September 25, 2026

Another volatile week kicked off with the NASDAQ and NASDAQ 100 posting new record highs as investors were back to 'risk on' on hopes President Trump's meetings with Iran and China would ease geopolitical tensions. Gains in the overweighted Mag 7, semiconductors and AI-related stocks did the heavy lifting with the Magnificent 7 ETF (MAGS) also notching a new all-time high. Strong economic data stalled the rally midweek as the S&P Global Composite PMI rose to 58.4 in September from 56.0 the prior month, the highest level since 2021. Services outpaced manufacturing, though factory hiring rose at its fastest pace since 2021. Yields jumped on the strong numbers with the rate on the 10-year Treasury closing at 5.108%. Energy (XLE) was the only sector to close higher as 10 of 11 market sectors traded down. Cyber Security stocks were one of the few bright spots that day as CrowdStrike (CRWD) and Fortinet (FTNT) hit record highs and Palo Alto Networks (PANW) soared +5%. The different indexes were mixed on Thursday as higher oil prices and yields weighed on all but a narrow group of stocks. Tough talk from several Fed officials pushed the yield on the 10-year Treasury to 5.201% as Philadelphia Fed President Anna Paulson commented that, 'some further tightening may be warranted' and the CME Group FedWatch priced in a 93% probability of a December rate hike. The major averages were higher on Friday and it was enough to land the major averages in the plus column for the week. Crypto currencies traded up to their highest level since February with Bitcoin jumping more than +10% to $84k. A choppy week in oil prices left crude oil down at $92.70 a barrel. The DJIA struggled with the rotation back into big cap tech but snapped a three-week losing streak. The S&P 500 snapped a two-week losing streak, while the NASDAQ and NASDAQ 100 closed higher for a fourth time over the last five weeks. Despite surging yields and the spike in oil prices, investors remain 'risk on'. Underlying breadth points to narrowing leadership but the major averages continue to see positive inflows. According to FactSet research, the S&P 500 is expected to report Y/Y earnings for Q3 up +29.1%, a third-consecutive quarter of earnings growth above 25%. Technology is looking at earnings growth of 63.5% which is why overweighted big cap tech stocks are able to keep the major averages within 1-2% of record highs. If earnings come in up 29.1%, that leaves the forward P/E for the S&P 500 at 19.2. That is below the 5-year P/E average of 19.8 but above the 10-year average of 19.0. Looking ahead, monthly job numbers and the August PCE will headline the economic calendar, while manufacturing, construction and factory orders will also cross the wire.

For the period, the DJIA picked up 145.98 points (+0.3%) and settled at 51828.62. The S&P 500 added 92.91 points (+1.2%) and closed at 7743.41. The NASDAQ gained 546.17 points (+2.1%), finishing at 27068.72. The small cap Russell 2000 lost 22.85 points (-0.8%) and settled at 2837.55.

Market Outlook: The technical condition of the market remains mixed. Despite record highs from the NASDAQ and NASDAQ 100 (NDX), underlying breadth is abysmal. Tuesday's record highs for the tech heavy indexes came with more new 52-lows than highs for only the second time in history, 1999 and 1929. After trading mixed for most of the period, Friday's jump improved some of the technical indicators, but they remain at best, neutral. The DJIA managed to eke out a gain for the week with Friday's gain, but the technical indicators are still in negative ground and the blue-chip index trades below both its 50 and 100-day MA. The S&P 500, NASDAQ and NDX are trading above key MA support levels and were close to record highs as the period ended with their technical indicators in neutral to positive ground and improving. The S&P 500 is still stuck in a trading range between 7500 and 7800. This week also saw the Philadelphia Semiconductor Index (SOX) gain +6.3% and climb above its 100-day MA while the technical indicators also moved into positive territory with improving momentum as demand for semiconductors grows. Shares of Qualcomm (QCOM) soared almost 15% this week, while Advanced Micro Devices (AMD) jumped +12.5%. Not everything bounced back however as the DJ Transportation Index and small cap Russell 2000 struggled and finished lower. The Transports are down -14.3% from its July closing high and has fallen back to a level last hit in April as higher fuel costs bite into profits. However, one caveat is that the DJ Transportation Index is the most oversold it's been since April 2025 looking at the 14-day RSI. The small cap Russell 2000 is down -7.3% from its August record high as this group is more sensitive to higher rates. 

The market sectors map saw a small uptick in sector ETFs as four of the 11 market groups closed higher led by a +3.50% jump in Technology (XLK), followed by strength in Communication Services (XLC), getting a lift from a +12.8% spike in shares of Meta Platforms (META), and Healthcare (XLV) which got a boost from a +28% surge in Moderna (MRNA). Utilities (XLU), Energy (XLE), Financial (XLF) and REITs (XLRE) were the worst performers.  Emphasizing the narrowness of the market gains, the Technology (XLK) sector came within a point of its all-time closing high on Friday and gained +3.95% on the week, while six of the 11 sectors have dipped below their respective 50, 100 and 200-day MA and Financial (XLF) is below its 50 and 100-day MA as banking stocks struggle with a narrowing yield curve. Market Edge only has a LONG opinion on Communication Services (XLC), Energy (XLE), Technology (XLK) and Healthcare (XLV) with the other seven market groups rated AVOID. In addition, the Market Edge Industry Segment rankings have fallen to 41 Strong or Improving from 104 the week ending 8/11/2026, while Weak or Deteriorating ratings dropped to 131 from only 68 showing broadening weakness in the market. 

A chart of these indicators can be found by going to the Market Edge Home page and clicking on Market Recap, which is on the right-hand side of the page just below the Second Opinion Status numbers.

Cyclical Trend Index (CTI): The underlying premise of the CTI is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves. There are five identifiable cycles, each with different time durations at work in the market at all times.

Currently, the CTI is Positive at +7, unchanged from the previous week. Cycles B, C, D are Bullish, while Cycles A and E are Bearish. The CTI is projected to remain in a positive configuration into October although adjustments are probable in extending some of the earlier bearish cycles.

Momentum Index (MI): The markets momentum is measured by comparing the strength or weakness of several broad market indexes to the DJIA. Readings of -4 and lower are regarded as bearish since it is an indication that a majority of the broader based market indexes are weaker than the DJIA on a percentage basis. Conversely, readings of +4 or higher are regarded as bullish.

The Momentum Index is Negative at -4, down four notches from the previous week. Breadth was negative at the NYSE as the Advance/Decline line lost 1932 units while the number of new 52-week lows exceeded the number of new highs on all four sessions. Breadth was also negative at the NASDAQ as the A/D line fell 1333 units while the number of new lows out did the new highs on each day. Finally, the percentage of stocks above their 50-day moving average dropped to 29.4% vs. 35.6% the previous week, while those above their 200-day moving average fell to 46.8% vs. 50.0% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

Underlying market breadth deteriorated for a sixth consecutive week with the NYSE and NASDAQ Advance/Decline lines again lower. The NYSE A/D line fell back to a level from early June, while the NASDAQ A/D is back back to its March numbers in these accumulating lines that are regarded as leading indicators of market direction. The NYSE tends to top out 3-5 weeks ahead of a market reversal and last hit a high the week ending August 14. New lows on the NYSE and NASDAQ expanded and outnumbered the new highs by a wide margin for a fourth consecutive week with the NASDAQ hitting 481 new 52-week lows on Thursday, the most since March 30, and only two days after the NASDAQ hit a new record high.

Sentiment Index (SI): Measuring the market's Bullish or Bearish sentiment is important when attempting to determine the market's future direction. Market Edge tracks thirteen technical indicators listed below that measure excessive bullish or bearish sentiment conditions prevalent in the market. The Sentiment Index is Negative at -3, down a notch from the previous week.

Professional investors remain bullish but have backed off their enthusiasm that peaked the last week of August. The National Association of Active Investment Managers (NAAIM) Exposure Index rose to 88.1% from 71.9% which was the least equity exposure for this group since the week ending 4/10/2026. Retail investors saw an uptick in the bulls with the Association of Individual Investors (AAII) reporting a bump in retail Bulls to 32.7%, but they remain below the historical average of 37.5% for a second week. Bears are still hard to come by with the Percentage of Bearish Investment Advisors dipping to 15.4%, the lowest percentage in five-weeks.

Market Posture: Based on the status of the Market Edge, market timing models, the 'Market Posture' is Bullish as of the week ending 08/07/2026 (DJIA - 54,036.93). For a closer look at the technical indicators and studies that make up the market timing models, check out the tables located below.

Industry Segment Rankings: What's Hot (41) - What's Not (131): Of the 172 Industry Segments that we track, 41 are rated as either Strong or Improving while 131 are regarded as Weak or Deteriorating. The Previous Week's totals were 53-119. The following are the strongest and weakest Industry Segments for the period ending 9/24/26. Strongest: Movie Theaters, Sporting Events, Drug Delivery and Gold. Weakest: Parcel Delivery, Other Transportation, Other Infrastructure and Dairy Products. To review all the Industry Segments rankings in the Market Edge universe, click on the Industry Group tab.

ETF Center: The top performing ETF categories for the week ending 9/24/26 were: Specialty Technology (+6.19%), Growth-Large Cap (+2.20%), Shorts (+145%), Growth-Mid Cap (+0.94% and Commodity-Base Metals (+0.86%). The weakest categories were: Specialty Financial (-3.79%), Sector-Basic Materials (-2.93%), Specialty Utilities (-2.77%), Bond-Government Long Term (-2.71%) and Sector-Alternative Energy (-2.71%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT