S&P 500 Rebounds Toward 8,000 as AI Spending Fears Cloud Growth

Stocks are holding near yesterday’s recovery as the AI-share rebound eases some of the anxiety around that trade. The bigger tension is that inflation remains hot while investors are also worrying about what weaker AI spending could mean for the economy. I remain bullish on the S&P 500 above 7,575, with the rising resistance line near 8,000 still guiding the immediate outlook.

In One Minute

Yesterday’s sharp opening decline gave way to a recovery, and the S&P 500 finished up about a third of 1% after rallying more than 1% from its lows. Treasury yields fell despite hot inflation data because economic concerns and demand for safety took priority. The opportunity remains in clearly defined support and resistance setups, but weakness in the AI trade could carry broader economic consequences. For the S&P 500, I’m watching 7,575 underneath the market and the rising resistance line near 8,000 above it.

The Context

The Producer Price Index and Consumer Price Index both showed hotter inflation, yet yields dropped sharply yesterday. Concern about defaults and rising credit default swap costs, which reflect the cost of protection against borrowers failing to repay debt, helped drive that move. Global stock market selling also pushed investors toward United States government bonds, lifting bond prices and lowering yields.

Kevin Warsh’s comments make an October Federal Reserve rate increase highly unlikely. December remains a possibility at the final meeting of the year. That leaves markets balancing persistent inflation against growing concern about economic weakness.

In my view, AI capital spending is a major reason the economy has avoided an official recession, even while roughly three quarters of the population may already feel as though one is underway. A hypothetical 25% reduction in that spending could send the economy into a tailspin. That concern helps explain why yesterday’s bond market focused more on growth risk than inflation.

Key Developments

S&P futures are neutral to slightly higher this morning after yesterday’s reversal. The S&P 500 opened sharply lower, recovered throughout the session, and closed up about a third of 1%. That was a rally of more than 1% from the lows, and the index remained within its bullish structure throughout the decline.

Above 7,575, my bullish bias stays intact. This is a short-term view aimed at the area around 8,000, not a bullish forecast for six months from now. From yesterday’s close, that leaves roughly 2% to 2.5% of potential upside.

The August 13 high is the next resistance test, potentially within the next week or so. We have already tested that area several times, which weakens the barrier, so I would expect another approach to break through. If that happens, the bullish bias continues toward the upper rising trend line.

That line sits at 8,003 today and reaches 8,038 by the end of October. Depending on when price gets there, approximately 8,020 could fit within that moving target. The important point is that resistance rises over time rather than staying fixed at 8,000.

The line begins in the 2022 bear market and connects a 2024 pivot high, along with highs in November and December 2024. Later tests produced pullbacks, although those declines were not large. I would expect some rejection there again, which is why I’m not looking to short the broader market heavily before it reaches that area.

A rejection becomes more serious if it carries the index into the neutral zone and then below it into bearish territory. That would bring 7,000 into view, a decline approaching 10% from the breakdown area. Until that sequence develops, I’m keeping the outlook tied to the existing structure rather than the fear surrounding individual sessions.

The Nasdaq remains weaker this morning as some of yesterday’s technology rebounds fade. It was down 2% before yesterday’s opening bell, which helped make the broader market feel more threatening than the S&P 500’s structure indicated. That difference matters when deciding whether weakness has become a confirmed breakdown.

The KOSPI rebounded overnight, offering some relief after the global selloff. The bounce was modest, however, and I don’t consider it particularly convincing. That leaves me watching for more selling as trading moves from Sunday night into Monday.

The dollar is easing after its strong advance, and I’m looking for a pullback toward 100.85 on the DXY. That area aligns with a trend line connecting previous highs, which the dollar broke above before briefly stalling and continuing higher. On a return visit, that former resistance should provide support.

I would expect some kind of bounce near 100.85. What I don’t know yet is whether it becomes a strong recovery toward new highs or a shallow rebound followed by a breakdown. The response at that line will help answer that question.

The 10-year yield is bouncing slightly today without causing stocks to sell off. Yesterday’s decline reflected anxiety about the economy and the AI trade, so a modest rebound now can fit with improving confidence after AI shares recovered. The relationship between yields and stocks depends on what is driving the move.

Last week’s weekly chart formed a long upper wick near the trend line extending from the 2007 high. The yield never closed above that line on the weekly chart, and a daily long upper wick also provided a bearish reversal signal. This week’s sharp decline followed those warnings.

Oil is hovering around $95 to $96 a barrel and edging higher, putting it on course for a seventh consecutive daily gain. I’m becoming more bearish as that advance approaches resistance. I started a small short position late yesterday through USO, using an oil-related security traded in a stock account.

The position is small while I assess the resistance test. The setup rests on the extended run and its location on the chart. I’m watching whether that area produces the reversal I’m looking for.

Gold is slightly lower but continues to reclaim the support line after briefly closing beneath it. Those closes did not produce confirmation, and price recovered the boundary each time. That means the breakdown has not been established.

With confirmation below the line, I would expect a move toward $3,500. Until then, gold is still holding on at support. GLD is the ETF referenced for gold exposure, but the technical discussion here concerns gold itself.

Silver has a weaker structure because it closed below support and then confirmed the break. It subsequently reached a double bottom and bounced from that previous low. That rebound does not remove the confirmed breakdown.

If silver rallies toward the broken support line, I would expect rejection and another move lower. I’m now more firmly in the camp of silver reaching $50 than gold reaching $3,500. Gold could still reach its downside target, but silver has already supplied the clearer bearish confirmation.

Natural gas closed above resistance but failed to confirm the breakout, then slipped back below it. That is a false breakout, and the daily chart does not look strong here. I still hold a half position and may add back exposure if price moves lower toward the support area I’m watching.

Tesla is gapping higher after Elon Musk demonstrated a flying Roadster using SpaceX technology, including a flip and landing. Musk pointed to production by 2028, but I’m skeptical about that timing. Earlier expectations for full self-driving capabilities and robots have taken longer to arrive, and safety and regulatory requirements could delay this project as well.

On the chart, Tesla remains inside a clearly defined channel. The upper boundary has repeatedly rejected price, while the lower boundary has repeatedly produced strong rebounds. A rally toward $393 would bring the stock into resistance again.

A breakout remains possible, so a short near the upper boundary needs a stop above it and a response if price confirms higher. Previous declines within the channel included 33%, 13%, and 18% moves, depending on the exit. Rebounds from the lower boundary included gains of 30% and 32%.

Those moves illustrate why the structure matters. A failed short could cost 2% or 3% if stopped after confirmation above resistance, while a successful channel move could offer considerably more room. The approach depends on following the levels consistently rather than assuming every trade will work.

Microsoft formed a daily long upper wick and pulled back slightly, but it never reached the triple top resistance area. I would have given that reversal signal more weight if it had formed directly at resistance. Its location makes me more cautious about treating it as a decisive bearish signal.

I generally prefer double tops for short setups. By the third test, resistance can weaken, allowing price to pause, consolidate, and eventually break higher. I’m watching whether Microsoft follows that path or reverses beneath the barrier.

IonQ opened into an area where a gap fill and a rising trend line came together. Those overlapping supports helped frame the rebound from $30 to $34 during the session, a move exceeding 10%. I took profits after that advance rather than holding out for another dollar.

Caterpillar’s sharp decline reached a major gap fill and the Fibonacci 0.886 retracement, a reference measuring how much of an earlier move has been reversed. The stock was oversold as it reached those overlapping supports. I entered during the decline and took profits on the rebound.

Digital Assets and Crypto

Bitcoin briefly fell below $81,000 yesterday before recovering, and it is slightly lower again today. The level I care about remains $81,000. A daily close beneath it, followed by confirmation, would point toward $75,500.

Recent Bitcoin trading also shows how forced liquidations can exaggerate a move. When leveraged positions cluster around a particular level, a sharp decline through that area can force traders out before price rebounds. That makes the difference between a temporary intraday break and a confirmed daily breakdown especially important here.

Why It Matters

Yesterday showed why I keep the market view tied to technical levels rather than the emotional force of a selloff. The S&P 500 remained bullish even while technology shares were falling sharply, and both IonQ and Caterpillar reached defined support areas before rebounding. Those were specific setups, not reasons to buy every decline.

The same discipline applies when a move fails. Gold has repeatedly recovered without confirming a breakdown, while silver has already confirmed one and natural gas has failed to hold its breakout. Consistent position sizing and clear responses to confirmation help keep those different conditions from turning into emotional decisions.

Key Details

Bull Case

The S&P 500 remains bullish above 7,575, and another attempt at the August 13 high could clear the way toward the rising upper boundary. Gold continues to defend its structure because the breaks beneath support have not been confirmed. Microsoft could also pause near its third resistance test and eventually break higher, although that outcome remains unresolved.

Bear Case

The broader warning would be an S&P 500 rejection near its upper trend line followed by a move through the neutral zone into bearish territory, bringing 7,000 into consideration. Oil’s extended advance is approaching resistance, Tesla faces its channel boundary near $393, and silver’s confirmed breakdown keeps $50 in view. Gold needs confirmation before $3,500 becomes the expected path, while Bitcoin needs a confirmed daily break below $81,000 before $75,500 becomes the next target.

What to Watch Next

Next week brings less economic data but more earnings, including Netflix, which could keep individual stocks active. I’m also watching the KOSPI from Sunday night into Monday, the S&P 500’s August 13 high, and the dollar’s response near 100.85. Microsoft’s resistance test, natural gas after its failed breakout, and Bitcoin’s daily closes around $81,000 remain important confirmations.

Bottom Line

The S&P 500 is still holding its bullish structure, even as concern about AI spending complicates the economic outlook. Above 7,575, I’m watching the path toward rising resistance near 8,000 rather than treating every sharp decline as a major top. Let price reach the level, wait for confirmation, and keep the risk defined.