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The market’s mostly been rallying since the Iran peace deal news broke, but most of the strength has come from just a few mega-cap names. The majority of stocks have been lagging, and momentum’s been narrowing fast.
Stocks making one-month highs fell from 325 to 304, while one-month lows jumped from 52 to 109. That’s not broad participation — it’s a market being dragged up by its biggest components.
Even as the indices moved higher, the put/call ratio leaned more bearish, showing traders were hedging instead of getting more bullish. With fading breadth and rising caution, momentum’s slipping.
This isn’t a call for a top. I’m not expecting a major sell-off, just a normal cooling-off period. Earnings are done, the Fed’s quiet, the peace deal’s priced in and tech valuations are stretched. With no fresh catalysts and fewer tailwinds, upside momentum’s on thin ice.
Oil’s been falling and bonds have been stabilizing, both of which helped lift stocks, but they’re sitting near levels that limit further support. External tailwinds are fading at the same time internal momentum’s weakening.
That’s why these breakdown levels matter so much. If they break, especially with the market this extended, the gap-fill becomes far more likely — and while gaps don’t always fill immediately, weakening momentum raises the odds right now.
SPY and QQQ Breakdown Zones
For the S&P 500 (SPY), the key breakdown level is $751.91, which we broke late Tuesday afternoon. A move below that puts the 8-day EMA in play, and there’s nothing between $753 and $751 to slow down a pullback.
The Nasdaq 100 (QQQ) is even more fragile. After breaking below $741.52 Tuesday morning, we’re right back inside the gap, and we’re only about a point above that level. Beneath that sits $737.38, which was broken by 11 a.m. Tuesday, there’s no support underneath — just air.
SMH: The Semiconductor Pressure Point
SMH is sitting near the bottom of its post-gap range. After $644.39 broke, $628.46 became the next target before ultimately settling the day down $31 to $616.10. The sector looked toppy, and chips have run hard enough that a pullback was completely normal.
The market’s already priced in the end of the war and higher tech valuations, so there’s not much left to push prices higher. With momentum fading, a move down to the 8-day EMA on any major index wouldn’t be bullish — but it’s still a tactical pullback, not a call for a market collapse.
Watch current levels closely because a gap-fill lower becomes the next logical move, and you’ll want to be ahead of it.
If things with Iran begin to go south again, the market will likely go right along with it.
I hope that helps!
Roger Scott
Roger Scott Trading
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P.S. If You Missed My State of the Market Briefing…
Hi, Roger here.
The U.S. and Iran look set to make “another agreement.”
But what happens when one party double-crosses the other?
We’ve seen this pattern over and over. And it’s casting uncertainty over the air….
That’s why I decided to hold an urgent state-of-the-market briefing to give my views on what I see coming next…
I shared my predictions on interest rates, oil, gold, crypto, and a shocking S&P 500 price forecast you can’t afford to miss…
I also shared my No. 1 stock pick for June…
A stock I expect to do well, regardless of the next Middle East headline…
Because I’ve spotted unusual buying activity on this ticker from our “friends” on Wall Street…
Now I won’t make reckless guarantees when it comes to the stock market…
But if you’d like to watch my urgent state-of-the-market briefing…
Hear my predictions…
And get my No. 1 stock pick for June free…
