Retail and Semis Signal Caution Despite Market Highs

Both and continue to drive this market higher.

Note how far above the price is from their respective July 6-month calendar range highs (horizontal green line).

Also, note the momentum as indicated by Real Motion.

SPY has a mean reversion to the sell side. Plus, with today’s new ATH, momentum did not make a new ATH.

QQQ shows waning momentum and marginal leadership over SPY.

So, what’s going on?

Key Drivers of Record Highs

1. Trade Clarity

• Recent U.S.–EU and Japan deals eased trade tensions.
• Postponed tariff deadlines reduced uncertainty.

2. AI Boom and Tech Earnings

• Nvidia (NASDAQ:) hit $4T market cap; strong tech earnings from AI leaders continue to fuel the rally.
• Semiconductor and cloud sectors lead and strength.

3. Economic Resilience

• Despite tariffs (~16%), growth (~1%) and low (~4.3%) signal no recession yet.

4. Earnings Recovery

• End of a “rolling earnings recession”; profit margins improving across sectors.
• Analysts now forecast the S&P 500 could hit 7,200 in 12 months.

5. Geopolitical Relief

• Israel-Iran cease-fire lowered risk; global markets calm.

6. Retail Momentum

• Return of meme-stock activity (Kohl’s (NYSE:), GoPro (NASDAQ:), etc.) supports broader bullish sentiment.

But not everything is at new all-time highs.

In the economic modern family, only semiconductors made a new all-time high even with the Nasdaq and S&P 500’s stellar performance.

And even SMH has yet to convincingly clear the July 6-month calendar range. (ellipse).

Retail dances on the calendar range high but has not cleared convincingly yet.

Moreover, the all-time high in XRT was made in 2021-now ancient history.

Market Outlook

Bottom Line

The market’s rise is fueled by:

• AI-driven tech strength
• Trade stabilization
• Solid economic data
• Renewed retail enthusiasm

But risks remain.

It could just be the summer doldrums. We have seen major sell-offs in August.

We continue to watch Modern Family and how they behave as we end July.

ETF Summary

(Pivotal means short-term bullish above that level and bearish below)

S&P 500 (SPY) 628 calendar range high now through it, so now support

Russell 2000 (IWM) FAILED 226 the calendar range high.

Dow (DIA) FAILED 450 the calendar range high.

Nasdaq (QQQ) 558 calendar range high to hold

Regional banks (KRE) 62 pivotal

Semiconductors (SMH) did not clear the calendar range high

Transportation (IYT) 70 pivotal

Biotechnology (IBB) 134 the calendar range high. Now must hold

Retail (XRT) FAILED 81.70, the calendar range high.

Bitcoin (BTCUSD) 116 held, over 120k probably higher.

Educational purposes only, not official trading advice.