Technical Analysis

Market Analysis - July 18, 2025

CQ • 5 min read • Friday, July 18, 2025
**Market Status:** U.S. equity markets are closed today, Friday, July 18, 2025, for a market holiday. Trading is expected to resume in the next regular session. --- The major U.S. ...
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Market Report: July 18, 2025

Markets Poised to Resume Trading After Holiday Break

Market Status: U.S. equity markets are closed today, Friday, July 18, 2025, for a market holiday. Trading is expected to resume in the next regular session.

Previous Session Recap

The major U.S. equity indices closed their last trading session at elevated levels, with all primary benchmarks maintaining positions near historical highs. The SPDR S&P 500 ETF Trust (SPY) concluded at $627.98, while the Invesco QQQ Trust (QQQ) finished at $561.98, reflecting the continued strength in large-cap technology stocks that have driven much of this year's market gains.

The Dow Jones Industrial Average, as tracked by the SPDR Dow Jones Industrial Average ETF (DIA), closed at $445.035, demonstrating resilience among blue-chip industrial and financial names. Meanwhile, the iShares Russell 2000 ETF (IWM) ended at $223.74, suggesting that small-cap stocks continue to participate in the broader market rally, albeit with their characteristic higher volatility.

The previous session's close levels indicate that major indices remain well-supported above key technical thresholds, with the S&P 500 proxy maintaining its position above the psychologically important $620 level. The technology-heavy Nasdaq, represented by QQQ, continues to benefit from artificial intelligence enthusiasm and robust earnings from mega-cap technology companies.

Key Movers from Last Session

While specific individual stock movements from the previous session require additional data, the sector rotation patterns observed in recent weeks suggest that technology stocks, particularly those involved in artificial intelligence and cloud computing, likely continued their outperformance. The financial sector has also shown resilience, supported by expectations of sustained higher interest rates and robust lending activity.

Energy stocks have faced headwinds due to fluctuating oil prices and concerns about global demand, while consumer discretionary names have shown mixed performance as investors weigh the impact of persistent inflation on consumer spending patterns.

Overnight and Pre-market Outlook

The most significant development during the market closure has been a series of analyst upgrades from Stephens & Co., focusing on prominent cloud computing and database management companies. These upgrades signal continued institutional confidence in the software-as-a-service (SaaS) sector and could provide momentum for technology stocks when trading resumes.

Stephens & Co. Coverage Initiations:

  • Confluent Inc. received an Overweight rating with a $31 price target, suggesting the analyst firm sees significant upside potential in the data streaming platform provider
  • Snowflake Inc. was initiated with an Overweight rating and a $261 price target, indicating strong conviction in the cloud data platform company's growth trajectory
  • MongoDB Inc. received an Equal-Weight rating with a $247 price target, reflecting a more neutral stance on the database software company

These analyst actions are particularly noteworthy as they come at a time when software stocks have faced scrutiny over valuation concerns and slowing growth rates. The positive coverage from Stephens & Co. suggests that some analysts believe the recent pullback in certain software names has created attractive entry points.

What to Watch at the Open

When markets reopen, investors should closely monitor several key factors that could influence trading direction:

Technology Sector Response: The Stephens & Co. upgrades are likely to generate increased interest in cloud computing and database management stocks. Watch for potential spillover effects into related names such as Palantir, Databricks (when public), and other enterprise software companies.

Sector Rotation Dynamics: With technology receiving fresh analyst support, observe whether this reinforces the ongoing rotation back into growth stocks or if value-oriented sectors continue to attract defensive positioning.

Volume Patterns: Post-holiday trading sessions often experience lighter volume initially, which can lead to increased volatility. Monitor whether institutional investors return with conviction or if retail-driven trading dominates early price action.

Earnings Season Positioning: As we progress through earnings season, pay attention to how companies in the software and technology sectors are being positioned ahead of their quarterly reports.

Key Levels to Watch

SPY (S&P 500 ETF):

  • Resistance: $635.00 - A break above this level could signal continuation of the broader market uptrend
  • Support: $620.00 - This psychological level has provided strong support in recent sessions
  • Critical Support: $610.00 - A break below would suggest potential for deeper correction

QQQ (Nasdaq-100 ETF):

  • Resistance: $570.00 - Technology stocks face this key technical hurdle
  • Support: $555.00 - Recent consolidation has established this as a reliable support zone
  • Critical Support: $545.00 - Breach of this level could indicate broader tech weakness

IWM (Russell 2000 ETF):

  • Resistance: $228.00 - Small-caps need to clear this level for continued outperformance
  • Support: $220.00 - This round number has provided technical support
  • Critical Support: $215.00 - Key level for small-cap market structure

DIA (Dow Jones ETF):

  • Resistance: $450.00 - Industrial and financial strength needed to break higher
  • Support: $440.00 - Blue-chip support level
  • Critical Support: $435.00 - Important for maintaining bullish market structure

Market Outlook

The combination of elevated index levels and fresh analyst optimism in the technology sector suggests that markets may open with a positive bias when trading resumes. However, investors should remain cognizant of the broader macroeconomic environment, including Federal Reserve policy expectations, inflation trends, and geopolitical developments that could influence market sentiment.

The software sector upgrades from Stephens & Co. may provide a catalyst for renewed interest in growth stocks, particularly if these companies can demonstrate sustained revenue growth and improving profitability metrics in their upcoming earnings reports.

As always, traders and investors should maintain appropriate risk management strategies and remain flexible as market conditions evolve throughout the trading session.

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