Semis Bleed, Software Breathes — SPY Is Two Dollars from Breaking Down
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Friday split the four major indices. The S&P 500 and Dow finished roughly flat, the Russell added a touch, and the Nasdaq was the lone laggard, down 1%. But S&P breadth improved for a second straight day — 324 advancers versus 178 decliners, with 8 of 11 sectors finishing the week green. The more notable print: the S&P equal-weight index gained 0.55% on the week while SPX fell 1.95%, a sign the index is still being held hostage by a handful of semi and memory names even as breadth quietly widens and mean reversion builds.
Today was, at its core, a month-end rebalancing tape. Pension funds executed their largest mechanical passive selling in history because their holdings ran up so much, layered on top of heavy quarter-end institutional repositioning. That kind of simultaneous across-the-board selling and buying, with surging volume, has limited value for directional reads. Whether this is real rotation or just month-end risk avoidance will only become clear once early-July capital is redeployed. One thing is certain: capital has not exited U.S. equities in size.
SPY closed at 728 without breaking down, but the breakdown zone of 727–743 is right there — two dollars lower and we're through. Below sits the long-term good-value zone derived from Q1 earnings, corresponding to a forward S&P range of roughly 6500–8000, or 18x–22x 2027 EPS. QQQ closed at 706, with a breakdown zone of 693–721; the overhead shelves at 617, 637, 645 and 665 are all visible if it loses those levels.
SOXX fell 7.7% on the week, giving back all of last week's gains — the two-week net is basically flat. Support sits at 554–582; only a loss of 554 confirms this semi run is over — until then, you cannot call it done. Semiconductors remain the S&P's most important earnings contributor; some names simply got ahead of themselves and will find buyers again at reasonable levels. SMH support is 591–613, with breakdown requiring a loss of 557.
Excluding GOOGL, which dropped 2% on its own, MSFT rose 5%, AMZN gained 2.5% and META added 1.3%. Microsoft had previously broken below 392 to form a range; rebounding to 392–435 is a decent showing, but it needs a clear signal — either Q2 earnings or a slowdown in semi capex — to go further. It is also the mega-cap with the fastest expected free-cash-flow recovery ahead. The closer Meta gets to 500, the cost basis, the better the long-term entry.
For Google, if it keeps falling, strong support sits at 311–325 and 298–308; anything from 349 down to 279 is not expensive on a long-term view. NVDA has fallen for several sessions but hasn't broken key levels — the two major supports below still have a meaningful probability of holding. At a 20x–30x growth multiple, sub-175 is already approaching undervalued territory; a straight shot through without a bounce is unlikely absent a sharp cut to industry-wide capex.
Software (IGV) touched a low of 84.2 yesterday, right at support — the closer it gets to that lower zone, the higher the probability of stabilization. Software has been beaten up too hard, but earnings have repeatedly proven the business is not being displaced by AI; the issue is only that AI revenue isn't growing fast enough. It's worth a look, but treat today as neutral and give it a few more sessions. PLTR is a textbook case of "what goes up comes straight back down" — after getting cut in half, it has returned to a value zone; watch 80–97 below. This time it bounced at 100–118, but still needs observation. INTU has support at 244–257 and resistance at 268–300.
ORCL didn't move even as software rallied broadly, weighed down by a fresh CDS high and deep entanglement with the delayed OpenAI listing. TSLA tagged the lower end of its range at 368 but only shallowly; another $10–$20 lower, into 345–350, would bring out stronger buying. Today's bounce lacked staying power. With two more days of pension selling ahead, CTA triggers right overhead, and high leverage not yet flushed, the prudent stance is to stay patient and observe.
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Disclaimer: This article reflects personal market observation and trading review only. It is not investment advice. Markets carry risk — trade with caution.