin could rally back up to the previous 92.5K support level, which will now act as initial resistance. If that resistance holds, bitcoin could fall back toward our target support level of 73K (bottom green horizontal line).

Navigating Market Volatility

Both Trend Technical Trader and Trend Letter anticipated these sharp market declines and issued hedging positions in advance to safeguard subscribers.

If you’re looking for guidance in navigating these volatile markets, now is an opportune time to subscribe to our services. Our mission is to help investors make informed decisions during uncertain times.

To support this, we’re reopening our Special Offers from the WOFC 2025 Conference, providing 33%–57% off regular subscription rates. Click here to take advantage of these exclusive discounts!

Stay vigilant and be ready to adapt—spotting trend changes is what we do!

Martin
Trend News

Markets Tumble – What’s Next for the S&P 500?

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The  heat map of the S&P 500 shows widespread declines across sectors, with technology stocks particularly hard hit. The ‘Magnificent Seven’ companies, including Tesla (-15%), Broadcom (-5.34%) and Nvidia (-5.03%) experienced significant losses.

The notable declines experienced by the equity markets were primarily driven by escalating recession fears and uncertainties surrounding US trade policies.​

  • Dow Jones Industrial Average: Fell 890 points (2.1%) to 41,911.71.​
  • S&P 500: Dropped 155 points (2.7%)  to 5,614.56.
  • Nasdaq Composite: Plunged 728 points (4%) to 17,468.32.​

These declines were exacerbated by Trump’s recent comments declining to rule out a potential recession, intensifying investor concerns.

Technical Analysis of the S&P 500:

The S&P 500 has now dropped below its 200-day moving average (DMA) and key support at 5,670. The critical question is whether this breakdown will be confirmed by a close below this level tomorrow. A confirmed close beneath this support could signal a deeper market correction, with the next key support level just below 5,400 (second green horizontal line).

However, if the S&P 500 manages to rally and close back above 5,670, we could see a short-term rebound. While this wouldn’t necessarily mark the ultimate market low, it would indicate a potential relief rally. To confirm a more sustained recovery, the index would need to reclaim its position within the uptrend channel (yellow lines) that it fell out of two weeks ago. This would require a rally back to the 6,000 level (red horizontal line).

Both Trend Technical Trader and Trend Letter had anticipated these sharp market declines and issued hedging positions to safeguard subscribers in advance.

If you’re looking for guidance in navigating these volatile markets, now is the perfect time to consider subscribing to our services. Our mission remains to help investors make informed decisions during uncertain times.

To support this, we’re reopening our Special Offers from the WOFC 2025 Conference, providing 33%–57% off regular subscription rates. Click here to take advantage of these exclusive discounts!

Keep your head on a swivel!

Martin

Trend News

Evaluating Greenland’s Role in a Tight Global Uranium Market

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Investors fearing that uranium mining in Greenland might depress market prices should consider several critical factors, including the current global supply shortfall, and an expanding supply-demand gap,

Addressing Investor Concerns About Greenland’s Uranium Impact on Prices

Current Uranium Market Dynamics

The uranium market is grappling with a pronounced supply deficit. In 2024, production reached only 89% of the global reactor requirement, leaving a substantial shortfall. Additionally, secondary supplies—which have traditionally filled the gap—are vanishing quickly, with commercial inventories falling from 65 million pounds in 2021 to just 17.5 million pounds in 2024. Notably, 2024 was expected to mark the last year when these secondary reserves offer any significant support.

Growing Supply-Demand Gap

This shortage is poised to worsen over the coming decade. Paladin Energy forecasts an annual deficit exceeding 50 million pounds of uranium, emphasizing the deepening imbalance between supply and demand. Utility companies, in response, are increasingly committing to long-term contracts, a clear indicator of their concerns about future supply shortages.

Reasons to Invest in Nuclear Energy

Long-term investments in nuclear energy continue to be attractive for several key reasons:

  • Stable and Reliable: Nuclear plants operate 24/7, ensuring a continuous and dependable power supply irrespective of weather conditions.
  • Low Greenhouse Gas Emissions: With a carbon footprint between 15 and 50 grams of CO₂ per kilowatt-hour, nuclear energy is a much cleaner alternative to fossil fuels, currently preventing about 1.5 gigatonnes of global emissions each year.
  • Growing Public Support: Global sentiment toward nuclear energy is on the rise, with even environmental advocates increasingly in its favor—an encouraging sign for future projects.
  • International Commitment: At COP28, more than 20 countries, including Canada, the US, France, and the UK, endorsed the Declaration to Triple Nuclear Energy, underscoring strong governmental backing for nuclear expansion.
  • Significant Growth Potential: With 440 operational nuclear plants worldwide, tripling capacity would require 1,320 reactors. Given that 65 reactors are under construction and 110 are planned, an additional 1,145 reactors would be needed to reach this goal—even halving the target would necessitate 570 new reactors. Such an expansion would dramatically boost uranium demand.
  • Economic Benefits: Studies suggest that investments in nuclear energy can spur economic growth, potentially increasing GDP by 0.2% to 3% in countries that prioritize nuclear power.

Greenland’s Uranium Potential and Challenges

Although Greenland is known to possess significant uranium reserves, several obstacles hinder any near-term market impact:

  • Political and Regulatory Hurdles: A 2021 ban by Greenland’s government prohibits uranium exploitation above 100 ppm, posing a formidable barrier.
  • Environmental Concerns: Local opposition driven by environmental and community interests has led to stringent restrictions on uranium mining.
  • Extended Development Timeline: Even if these challenges were overcome, new mining operations in Greenland would likely require many years—possibly a decade or more—to become operational.

Market Implications for Investors

Considering the current market conditions, several key implications emerge for investors:

  • Persisting Supply Deficit: The ongoing and projected shortages indicate that uranium prices are more likely to rise in the near to medium term.
  • Limited Short-Term Impact from Greenland: Given the regulatory and developmental challenges, Greenland’s uranium reserves are unlikely to affect the market significantly in the short run.
  • Surging Demand: With over 60 new reactors under construction globally and increasing support for nuclear energy, demand for uranium is set to grow substantially.
  • Importance of Diversification: Recent geopolitical shifts underline the necessity of diversified supply sources to ensure long-term energy security.

Conclusion

Investors concerned that Greenland’s potential uranium production might lower prices should instead consider the current severe supply deficit, the rapid depletion of secondary reserves, and the forecasted surge in global demand. With ambitious international plans to expand nuclear capacity and a pressing need for new reactor construction, additional uranium supply—even from Greenland—will likely be absorbed by the market, thereby supporting, rather than reducing, uranium prices. New sources of uranium will be crucial in meeting the growing global demand for nuclear fuel.

Nvidia Breaks Support – Is a Tech-to-Commodities Shift Underway?

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Here are two key charts to focus on this week.

First, we examine the S&P 500 heat map, which highlights last week’s biggest losers—many of which were major tech stocks. Among them, Nvidia stood out as the biggest tech loser of the week.

By now, the impact of DeepSeek on the AI modeling landscape is widely recognized. For those looking for more insight, we recently published a blog titled ‘The Rise of DeepSeek: Redefining the Future of AI.‘

We’ve been tracking Nvidia’s potential decline since mid-November and revisited the topic after its Outside Reversal on January 7th. As outlined in our last update, ‘Market on Edge: Is Nvidia Signaling a Bigger Pullback Ahead?‘ the stock has now broken below its near-term support at 135.00, with the next key level to watch at 98.00.

This movement is worth watching closely, as it could validate our forecast of a rotation out of high-flying tech stocks and into commodities—potentially fueling the next major rally.

As usual, we will have full coverage of all the markets in Sunday’s issue of the Trend Letter

Stay tuned!

Market update – DeepSeek Hits Big Tech

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A surge in interest around China’s AI model, DeepSeek, shook markets today, with the Nasdaq falling 3.07% and Nvidia plunging nearly 17%. This development raises concerns about the sustainability of AI investments, particularly whether costly infrastructure like chips and data centers will deliver returns. Nvidia, valued at over $3 trillion, faces growing skepticism as DeepSeek emerges as a low-cost rival.

On January 8, we highlighted Nvidia’s “outside reversal” (white arrow on chart below) when it hit an all-time high after unveiling its compact AI superchip, the GB10, before retreating to test its 50-DMA. At the time, we warned that failure to hold support at 127.00 could lead to a deeper correction. See our full analysis here. Below is Nvidia’s updated chart.

DeepSeek announced that its R1 model rivals OpenAI’s o1-mini, unveiled in September, while training costs for its latest model totaled $5.6 million—far lower than the $100 million to $1 billion cited by Anthropic CEO Dario Amodei for similar projects. The company trained its V3 model using just over 2,000 Nvidia chips, compared to the tens of thousands typically required for comparable AI systems.

The company said training one of its latest models cost $5.6 million, compared with the $100 million to $1 billion range cited last year by Dario Amodei, chief executive of AI company Anthropic.

“This new AI challenger has spooked investors,” said AJ Bell investment director Russ Mould. “Its assistant is free, operates on lower-cost chips, and uses less data—posing a serious challenge to Western AI leaders.”

DeepSeek’s rapid rise is escalating the AI rivalry between the US and China, particularly in light of Stargate—a US-based joint venture by OpenAI, SoftBank, Oracle, and MGX to expand data center capacity.

The news of DeepSeek’s emergence sent shockwaves through the market, with chipmakers suffering significant losses on fears that the availability of lower-cost alternatives will erode their pricing power. This pressure contributed to a notable sell-off in the Nasdaq tech index.

Conversely, industrial companies poised to benefit from more affordable AI solutions experienced gains, as reflected in the rally of the Dow Industrial Average Index. This market reaction underscores the shifting dynamics in the AI landscape, where cost-efficient technologies are reshaping winners and losers.

Stay tuned!

Market on Edge: Is Nvidia Signaling a Bigger Pullback Ahead?

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Let’s start with the hottest stock in the hottest sector of the market. Nvidia just unveiled its new compact AI superchip, the GB10, and its stock soared to a record high of $153.13 at yesterday’s open. It’s a textbook example of a meteoric rise.

But it turns out it was the classic rally on the hype of a new product. The stock quickly reversed, dropping $13.12 from peak to trough. It created an ‘outside reversal’ (circled), where the stock opened higher than previous day day, but closed much lower at $140.14 – a very bearish signal. We need to watch this carefully!

That move is very bearish and was the biggest single day pullback in NVIDIA’s history. We need to see if this is the start of a telling correction in the stock market rock star which has led the big 2024 rally.

What we are watching is to see if NIVDA breaks down below that lower rung (green diagonal line) of its wedge pattern at 135.00.  If it does, then the next Key Support sits at 127.00, so we are watching that level to see if it fails. If it does, then we could see NIVIDA have a significant correction (purple dotted line).

Secondly, we want to revisit the Head & Shoulders pattern we highlighted on January 2nd.

Back then, we noted that if the right shoulder of the S&P 500 breaks below the neckline (green dotted line), it could signal a significant correction in the markets.

This remains a key level to watch. A breakdown below the neckline (potential move highlighted by purple dotted lines)  would confirm the pattern and could set the stage for a broader market pullback. Keep an eye on this critical support level!

While there’s no guarantee either scenario will play out, if NVIDIA breaks down, it could drag the rest of the market down with it.

Stay tuned!

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“Head & Shoulders Pattern Forms – Key Market Moves Ahead This Friday”

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As of January 2, 2025, the much anticipated Santa Claus rally is failing to materialize. The S&P 500 heat map painted another grim picture, with most sectors in the red. However, Nvidia and Meta managed to post solid gains today, while the oil sector continued to show some resilience. Outside of those and a few other bright spots, the broader market remained under pressure.

Over the past few weeks, we’ve highlighted a critical technical trend we’ve been closely monitoring. On the chart below, we’ve drawn a trend line (upper yellow diagonal line) connecting the November low to the present. From November to August of this year, this trend line served as support, but in August, it failed to hold (first white arrow and circle). Since then, it has acted as a resistance level (red arrows).

Following the breakdown in August, we established a second, lower trend line by connecting the subsequent lows. This lower line has provided key support for the S&P 500 up to December 18th. However, since then, the index has struggled to re-enter the channel between these two trend lines.

Zooming into a shorter timeframe, we can clearly see the S&P 500 rallied to test the lower boundary of the uptrend channel but failed to break through (white circle). Since then, it has turned lower.

A Head & Shoulders pattern is now forming, signaling a potential bearish scenario. If the right shoulder breaks below the neckline (green horizontal line), it could trigger a more substantial decline.

To estimate the potential downside, we measure the distance from the head to the neckline and project that downward. This suggests a support target around the 5600 level.

As of today, the neckline remains intact, so there’s no confirmation of an imminent decline. Friday’s market action will be crucial—either the neckline holds, prompting a rebound, or it breaks, paving the way for lower lows with an initial target near 5600.

Stay tuned !