October 2, 2026

A late-week rally was not enough to pull the DJIA and S&P 500 out of the negative column as crude oil and Treasury yields remained at elevated levels. Instead, investors bid up mega-cap technology stocks, pushing the NASDAQ 100 (NDX) to fresh highs to end the week. On Monday, crude oil prices nudged higher after President Trump dismissed Iran’s plans to reopen the Strait of Hormuz, causing Treasury yields to tick higher on renewed inflation concerns. Wall Street stocks came under pressure again from higher interest rates on Tuesday, but early losses were pared in the afternoon on comments from NY Fed President John Williams that another rate hike could be pushed out until later in the year. On Wednesday, the Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index showed inflation rising 3.4% Y/Y in August, below economists’ expectations for a 3.7% increase. Following the report, investors further rotated into mega-cap technology stocks as concerns about additional interest hikes abated.

The major U.S. stock indexes whipsawed at the start of Q4 on Thursday as the 10-year Treasury yield initially hit a fresh 24-year high before easing toward the end of the session, allowing stocks to finish with modest gains. Initial jobless claims ticking down to 197K, the lowest level since mid-July, also helped further the gains. By Friday, stocks got a major shot in the arm as the 10-year Treasury yield initially pulled back after the U.S. added fewer-than-expected jobs in September, while oil prices retreated as the CME FedWatch Tool indicated that traders now saw a 22.7% likelihood of a Federal Reserve rate hike at its October meeting, down from the 64% likelihood reading from a week earlier. Oil prices also dropped after the G7 nations agreed to release 100M barrels of crude oil and diesel from stockpiles. The NASDAQ touched all-time highs before retreating slightly to end the period. The Technology (XLK), Energy (XLE) and Utilities (XLU) market groups outperformed during the week while HealthCare (XLV), Financial (XLF) and Communication Services (XLC) underperformed.

For the period, the DJIA lost -651.66 points (-1.3%) and settled at 51176.96. The S&P 500 edged lower by -20.69 points (-0.3%) and closed at 7722.72. The NASDAQ was a bright spot as it gained 122.14 points (0.5%), finishing at 27190.86. The small cap Russell 2000 lost 4.66 points (-0.2%) and settled at 2832.89.

Market Outlook: The technical condition of the market remains mixed but improved some as the period came to an end. The S&P 500, NASDAQ and NASDAQ 100 (NDX) continue to do the hard labor as they trade further above their respective 50-day moving averages. MACD, a short-term trend gauge, is in neutral to bullish territory for the growth indexes, while the 14-day RSI, remains in the mid-50 to 60 range but is improving. However, negative divergences remain in both DJIA and Equal-Weight S&P 500 (RSP), which are still in negative territory but are holding support near their respective 200-day MAs. The 14-day RSI for both indexes has broken below the key 40 level, while stochastic readings below 20, indicating oversold conditions. The MarketEdge/ S&P Oscillator has also been in oversold territory for the last 16 sessions, which could indicate that the market is overdue for bounce. The secondary indexes, which include the DJ Transportation Index and Russell 2000 are improving, with the Transports settling just short of reclaiming its 200-day MA and the small cap index successfully testing and bouncing off its 200-day MA as the week came to a close. Demand for semiconductors remained strong, with the Philadelphia Semiconductor Index (SOX) continuing to outperform as momentum is strong.

The market sectors map showed slight weakness in sector ETFs with three of the 11 market groups closing higher for the week. Technology (XLK) was a big gainer, led by strength in Micron Technology (MU) following its stellar earnings report. The Utilities (XLU) sector also received a boost from IDT Corp. (IDT), as revenue growth and margin expansion drove gains, while a jump in oil prices helped the Energy (XLE) sector move above its 50-day MA. Healthcare (XLV), Communications Services (XLC) and Financial (XLF) were the weakest sectors. Eight of the 11 sector ETFs are trading below their 50/100 and 200-day moving averages, continuing to highlight broad deterioration across the market. MarketEdge currently has a LONG opinion on only four sectors: Communication Services (XLC), Energy (XLE), Technology (XLK) and Healthcare (XLV). The narrow leadership that has been responsible for keeping a floor under the market remains intact, but broader accumulation is needed for the next leg up. However, the Market Edge Industry Segment rankings have deteriorated, with Strong or Improving ratings falling to 34 from 41 for the week ending 10/01/2026. At the same time, Weak or Deteriorating ratings increased to 138 from 131, showing broadening weakness across 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 +5, down two notches 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 -2, up two notches from the previous week. Breadth was negative at the NYSE as the Advance/Decline line lost 1465 units while the number of new 52-week lows exceeded the number of new highs on all five sessions. Breadth was also negative at the NASDAQ as the A/D line dropped 2892 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 24.4% vs. 29.4% the previous week, while those above their 200-day moving average fell to 42.3% vs. 46.8% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

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 -4, down a notch from the previous week.

Professional investors remain bullish but are keeping a minor safety cushion. The National Association of Active Investment Managers (NAAIM) Exposure Index fell to 84.7% from 88.1%. Retail investors saw a slight uptick in the bulls with the Association of Individual Investors (AAII) reporting a bump in retail Bulls to 34.6%, but they remain below the historical average of 37.5% for a third week. Bears are still hard to come by with the Percentage of Bearish Investment Advisors remaining at 15.4% for a second straight week.

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 (34) - What’s Not (138): Of the 172 Industry Segments that we track, 34 are rated as either Strong or Improving while 138 are regarded as Weak or Deteriorating. The Previous Week's totals were 41-131. The following are the strongest and weakest Industry Segments for the period ending 10/01/26. Strongest: Security Software & Systems, Movie Theaters, Medical Equipment Distributors, Diagnostics and Testing and Doors and Windows. Weakest: Parcel Delivery, Pulp & Paper Products, Other Transportation and Dairy Products.

ETF Center: The top performing ETF categories for the week ending 10/01/26 were: Specialty Technology (+2.74%), Shorts (2.57%) and Specialty Utilities (+0.02%). The weakest categories were: Sector-Basic Materials (-3.78%), Commodity- Base Metals (-3.59%), Europe (-3.24%) and Commodity- Precious Metals (-2.76%).