July 24, 2026

The major averages were pulled down this week by the weight of higher oil prices and rising yields as fighting in the Middle East expanded with the Iran-backed Houthis' threatening to disrupt shipping through the Red Sea. After falling into a Bear market, down -20% to start the week, the Philadelphia Semiconductor Index (SOX) staged a rebound on Tuesday soaring +5.21% as investors rolled back into memory chip makers with Micron (MU) and SanDisk (SNDK) surging more than +12%. The reversal snapped a three-day losing streak for the NASDAQ. Despite additional gains in semiconductors on Wednesday, the major averages finished marginally lower as oil prices and yields ticked higher again with the rate on the 10-year Treasury climbing to 4.665% before closing the week at 4.685%, its highest level since January 2025. The wheels came off the bus on Thursday as fighting in the Middle East expanded to the Red Sea and crude oil prices closed at $91.81 a barrel and Brent Crude crossed above $100 a barrel causing another uptick in yields as inflation pressures grew. After falling to just a 12.8% probability of a July rate hike the prior week as the CPI and PPI came in lower than estimated, the CME Group FedWatch jumped to a 37.9% chance of the Federal Reserve bumping rates higher at next week's FOMC Meeting. While most companies reported better-than -expected Q2 earnings, their stocks traded mixed on questionable forward guidance and signs that investors were wary of higher AI cap-ex spending. Shares of General Motors (GM), 3M (MMM), RTX (RTX), Lockheed Martin (LMT) and Honeywell (HOM) closed the week with solid gains while disappointment in the numbers from Alphabet (GOOGL), Tesla (TSLA), Intel (INTC) and American Express (AXP) saw those stocks trade sharply lower. As investors kept an eye on turmoil in the Middle East, higher oil prices and rising yields, the S&P 500 and NASDAQ ended the period down for a second straight week, while the DJIA and small cap Russell 2000 were lower for a third consecutive week as dip buyers stayed on the sidelines. Next, the focus turns to the July FOMC Meeting and the committee's outlook for interest rates, while another round of key data is released on Thursday in the June PCE, the Fed's preferred gauge for inflation. The remainder of the Mag 7 companies will also release earnings later in the week.

For the period, the DJIA lost 199.17 points (-0.4%) and settled at 51947.25. The S&P 500 fell 45.71 points (-0.6%) and closed at 7411.98. The NASDAQ lost 544.42 points (-2.1%), finishing at 24975.82. The small cap Russell 2000 slipped 32.22 points (-1.1%) and settled at 2930.00.

Market Outlook: The technical condition of the market saw more deterioration this week as the S&P 500 joined the NASDAQ, NASDAQ 100 and SOX trading below its 50-day MA. The DJIA, Equal-weight S&P 500 and Russell 2000 closed the period above their respective 50-day MA with the Russell 2000 bouncing off that support level on Thursday and Friday. A rotation out of the Technology (XLK) sector and into cyclical and defensive sectors however, limited the damage to the broader market as most of the different indexes have remained in a trading range since early June. The NASDAQ and NASDAQ 100 however, broke below that range as the week ended with the mega-cap NASDAQ 100 sliding to an intraday low last hit in early May. The technical indicators show a rally that has stalled with most indicators falling into bearish territory. MACD, a short-term trend gauge, is bearish for the different indexes as is Momentum, as measured by the 14-day RSI, but this indicator held support above 40, hinting that the bull market isn't dead yet. Furthermore, the VIX, a volatility index which measures fear in traders, has remained stubbornly between 15 and 19 which indicates that market participants are still hesitant to price in additional selling pressure while weighing higher oil prices and yields against a strong economy with expanding earnings. Despite these ongoing mixed signals, higher oil prices and a 10-year Treasury flirting with 4.75% will limit upside gains. Additional escalation between the US and Iran will also likely change the outlook for global market gains. One last indicator to throw in the mix is the Market Edge Cyclical Trend Index (CTI). This proprietary market timing indicator is still forecasting that the market is susceptible to weakness through July as we enter what is historically a weak period in the calendar.

The Energy (XLE) sector continues to outperform on rising oil prices, but eight of 11 market groups finished higher despite the broader market posting a down week. Utilities (XLU), Industrial (XLI), REITs (XLRE) and Materials (XLB) were also strong. Consumer Discretionary (XLY) and Communication Services (XLC) were slammed during the period on big losses in Tesla (TSLA), down -19.2% on the week, and Alphabet (GOOGL). Confirming the rotation into cyclical sectors is that a majority of sector ETFs remain above their respective 50/100 and 200-day MA, including Energy (XLE), Financial (XLF), Industrial (XLI), Healthcare (XLV) REITs (XLRE) and Utilities (XLU), while Consumer Staples (XLP), Materials (XLB) and Technology (XLK) have held support at their 50-day MA. Market Edge has a LONG opinion on seven sectors with eight of 11 outperforming or in line with the S&P 500.

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 Negative at -15, unchanged from the previous week. Cycles A, B, C, D and E are bearish. The negative CTI configuration is projected to remain in place through July.

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 -8, down two notches from the previous week. Breadth was mixed at the NYSE as the Advance/Decline line fell 1439 units while the number of new 52-week highs exceeded the number of new lows on four sessions. Breadth was negative at the NASDAQ as the A/D line lost 4233 units while the number of new lows out did the new highs on all five days. Finally, the percentage of stocks above their 50-day moving average fell to 45.2% vs. 55.0% the previous week, while those above their 200-day moving average eased to 55.8% vs. 60.2% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

Underlying market breadth is mixed. The NYSE Advance/Decline Line, a leading indicator of market direction, is only one week removed from a record high but lost ground this week. It's a different story at the NASDAQ as the A/D Line finished lower for a third consecutive week and the accumulative line has dropped to a level last seen in April. The number of new 52-week lows on the NASDAQ outdid the new highs for a second week with the new highs contracting. New NASDAQ lows hit 342 on Thursday, the most since June.

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 -1, up four notches from the previous week.

It appears investors are getting more worried as we saw a notable pick-up in bearish sentiment. The American Association of Individual Investors (AAII) survey saw a drop of 15.3 percentage points in retail bulls to 29.6% from 44.9% a week ago. That's the fewest bulls in that survey since September 2025! Investment Managers also took their foot off the gas as the National Association of Active Investment Managers (NAAIM) Exposure Index fell back to 84.0% from 95.6% the prior period.

Market Posture: Based on the status of the Market Edge, market timing models, the ‘Market Posture' is Bearish as of the week ending 05/15/2026 (DJIA - 50,579.70). 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 (103) - What's Not (69): The following are the strongest and weakest Industry Segments for the period ending 7/23/26. Strongest: Movie Theaters, Generic Pharmaceuticals, Staffing & Human Resources and Appliances. Weakest: Special Purpose Acquisition Companies, Gold, Silver and Confectioners. To review all the Industry Group rankings in the Market Edge universe, click on the Industry Group tab.

ETF Center: The top performing ETF categories for the week ending 7/23/26 were: Commodity-Energy (+12.12%), Sector-Energy (+6.32%), Commodity-Blend (+5.58%), Commodity-Agriculture (+2.35%) and Sector-Basic Materials (+2.33%). The weakest categories were: Sector-Internet (-5.18%), Sector-Telecom (-4.54%), Specialty Communications (-4.54%), Sector-Consumer Discretionary (-4.51%) and Specialty Retail (-3.78%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT