Week In Review: Momentum Fades as Rotation Begins

Markets opened weak on Friday, but turned higher after new headlines eased concerns over tariffs on China. Ally Financial (ALLY) also helped calm worries about credit exposure in the banking sector. The S&P 500 (SPX) moved from early losses to finish near flat, showing how quickly sentiment can shift. Volatility remains high, and traders are becoming more cautious after weeks of steady gains.

Retail investors are still buying dips aggressively, with record levels of options trading. This kind of activity often signals a turning point when larger institutions start pulling back. The S&P 500 continues to trade just below a key trend line. A close below that line would likely confirm a larger correction of around 10%, though that has not yet happened. For now, it is only a warning sign, not a confirmed breakdown.

Regional banks, which had been strong, pulled back this week. Semiconductor valuations remain stretched, and the market’s leadership has narrowed to a few large tech names. That leaves the broader market vulnerable if semiconductors start to weaken.

Commodities and Metals

Commodity markets are seeing large price swings. Palladium hit the $1,600 level before falling about 8–8.5%. Momentum has cooled, and the relative strength index is showing that buyers are backing off. A potential entry could come closer to $1,300 if the market finds support.

The drop in palladium matched weakness in silver and gold. Silver fell about 5–6%, and gold pulled back after nine straight weekly gains. These moves suggest a natural pause after a strong rally. Both metals are still in longer-term uptrends, but traders should expect more sideways action before another push higher.

Technology and AI-Linked Equities

Advanced Micro Devices (AMD) is testing the top of a long-term rising channel. That level has acted as resistance several times before. A breakout would need strong buying and more capital coming in, which may not happen right away. The stock’s position now signals caution and the potential for a short-term pullback.

Nvidia (NVDA) shows a similar setup. A long upper wick formed on its weekly chart near resistance, often a bearish short-term signal. The stock is sitting just above a key trend line. If that level fails, price could fall toward the middle of its range, around $160. Because Nvidia carries such heavy weight in the S&P 500, any drop could drag the index lower as well.

The VanEck Semiconductor ETF (SMH) also shows a long upper wick that has not been erased. This adds to the broader risk across semiconductors. Smaller speculative tech names like Rigetti Computing (RGTI), Oklo (OKLO), and SNDK have seen steep declines, showing that momentum is fading in riskier corners of the market.

Rigetti Computing (RGTI) remains active but volatile. The stock has bounced after filling a recent gap, and the next resistance target sits near $56.34. If support breaks, the price could fall toward $35.34. These moves can happen fast, with intraday swings of 10–15%, so keeping risk tight is important.

Consumer and Industrial Equities

Colgate-Palmolive Company (CL) is trading near multi-year lows but showing signs of strength. The stock is trying to break above a downward trend line, which could set up a recovery. A confirmed move higher may deliver about 20% upside over time, while investors collect steady dividends along the way.

Starbucks Corporation (SBUX) is also showing early signs of a rebound. The stock fell about 20% earlier this year but found support near $80. The target now sits near $100 if the price continues higher. A confirmed breakout above the recent pivot would strengthen that outlook.

Keurig Dr Pepper Inc. (KDP) is gaining attention as money shifts from big tech into smaller dividend stocks. As investors move toward safer yield plays, these names could see stronger inflows and faster recoveries.

Ally Financial (ALLY) continues to act as a measure of market confidence. Its ability to stabilize early in the week helped calm some of the broader market’s credit fears.

Crypto

Bitcoin (BTC) continues to behave like a risk asset, moving with the broader market. It dropped to about 103,000 early in the session, then rebounded as stocks recovered. Despite the bounce, Bitcoin remains below yesterday’s low, which keeps the short-term trend uncertain. If it closes back above that low, it could see a short-term recovery. A confirmed close below it, however, increases the chance of a move toward 98,000–95,000.

The key difference is that while the stock market finished positive, Bitcoin stayed negative. That kind of divergence shows continued risk reduction across crypto. Historically, weakness in Bitcoin can signal a shift toward more caution in equities as well.

Outlook

Markets are entering a more defensive phase. The S&P 500 (SPX) remains below a key trend line, semiconductors are flashing warning signs, and regional banks are losing momentum. If large tech and AI-related stocks start to correct, the impact could spread across major indices.

Investors are beginning to rotate toward dividend-paying stocks like Colgate-Palmolive (CL), Starbucks (SBUX), and Keurig Dr Pepper (KDP), which offer stability and income. In commodities, palladium’s reversal and the pullback in gold and silver suggest a temporary cooling period after months of strong gains.

In digital assets, Bitcoin’s close relative to its prior low will likely determine the next move. A close above it keeps hope for recovery alive, but a confirmed break could trigger deeper losses.

For now, liquidity remains solid, but confidence is starting to fade. Leadership is rotating, volatility is rising, and markets are signaling that the easy part of the rally may be behind us.