Traders often mark neat horizontal lines on charts for support and resistance, but sometimes those levels seem to hold firm and other times they break with no warning. Why the difference? The answer usually lies in volume. A support line backed by high trading volume is a lot more likely to hold than one drawn in thin air. As Investopedia notes, “the more buying and selling that has occurred at a particular price level, the stronger the support or resistance level is likely to be”. In short, volume analysis is the missing piece that confirms whether your support or resistance line is meaningful.
The US stock market is sitting at all-time highs, but the rally has been unusually narrow. Almost all the gains have come from a few megacap tech names. Since April, the S&P 500 has jumped about 27%, with the “Magnificent Seven” now making up roughly one-third of the index. Nvidia alone accounts for around 8%, while Microsoft and Apple make up about 7% and 6%. Together, those three represent more than a fifth of the S&P. That raises a simple question: can a rally powered by so few stocks keep going, or is momentum starting to crack?
Earlier this year, energy stocks had some serious tailwinds behind them. Rising oil prices, stable earnings, and talks of a Fed pause helped push the sector higher. The Energy Select Sector SPDR Fund (XLE), which holds a mix of top oil and gas companies, caught a decent bid. For a while, it looked like it might keep going. But lately? That momentum has slowed. Prices are starting to fall, and a few technical signs are flashing yellow. So, is this just a mid-year pause, or are we seeing the early signs of something more? Let’s break it down.
