The S&P 500 index is chopping sideways, but under the hood market looks healthy. At same time, gold and BTC prices show interesting signals.
This content has been produced by Kvarn Investment Services Oy, a licensed investment firm supervised by the Finnish Financial Supervisory Authority. The content is intended for informational purposes only and should not be interpreted as investment advice or recommendation. All investing involves risks, and past performance is not a guarantee of future returns.
Last week, the Kvarn Pulse newsletter was written in a slightly cautious mood. The S&P 500 index had fallen below its 200-hour moving average and dropped beneath its 10-day and 20-day moving averages.
The S&P 500 index has continued its sideways movement throughout June, oscillating around 7,400 points.
However, a positive development over the past week is the index's return above its 10-day and 20-day moving averages.
We must bear in mind, though, that the 10-day moving average is still below the 20-day moving average, and both of these averages remain on a downward trajectory.
The development of the entire index mirrors the trajectory of the technology sector, which acted as the engine for the spring rally.
Yet, if we exclude the heavily weighted technology sector from the analysis, the past week's development looks slightly stronger. S&P 500 ex-Technology has risen right near its record highs in recent days.
Meanwhile, the equal-weighted S&P 500 index, which balances out the outsized impact of larger companies, has already reached new record highs this week.
Russell 2000 index, representing smaller companies, has likewise hit new record highs.
Market breadth has also continued to improve, and the number of companies trading above their 50-day moving average is still growing.
In the "traffic light" model we have used, S&P 500 index has climbed back into the green zone in recent days.
VIX index, which often indicates market nervousness, has clearly returned below its 200-hour moving average and is near its lowest readings of the past month.
In summary, although the stock market appears to have stalled into a sideways movement at the index level, we believe the overall picture remains quite positive.
This interpretation is supported by the relative weakening of defensive sectors seen over the past week. Last week, we noted that defensive sectors, such as utilities (XLU), had started to strengthen against the S&P 500 index during June. We initially considered this a slightly cautionary sign.
However, from the chart below, we can see that this trend appears to have reversed last Friday, and utilities, consumer staples (XLP), and healthcare (XLV) have all weakened again against the S&P 500 index in recent days.
As long as this situation persists, it points to a recovery in market risk appetite and supports positive expectations for the continuation of the stock market's uptrend.
The direction of the next significant move at the index level might be decided by the tug-of-war between semiconductors, which drove the spring rally, and the heavily weighted Mag 7 companies.
From the chart below, we can see that during June, semiconductors have remained in an uptrend, albeit a slowing one.
Conversely, the price of the MAGS ETF, representing the Mag 7 companies, turned into a clear downtrend in early June.
While semiconductors have pulled the market upward at the index level and the Mag 7 companies have dragged it down, the S&P 500 index has moved sideways without a clear trend.
On the other hand, just over the past week, we have seen this situation potentially start to reverse. The rise in semiconductors has stalled, and we have not seen new record highs from their representative ETFs. Simultaneously, the Mag 7 companies have perked up, and the MAGS ETF price is testing its 200-hour moving average.
We expect that the next clear move for the S&P 500 index will be seen when both semiconductors and the Mag 7 companies end up on the same side of their 200-hour moving averages. At this stage, our primary expectation is that the direction of this move would more likely still be upward, but this requires continued strengthening from the Mag 7 companies.
For this week's thematic idea, we are highlighting the banking sector.
From the lower panel of the chart below, we can see that although the financial sector clearly lagged behind the S&P 500 index during the tech-driven rally of April-May, it has started to noticeably outperform the index during June.
Banks look like a particularly strong theme within the financial sector. While the ETFs representing the broader financial sector are mostly still below their January 2026 peak readings, the price of the iShares S&P U.S. Banks ETF (IUS2) has already climbed to new all-time highs.
In addition to the banks in the S&P 500 index, European banks also look strong. While the aforementioned US bank ETF's price is just barely above its January 2026 peak, the price of the iShares STOXX Europe 600 Banks ETF (EXV1) has climbed much more clearly past the peak readings seen in February.
Gold's price action has offered some interestingly ambiguous developments over the past week.
On one hand, it is obvious that gold's downward trend has continued. The price has hit new lows for the year in recent weeks and briefly dipped below the $4,000 level.
On the other hand, we have seen the price at least temporarily stabilize right around the $4,000 mark, and we have seen gold futures momentarily poke their heads above the 200-hour moving average.
On the other hand, the prices of gold ETFs, which operate on narrower trading hours than futures, still have a long way to go to reach their 200-hour moving average.
When looking at the daily chart, gold's price development also looks intriguing.
The price has begun to stabilize around $4,000 over the past week. This is not only a significant round number but also very close to the level where the gold price found support to continue its uptrend in October 2025.
On the daily chart, we can also see the Relative Strength Index (RSI) forming a bullish divergence (the price makes a lower low, while the RSI makes a higher low), which sometimes serves as an indication that the end of a downtrend is approaching.
It is certainly worth noting that despite the bullish divergence, the RSI dipped below 30 at its higher lower, pointing to clear weakness. Because of this, we are somewhat cautious about drawing strong conclusions from this divergence just yet.
In summary, even though gold's price decline has continued, we have seen signals over the past week that give us reason to monitor it with heightened precision in the near future. The price of gold has come down sharply since March, and it will be interesting to see if a bottom might already be at hand.
Like the price of gold, the crypto market has also been interestingly ambiguous over the past week.
Similar to gold, the price of Bitcoin has hit new lows, briefly dipping below $58,000. Conversely, just like gold, Bitcoin's price has given early indications of stabilizing in the $58,000–$60,000 range. Much like gold futures, Bitcoin's price has also momentarily risen above its 200-hour moving average.
As with gold, a clear bullish divergence formed by the Relative Strength Index (RSI) can be seen on Bitcoin's daily chart.
In this case, too, the higher low made by the RSI is right around the 30 mark, so we are cautious about making strong interpretations of this divergence, but we consider it an encouraging sign regardless.
In addition to the bullish divergence on the daily chart, we can also see another bullish divergence forming over the past week on the four-hour chart.
Together, these observations provide grounds for the interpretation that the downtrend might at least be leveling off.
However, the obvious must be stated: even in a more positive interpretation, we would currently only be at the end of a downtrend, not yet in a new uptrend.
For now, all upward movements between $60,000 and $68,000 primarily look like noise within an ongoing downtrend. We can begin talking about a genuine trend reversal at the earliest when the price crosses the 200-day moving average (around $75,000). A fairly unambiguous interpretation of an uptrend would be achieved if the price rose above the local peak in May (approx. $84,000).
Thus, there is still about a 40% distance to a true trend reversal. This, of course, means that even in mere "bear market rallies," there can be quite nice profit opportunities for a trader, as long as one knows to exit the trades in time as the rally stalls.
From the altcoin side, we highlight the notable strengthening of Solana. The price of the SOL token seems, for now at least, to have broken its own downtrend.
Solana has gained particular momentum in recent weeks due to, among other things, its strengthening narrative as a trading platform for tokenized stocks.
Propelled by Solana, many protocols operating within its ecosystem have also gained momentum. For example, the price of the staking protocol Jito Network's JTO token has risen to its highest levels since November 2025.
The financial markets are heading into July 2026 from a quite interesting starting point. Following consolidation, the stock market looks ready to continue its upward climb, and at the same time, the sharply declining prices of gold and Bitcoin are showing signs of stabilizing.
In a more optimistic scenario, investors could next be facing a situation where the stock market, the price of gold, and cryptocurrency prices all embark on an upward trajectory.
Whatever scenario the second half of 2026 offers us, we will continue to monitor the situation and keep you up to date, so stay tuned!
The information and sources presented are for illustrative purposes only. While obtained from sources deemed reliable, their accuracy cannot be guaranteed.
The stock market's shallow correction has quickly reversed into a broadening rally fueled by positive Middle East de-escalation news. Meanwhile, gold and Bitcoin are showing early signs of stabilizing at key support levels, opening up potential trend-reversal opportunities across both commodity and crypto markets.
The stock market has entered a correction following a drop in the S&P 500, though its broader uptrend remains intact as long as key support levels hold. Meanwhile, the cryptocurrency market has shown signs of stabilization with Bitcoin remaining above $60,000.
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