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March 9, 2025

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My Downside Target for the S&P 500

Stock 4 Mins Read

Things heated up this week on , featuring interviews with Kristina Hooper of Invesco, Keith Fitz-Gerald of The Fitz-Gerald Group, and Jordan Kimmel of Magnet Investing Insights!

Now that 5850 has been clearly violated to the downside, though, it’s all about the 200-day moving average, which both the S&P 500 and Nasdaq 100 tested this week. Friday’s rally kept the SPX just above its 200-day moving average, which means next week we’ll be looking for a potential break below this important trend-following mechanism.

Fibonacci Retracements Suggests Downside to 5500

But what if we apply a Fibonacci framework to the last big upswing during the previous bull phase? Using the August 2024 low and December 2024 high, that results in a 38.2% retracement level at 5722, almost precisely at the 200-day moving average. So now we have a “confluence of support” right at this week’s price range.

If next week sees the S&P 500 push below the 5700 level, that would mean a violation of moving average and Fibonacci support, and suggest much further downside potential for the equity benchmarks.  Using that same Fibonacci framework, I’m looking at the 61.8% retracement level around 5500 as a reasonable downside target.  With the limited pullbacks over the last two years, most finding support no more than 10% below the previous high, a breakdown of this magnitude would feel like a true bear market rotation for many investors.

Supporting Evidence from Newer Dow Theory

So, despite rotating to more defensive positioning in anticipation of a breakdown, what other tools and techniques can we use to validate a new bear phase in the days and weeks to come? An updated version of Charles Dow’s foundational work, what I call “Newer Dow Theory”, could serve as a confirmation of a negative outcome for stocks.

Charles Dow used the Dow Industrials and Dow Railroads to define the trends for the two main pillars of the US economy, the producers of goods and the distributors of goods. For our modern service-oriented economy, I like to use the equal-weighted S&P 500 to represent the “old economy” stocks and the equal-weighted Nasdaq 100 to gauge the “new economy” names.

We can see a clear bearish non-confirmation last month, with the QQQE breaking to a new 52-week high while the RSP failed to do so. This often occurs toward the end of a bullish phase, and can represent an exhaustion point for buyers. Now we see both ETFs testing their swing lows from January. If both of these prices break to a new 2025 low in the weeks to come, that would generate a confirmed bearish signal from Newer Dow Theory, and imply that the bearish targets outlined above are most likely to be reached.

Many investors are treating this recent drawdown as yet another garden variety pullback within a bull market phase. And while we would be as happy as ever to declare a full recovery for the S&P 500, its failure to hold the 200-day moving average next week could be a nail in the coffin for the great bull market of 2024.

RR#6,

Dave

P.S. Ready to upgrade your investment process? Check out my free behavioral investing course!

David Keller, CMT

President and Chief Strategist

Sierra Alpha Research LLC

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

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Did Friday’s Reversal Mark A Major Bottom?

Stock 5 Mins Read

The next step in the stock market will be very interesting. I’ve been discussing a potential Q1 correction since our MarketVision event the first week of January and it’s here. The NASDAQ 100 ($NDX), from its high on February 19th (22222.61) to its low on Friday (19736.81), fell 11.19% before rallying Friday. The NASDAQ 100’s correction has been reached. The small cap Russell 2000 ETF (IWM) hit a high of 244.25 on November 25th. Its low Friday was 201.73. That’s a 17.41% tumble, which is approaching bear market territory.

S&P 500 – Head & Shoulders Pattern?

So what about the benchmark S&P 500? Well, there’s plenty to consider, but I’ll give you my thoughts on what could happen here:

Looking at the above chart, here are several thoughts I have:

  • The July price high should provide at least short-term support and it did on Friday as we saw a rally as soon as the S&P 500 touched this prior high/current support.
  • Volume has accelerated on this most recent selling.
  • We have potentially formed a down-sloping neckline in a topping head & shoulders pattern.
  • Price momentum (PPO) is as weak as it was in early August.
  • RSI has broken 40 support, which is usually a key in remaining in an uptrend.
  • Selling thus far has taken the S&P 500 down 7.83% at Friday’s low, a bit shy of a 10% correction.
  • If we bounce into a potential right shoulder, it’ll be important to see how money rotates; if the current downtrend remains in play, then I doubt we’ll see the S&P 500 clear 5900 on a bounce, especially if leadership on that bounce is poor.
  • A VERY EARLY head & shoulders projection would suggest a possible move on the S&P 500 to 5225 or so.

Fundamental news the next two weeks, along with the market’s reaction and rotation, will likely determine our path over the next month or so. Here are the critical economic releases/events to put on your calendar:

  • Consumer Price Index (CPI) – Wednesday, March 12th, 8:30am ET
  • Producer Price Index (PPI) – Thursday, March 13th, 8:30am ET
  • Fed (FOMC) Meeting – Tuesday, March 18th – Wednesday, March 19th (policy statement at 2:00pm ET)

Listen, this recent selloff has been widely expected, if you follow market rotation and sentiment, and keep a healthy dose of perspective handy. Everyone likes to use fundamental arguments and their perception of the market environment to call bear markets……nearly every year. Few pay attention when the warning signs are out there, but everyone becomes an expert after the market begins to tumble.

I absolutely remain long-term bullish and believe that, once the current bearish phase ends, the S&P 500 will rally back to all-time highs. We may have to endure further pain first though. I doubt we’ve seen the ultimate 2025 bottom. We’ll need some very good news on CPI, PPI, and from the Fed meeting. I’d give that a 20-25% chance at this point.

Sentiment

For awhile, the 5-day SMA of the equity only put call ratio suggested that traders had grown way too bullish in the near-term and this is a contrarian indicator, meaning that the stock market usually moves opposite of sentiment, especially if the bullish or bearish sentiment extends too long. Take a look at the CPCE 5-day SMA over the past year:

I use the .55 level as the level at which options traders are growing too bullish and it signals a potential short-term top. On the above 1-year chart, you can see how effective 5-day SMA readings were in marking multiple short-term tops (red-dotted vertical lines). However, over the past 4-5 months, the 5-day SMA reading nearly lived at .55 or below (big red circle). That’s an extended period of bullishness and you can see that the S&P 500 really struggled to print higher highs (black curved line), despite all of the optimism and bullishness among options traders.

The 5-day SMA of the CPCE at .75 also has a tendency to suggest a short-term market bottom as options traders grow overly pessimistic. Look at where we are now. Despite a near bear market in small caps, a correction on the NDX, and a near-correction on the S&P 500, the 5-day SMA of the CPCE remains WELL BELOW .75 and even fell last week! This simply suggests that optimism remains and that could lead to further selling in the weeks ahead.

It’s EB Education Week!

Given the prior warning signs and the recent increased market volatility, we’ve encouraged members over the past couple months to be careful and that cash is absolutely a position to consider. It also is a GREAT time to think about ways to better your trading success. I know many of you have followed me over the years, so I thought it would be an awesome time to discuss much of our research and how we do things at EarningsBeats.com. So for one week only, we are going to show exactly how we put together all of our ChartLists on the StockCharts.com platform.

These are intended to be brief “classes” this week, all starting at 5:30pm ET and lasting 45 minutes or so each. If you can’t attend any (or all) of these events live, no worries at all. We’ll record them and make sure all that register receive a copy of the recording.

To learn more, register, and save yourself a spot, sign up here. It’s time to gear up now, during this market weakness, for a better market and rally ahead. Join us and learn to trade smarter!

Happy trading!

Tom

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Investing

Crypto Market Recap: White House Hosts Bitcoin Summit, Texas Votes “Yes” on Bitcoin Reserve

Investing 6 Mins Read

Here’s a quick recap of the crypto landscape for Friday (March 7) as of 9:00 p.m. UTC.

Bitcoin and Ethereum price update

Bitcoin (BTC) is currently trading at US$86,934.56, reflecting a 2.5 percent decrease over the past 24 hours. The day’s trading range has seen a high of US$90,940.27 and a low of US$86,701.87.

Ethereum (ETH) is priced at US$2,155.47, marking a decrease of 2.3 percent over the same period. The cryptocurrency reached an intraday high of US$2.244.58 and a low of US$2,145.98.

Altcoin price update

  • Solana (SOL) is currently valued at US$144,38, up 0.1 percent over the past 24 hours. SOL experienced a high of US$149 and a low of US$141.65 during Friday’s trading session.
  • XRP is trading at US$2.46, reflecting a 5.5 percent decrease over the past 24 hours. The cryptocurrency recorded an intraday high of US$2.55 and a low of US$2.39.
  • Sui (SUI) is priced at US$2.68, showing a 4.8 percent decrease over the past 24 hours. It achieved a daily high of US$2.84 and a low of US$2.66.
  • Sui (SUI) is priced at US$2.68, showing a 4.8 percent decrease over the past 24 hours. It achieved a daily high of US$2.84 and a low of US$2.66.

Crypto news to know

Crypto summit: Sentiment positive, details limited

The highly anticipated White House crypto summit, hosted by President Trump and David Sacks, brought together key industry leaders and policymakers to discuss the future of crypto and blockchain regulations.

The event provided a platform for attendees such as Ripple CEO Brad Garlinghouse, Strategy’s (NASDAQ:MSTR) Michael Saylor, and Chainlink co-founder Sergey Nazarov to share their insights and offer feedback on the industry’s needs.

The summit was expected to primarily focus on strengthening US leadership in the digital asset industry and fostering an environment that promotes innovation while ensuring appropriate regulatory oversight.

Industry watchers were also hoping for clarity on the executive order (EO) issued on Thursday evening establishing a Bitcoin reserve and digital asset stockpile.

Although US Treasury Secretary Scott Bessent said he would discuss the next steps for possibly acquiring more Bitcoin during a CNBC Squawk Box interview on Friday morning, the government’s announcement that it did not intend to purchase more Bitcoin resulted in a subdued market response.

Crypto assets pulled back further after a senior White House official stated that Trump’s mention of ADA, XRP, SOL, Bitcoin, and Ether as examples of cryptocurrencies included in a strategic reserve should not be overinterpreted.

Market experts had mixed reactions. Some experts called the EO a symbolic move, while others hailed it as a turning point in the market’s development.

Dick Lo, CEO of TDX Strategies, said “Initial disappointment as the market had built up high expectations leading up to the announcement. However, the news is (unambiguously) positive: It would have been unrealistic to expect new buying without a plan on how it would be funded. An important distinction has been made between Bitcoin and the rest of crypto, i.e. not a single dollar will be spent buying altcoins.”

The summit wrapped up with positive sentiments toward Trump’s leadership and the joint effort to advance the digital asset industry, though it didn’t introduce many new details. Trump shared his desire to see legislation enacted before the August break and offered congratulations to attendees.

Texas Senate passes Bitcoin strategic reserve bill

The Texas Senate voted to pass Bitcoin strategic reserve bill SB-21 in a 25-5 vote on Thursday after a fierce debate between Texas State Senator Charles Schwertner, who introduced the legislation, and Democratic Senator Roland Gutierrez of San Antonio.

Gutierrez raised concerns about Bitcoin’s volatility and the potential risks associated with allocating state funds to cryptocurrency.

“When the economy is down, Bitcoin is down, and the fluctuations on this stuff is insanity,” he said. “We have so many real concerns in this state, and so many of our citizens that’re asking for real help, and the last thing that we need to do is go benefit some techno bro.”

Schwertner argued that a crypto reserve would allow Texas to diversify its investment approach and “participate competitively in the evolving digital, financial economy.”

“We don’t have stacks of dollar bills and safes like we did in medieval times. What we have is digital currency,” he told the floor.

The proposed legislation would authorize the state comptroller to purchase, hold and manage Bitcoin and other digital assets as a hedge against inflation and economic volatility. Funding would come from legislative appropriations and private donations. A committee would also be established to advise the comptroller on cryptocurrency investments, making Texas the first US state to create a cryptocurrency reserve if the bill is signed into law.

Trump memecoin generates US$350 million in revenue

Analysis by the Financial Times revealed that Trump’s cryptocurrency project has generated at least US$350 million in revenue from the launch of the Official Trump (TRUMP) memecoin, with roughly US$314 million from token sales and US$36 million from fees on the Solana blockchain.

Following the launch of the Trump memecoin, Trump-linked accounts reportedly sold 100 million Trump tokens at a price below US$1.05. The analysis suggests that after withdrawing the initial USDC earnings, Trump wallets reinvested US$291 million in USDC into another liquidity pool, perhaps to support the market.

The report also highlighted that these Trump-linked wallets sent approximately 14.7 million Trump tokens to 10 different exchanges, including major platforms such as Binance, Bybit and Coinbase (NASDAQ:COIN). While the exact extent of the financial gains from these transactions remains unclear, the analysis indicates that these other transactions may have generated additional profits.

The Financial Times also found that the Trump accounts spent US$1 million on their own tokens at US$33.20 on January 19 and January 20 to stabilize the price amid the TRUMP decline following the launch of Melania Trump’s MELANIA memecoin. The report determined that the 831 million TRUMP tokens still held by Trump-affiliated accounts are estimated to have a notional value of US$10.8 billion.

The memecoin’s official website, Gettrumpmemes.com, states that The Trump Organization-affiliated CIC Digital and Delaware-based Fight Fight Fight collectively own 80 percent of the tokens; however, Trump’s profits are not known.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com

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Tech 5: CoreWeave Plans US$4 Billion IPO, Trump Threatens CHIPS Act

Investing 7 Mins Read

Tech stocks were active this week, impacted by a broader market correction, key announcements and funding rounds.

Google’s (NASDAQ:GOOGL) introduction of AI Mode, a powerful new search tool for complex, multi-part questions, as well as Shield’s estimated US$5.3 billion valuation after securing US$240 million in a new funding round offer a snapshot of the rapid innovation and investor interest driving the tech landscape right now.

With that, here’s a look at other key events that made tech headlines this week.

1. CoreWeave plans IPO, faces Microsoft contract concerns

CoreWeave filed for a New York initial public offering (IPO) on Monday, seeking to raise US$4 billion and an expected valuation of more than US$35 billion.

On Wednesday, the Financial Times reported that Microsoft (NASDAQ:MSFT) pulled out of some of its agreements with CoreWeave. Anonymous sources didn’t give details as to why the startup’s biggest customer cancelled some contracts but alluded to Microsoft’s reduced confidence in CoreWeave after the company allegedly missed deadlines and ran into other delivery issues.

CoreWeave generates over 60 percent of its revenue from Microsoft, to which it supplies computing power from its data centers for running large-scale AI models, including OpenAI’s ChatGPT.

This multi-billion-dollar partnership represents a concentration risk. In its filing, CoreWeave stated that its business, operating results, financial condition and/or prospects could be negatively impacted by changes in its overall strategic relationship with Microsoft, including changes in demand and contractual agreements. Contracts between the two companies reportedly have Microsoft set to spend more than US$10 billion on CoreWeave services by 2030.

CoreWeave’s IPO filing revealed a US$1.9 billion revenue for 2024, alongside substantial debt and net losses. The company has raised US$14.5 billion through debt and equity financing, including US$11 billion in asset-backed loans. This aggressive expansion has led to escalating net losses, which reached US$863 million in 2024, up from US$594 million in 2023 and US$31 million in 2022.

The company’s reliance on chip supplier Nvidia (NASDAQ:NVDA) also poses supply chain risks, particularly concerning potential delays with Nvidia’s Blackwell GPUs.

After publication, CoreWeave delivered a statement to Data Center Dynamics, clarifying “there have been no contract cancellations or walking away from commitments. Any claim to the contrary is false and misleading.”

In a strategic move to further solidify its position in the AI space, on Tuesday, CoreWeave announced that it would acquire AI development startup Weights and Biases. The press release did not say how much the deal was worth, but unnamed sources for The Information said the deal could be valued at around US$1.7 billion.

2. TSMC fluctuates amid investment and political concerns

An interplay of factors, including geopolitical tensions and economic uncertainty, contributed to fluctuating TSMC’s (NYSE:TSM) share prices this week, both in the US and Taiwanese markets.

US shares were down at the start of the week due to concerns of economic upheaval and a potential trade war with China. Its Taiwanese shares fell after the company announced a US$100 billion investment in US chip production, including three new manufacturing plants, two packaging facilities and a research and development center.

Trump’s intention to end the US$52 billion CHIPS Act, which he expressed during his Tuesday evening Congressional Address, added to investor concerns. The CHIPS Act, an initiative from the Biden administration, has pledged funding to TSMC as well as fellow benefactors Intel (NASDAQ:INTC), Samsung (KS:5930) and Micron (NASDAQ:MU) to fund sizeable infrastructure projects. Intel received the largest portion, a US$7.9 billion grant to support commercial factories and another US$3 billion to produce military chips. TSMC is set to receive US$11.6 billion in direct funding and loans.

TSMC’s CEO, C.C. Wei, held a press conference on Thursday to address concerns from Taiwanese critics of the planned US investment who worry that moving advanced manufacturing will lessen US incentive to defend Taiwan from a Chinese invasion. The country’s Chinese Nationalist Party, the KMT, said the investment was a threat to national security.

Wei defended the move, stating it was a response to increased customer demand for AI chips. In a separate statement, Taiwan’s Economics Minister said that TSMC’s most advanced processes would stay in Taiwan until at least 2026.

He did not confirm whether Trump had guaranteed the continuation of CHIPS Act subsidies in light of the new investment pledge but said that the company could proceed without them, emphasizing the desire for fairness.

3. NVIDIA chips to power OpenAI and Oracle’s Stargate data center expansion

A source for Bloomberg said that OpenAI and Oracle (NYSE:ORCL) are preparing to add 64,000 of NVIDIA’s GB200 semiconductors to a new data center being built in Abilene, Texas, the first of the US$100 billion Stargate project announced by the Trump administration in January.

According to the report, the chips will be added to the center in phases, with an initial 16,000 chips set to be completed by this summer and the entire project complete by 2026.

4. Tech stocks share mixed earnings results

This week also saw a mix of earnings reports from major tech companies:

        5. Shift to practical AI continues with agents, specialized applications

        Key developments this week signaled a continuing shift toward AI agent expansion across both commercial and government sectors.

        On Tuesday, Reuters reported on a new division from Amazon (NASDAQ:AMZN) Web Services (AWS) dedicated to AI agents, indicating a strategic focus on automated task solutions for cloud computing clients. The plans were officially announced by Amazon Vice President of AI and Data Swami Sivasubramanian via a LinkedIn post on Wednesday.

        “This new capability – powered by Claude 3.7 Sonnet, Anthropic’s most intelligent model to date – allows developers to have more collaborative, interactive conversations with Q Developer that works with them, asks them feedback and makes iterative changes as they go along,” Sivasubramanian wrote.

        Later, during a public interview at Morgan Stanley’s Technology, Media and Telecom Conference in San Francisco on Wednesday, Meta’s (NASDAQ:META) chief product officer Chris Cox said the company’s upcoming Llama 4 model will have reasoning capabilities powerful enough to create AI agents capable of using a web browser and other tools.

        He described how more advanced AI agents can be built on a foundation of embeddings, enabling them to complete specific business-related tasks like filing receipts. These comments follow a previous CNBC report of Meta’s plans to debut a stand-alone AI app sometime during the second quarter and echo similar statements made to CNBC’s Julia Boorston by Clara Shih, Meta’s head of business AI.

        “We’re quickly coming to a place where every business, from the very large to the very small, they’re going to have a business agent representing it and acting on its behalf, in its voice — the way that businesses today have websites and email addresses,” Shih said, explaining that Meta is working to develop business AIs for smaller businesses who may not be able to hire large AI teams.

        Adding to this trend, OpenAI is reportedly planning to introduce tiered subscriptions for specialized AI agents, with prices ranging from US$2,000 to US$20,000 per month to reflect varying levels of capabilities.

        Also, the US Department of Defense has begun integrating AI agents through collaborations with Scale AI, Microsoft, and Anduril for military operations, including simulation and decision support.

        These moves signal rapid growth in the adoption of AI agents, marking a shift toward practical AI implementation and coincide with broader market shifts showing increased investment in AI applications, as noted in recent financial reporting from Bloomberg’s Kate Clark. This reflects a wider movement beyond foundational AI models, focused on delivering specialized, user-focused AI tools and services, whether through autonomous agents or dedicated applications.

        Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.

        This post appeared first on investingnews.com

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