September 4, 2026

A choppy week ended with the different indexes mixed but little changed as investors dealt with geopolitical risks, sending oil prices sharply higher, and increasing yields. Stocks were rattled by back-and-forth skirmishes between the US and Iran as the period started and crude oil prices surged +8% triggering inflation concerns. The rate on the 10-year Treasury hit 4.82% midweek before settling at 4.785% on Friday. The major averages were on a three-day losing streak until getting a boost from strong earnings and AI developments coming out of the G-20 on Wednesday. Yields briefly ticked lower on Thursday on dovish comments from Fed governor Christopher Wallace who said he wasn't in a hurry to raise rates and was seeing signs of disinflation. The comments sent the different indexes sharply higher and into the plus column for the week by the close. Equities were mostly lower again on Friday, however, after a stronger than expected payroll number that brought on another uptick in yields and left the CME Group FedWatch with a 59% probability of a September rate hike. Earnings were hit-or-miss with shares of Dell Technologies (DELL), Snowflake (SNOW), Five Below (FIVE) and NetApp (NTAP) soaring, while Broadcom (AVGO) fell following weaker guidance. Palo Alto Networks (PANW), Lululemon (LULU) and Victoria's Secret (VSXY) tumbled after disappointing numbers. Energy (XLE) was the best performing market sector with several oil-related stocks hitting new highs including Conoco Phillips (COP), Marathon Petroleum (MPC) and Valero Energy (VLO). Utilities (XLU) and Technology (XLK) also outperformed, the latter on a rebound in semiconductors. Weighing on equities was weakness in Consumer Discretionary (XLY), Materials (XLB), REITs (XLRE), Industrial (XLI) and Consumer Staples (XLP) were all down more than -1%. Despite the mixed week, the major averages traded in a narrow range as investors continue to gauge whether a rate hike this month is in the cards. They could get an answer next week as the CPI and PPI are released for an updated look at inflation.

For the period, the DJIA lost 145.74 points (-0.3%) and settled at 53414.25. The S&P 500 added 6.84 points (+0.1%) and closed at 7718.60. The NASDAQ gained 104.57 points (+0.4%), finishing at 26506.99. The small cap Russell 2000 snapped a two-week losing streak tacking on 3.28 points (+0.1%) and settled at 2975.65.

Market Outlook: The technical condition of the market was little changed with the major averages seeming to be caught up in a trading range again as investors were noncommittal ahead of the September FOMC meeting. The technical indicators closed the week mixed but market under currents deteriorated for a second week. MACD, a short-term trend gauge, was negative to neutral for the major averages, while Momentum, as measured by the 14-day RSI, was in neutral ground. The VIX, a measurement of fear in the market, fell to its lowest read since January showing traders are not yet concerned with a deeper pullback. However, this could indicate that investors are getting too complacent as they continue to buy the dips. There were positives during the period as several of the different indexes were able to test and bounce off key Moving Average (MA) support levels and the DJIA, S&P 500, NASDAQ and NASDAQ 100 are all trading above their 50/100/and 200-day MA. That could lay the groundwork for a retest of the recent highs if next week's inflation data comes in on the light side.  I mentioned last week that the weekly charts show the longer-term outlook for the major averages are bullish, but there was some minor deterioration. The NASDAQ and NASDAQ 100 saw Momentum, as measured by the 14-week RSI, slowing for a second straight week.  The secondary indexes, which include the DJ Transportation Index, small cap Russell 2000 and Philadelphia Semiconductor Index (SOX) were mixed this week and are stalled below key MA levels. If a rate hike comes off the table over the next two weeks, we could see these indexes rally and lead the broader market higher.

The market sectors are mixed with only four of 11 market groups higher this week. Energy (XLE) and Financial (XLF) were able to post new highs during the period, while Healthcare (XLV) and Technology (XLK) trade just below their highs. Unfortunately, six of the sector ETFs are below key MAs. Consumer Discretionary (XLY), Materials (XLB), REITs (XLRE) and Industrial (XLI) were the weakest sectors this week.

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 +9, 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.

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 Neutral at +0, up six notches from the previous week. Breadth was negative at the NYSE as the Advance/Decline line lost 702 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 fell 496 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 fell to 51.0% vs. 56.5% the previous week, while those above their 200-day moving average eased to 58.0% vs. 60.7% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

Underlying market breadth lost ground for a third consecutive week with the NYSE and NASDAQ Advance/Decline lines both lower. New lows outnumbered the new highs with expansion in the number of new lows on both the NYSE and NASDAQ. That shows a narrowing number of stocks holding the different indexes up.

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 -5, down a notch from the previous week.

Investors are still bullish and there was an uptick in retail and professional bulls. The Association of Individual Investors (AAII) listed retail bulls at 39.7%, up 6.8 percentage points and above the historical average of 37.5%. There was also a move higher in the Percentage of Bullish Investment Advisors to 54.9% from 51.9%. There was one group which saw a decline in bullishness. The National Association of Active Investment Managers (NAAIM) Exposure Index saw the professionals' trim holdings to 85.6% from 102.7% the prior period, which was the highest reading since December. Bears remain hard to find among investment advisors with the Percentage of Bearish Investment Advisors at only 17.6% marking a 11th consecutive week below 20%.

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 (65) - What's Not (107): Of the 172 Industry Segments that we track, 65 are rated as either Strong or Improving while 107 are regarded as Weak or Deteriorating. The Previous Week's totals were 90-82. The following are the strongest and weakest Industry Segments for the period ending 9/03/26. Strongest: Oil & Gas Refining Marketing, Mobile Devices, Other Business Services and Silver. Weakest: Pulp & Paper Products, Commercial Construction, Semiconductors and Parcel Delivery. 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 9/03/26 were: Commodity-Energy (+7.11%), Sector-Energy (+4.66%), Commodity-Blend (+3.13%), Specialty Financial (+1.42%) and Specialty Communications (+1.09%). The weakest categories were: Specialty Technology (-3.62%), Sector-Alternative Energy (-3.19%), Commodity-Precious Metals (-3.03%), Sector-Industrial (-2.63%), Growth-Small Cap (-2.24%) and Growth-Mid Cap (-2.00%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT