Wall Steet was mixed to start post-holiday week trading, seesawing on renewed tariff uncertainty and tariff threats from US President Donald Trump. On Tuesday, the major indices traded in a narrow range as trading volumes declined. For example, the tech-heavy Nasdaq 100 Index ETF (QQQ) gained .06% while volume fell 23% versus the 50-day average. Meanwhile, some rotation forces have carried over from last week as the once-lagging small caps outperformed, with the Russell 2000 Index ETF (IWM) gaining 0.70% for the session.
Though the bulls remain in control of the market’s direction, there are some short-term caution flags to watch for, including:
The Nasdaq is Overbought: According to the Williams % Range and several other technical metrics, tech stocks are overbought on the short-to-intermediate-term time frames.
Distance from the 10-day Moving Average: QQQ has not tagged its short-term moving average 10-day exponential moving average for ten consecutive sessions, and counting.The 10-day streak above the 10-day moving average is the longest such streak of 2025.
Sentiment has Flipped Bullish: The ‘CNN Fear/Greed Indicator’ has reached the ‘Extreme Greed’ level for the first time in 2025. Remember, bull markets like to climb the proverbial ‘Wall of Worry.’ When everyone has turned bullish, making significant gains can be difficult for the market, without at least ‘shaking the tree.’
The above metrics are secondary indicators and do not mean that investors should get bearish on the market. However, they do mean that there will likely be better areas that investors can find to buy stocks. Beyond price, one bullish thing to watch is that the market has been remarkably resilient in the face of the latest tariff uncertainty. Early in 2025, tariff headlines would send stocks down 1% or more in a single session. Lately, such headlines have led to slight intraday declines that bulls quickly bought up.
Stocks on the Move
‘Ethereum treasury’ stocks likeSharpLink Gaming (SBET) are on the move. Crypto stocks such as stablecoin issuer Circle Group (CRCL) and Coinbase Global (COIN) should be watched ahead ofthe Republican-led ‘Crypto Week’ next week. M&A activity is increasing in 2025. Utility company AES (AES) is up in early trading as the company explores a potential sale. Meanwhile, biotech giant Merck (MRK) is buying Verona (VRNA) in a $10 billion deal.
5 Stocks Set to Double
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Today, See These 5 Potential Home Runs >>Merck & Co., Inc. (MRK) : Free Stock Analysis Report
The AES Corporation (AES) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
iShares Russell 2000 ETF (IWM): ETF Research Reports
Verona Pharma PLC American Depositary Share (VRNA) : Free Stock Analysis Report
Coinbase Global, Inc. (COIN) : Free Stock Analysis Report
Circle Internet Group, Inc. (CRCL) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
