Inside Markets — New Highs

The SPX and NDX quietly extend to new highs after a relatively brief two-month period of consolidation. A break to new highs after a prolonged period of consolidation removes overhead supply, which often clears the way for further gains. The dynamic is a bullish technical development, but we expect limited upside in this case given the recency to the old high. Both indices are in overbought territory but lack bearish momentum divergence signals that often precede a pullback. The technical pattern suggests further upside until those divergences are triggered.

Beginning of the year inflows are now fading, but the corporate buyback window remains wide open and supportive through March 14. Sentiment is also mostly supportive with bearish respondents in last week’s AAII survey (individual investors) reaching elevated levels of 47.3. A better-than-expected CQ4 earnings season has been the fundamental driver of upside with calendar-year ’25 on track for ~11% earnings growth. Upcoming earnings prints starting with WMT tomorrow and NVDA next Wednesday are important near-term catalysts.