June 12, 2026

A wild week on Wall Street left the major averages with modest gains this week as back and forth rhetoric between the US and Iran triggered big swings in equities and oil prices. Coming off the previous Friday's rout the different indexes were able to rebound on Monday on strength in semiconductors with the Philadelphia Semiconductor Index regaining +5.61% led by a spike in Intel (INTC) after Alphabet (GOOGL) said it would use the company to build its new AI chips. The bounce stalled midweek after Iran shot down a US helicopter and Trump said the US 'must respond'. A jump in May CPI to +4.2% YoY, a three-year high, coupled with overnight strikes on Iran sent oil prices soaring and stock prices sinking on Wednesday leading to nearly -2% drops in the major averages. Dip buyers stayed on the sidelines leaving cyclical sectors sharply lower with losses in Caterpillar (CAT) and Honeywell (HON) leaving the DJIA holding a 953.33-point (-1.87%) loss. Despite another inflationary read in the PPI on Thursday, the different indexes rallied hard after Trump called off more strikes on Iran saying a peace deal could be signed over the weekend. The major averages erased the prior day's drubbing with the NASDAQ soaring 663-points (+2.64%), its best single point day since March 31. The Technology (XLK) sector led the rally with the Philadelphia Semiconductor Index surging +7.91%, but the Expanded Tech-software Sector ETF (IGV) was on a nine-day losing streak at Friday's close. Oil prices slipped lower with crude oil hitting a three-month low. Stocks traded higher again on Friday despite a few bumps on back-and-forth comments between the US and Iran on the peace deal as investors were focused on Elon Musk's record setting SpaceX (SPCX) IPO which rocketed higher. Crude oil prices ended the week at $84.38 a barrel, while the yield on the 10-year T-Bill dipped below the 4.5% level helping equity prices to firm. The DJIA, S&P 500 and NASDAQ closed the period higher for a third week out of the last four, while a rotation into more cyclical areas sent the NYSE, Equal-Weight S&P 500 (RSP) and small cap Russell 2000 to new all-time highs. Next week, the June FOMC Meeting gets underway with new Fed Chair Kevin Warsh at the helm after taking the baton from outgoing Fed Chief Jerome Powell. Investors will be focused on Warsh's policy comments at Wednesday's 2:30 PM ET press conference for hints on the projection for yields.

For the period, the DJIA added 335.48 points (+0.7%) and settled at 51202.26. The S&P 500 tacked on 47.72 points (+0.7%) and closed at 7431.46. The NASDAQ gained 179.41 points (+0.7%), finishing at 25888.84. The small cap Russell 2000 jumped 110.55 points (+3.9%) and settled at 2943.99.

Market Outlook: The technical condition of the market improved this week with several indexes posting new record highs, but the technical indicators are mixed amid continued back-and-forth market swings. MACD, a short-term trend gauge, is negative for the major averages, while Momentum, as measured by the 14-day RSI, is neutral but improved as the period ended. The different indexes also worked off their overbought condition from the prior week as stochastics fell back below the 40 level. The major averages remain above key Moving Averages (MA) which is a positive condition going forward. The NASDAQ tested and held support at its 50-day MA during the week, another plus. The secondary indexes, which include the DJ Transportation Index, small cap Russell 2000 and Philadelphia Semiconductor Index (SOX) easily outperformed the major averages during the period with the Russell 2000 hitting a new record high on Friday and the SOX surging +9.4% on the week. Market technicians like to see these indexes lead the market higher and lower. There has been broadening out in equities as eight of 11 sectors now trade above key MA's, with Materials (XLB), Technology (XLK), Consumer Staples (XLP) and Financial (XLF) outperforming this week. Only Energy (XLE) was red on weakness in oil related shares, while Communications Services (XLC) was flat. After spiking above 23 midweek, the VIX pulled back to the 17 level on Friday. While still somewhat elevated, the pullback hints that traders are more comfortable that the worst of the selloff is behind us.

There are areas of concern remaining however, that should keep investors cautious. The DJIA, S&P 500 and NASDAQ all traded below the prior week's lows, which is a bearish condition. Although the drop in equities was due to an increase in tensions between the US and Iran, it does show that investors will be quick to pull the sell lever should we see additional flare-ups occur in the Middle East. Finally, the Market Edge Cyclical Trend Index (CTI) is in a bearish configuration and is projected to remain negative into July. This is due to longer term cycles prevalent in the market having more of an influence on prices.

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 -5, unchanged from the previous week. Cycle B is bullish, while Cycles A, C, D and E are bearish. The negative CTI configuration is projected to remain in place into 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 -6, unchanged from the previous week. Breadth was positive at the NYSE as the Advance/Decline line gained 2146 units while the number of new 52-week highs exceeded the number of new lows on four session. Breadth was mixed at the NASDAQ as the A/D line added 2028 units while the number of new lows out did the new highs on three of the five days. Finally, the percentage of stocks above their 50-day moving average eased to 56.1% vs. 58.8% the previous week, while those above their 200-day moving average rose to 57.7% vs. 57.6% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

Underlying market breadth was mostly positive with the NYSE Advance/Decline Line, a leading indicator of market direction, making a new high on Friday, confirming that more stocks are under accumulation. In addition, we saw the number of new 52-week highs expand during the period on both the NYSE and NASDAQ. Offsetting some of that is that there was some expansion in the number of new lows on the NASDAQ.

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 Neutral at +0, up a notch from the previous week.

Investor sentiment is in neutral ground as saw less bulls in both retail and professional investors. The American Association of Individual Investors survey saw retail bulls drop about 6% points, retail bears fell to 47.7%, the most since the last week of March, and remains above the historical average of 31% for an 18th consecutive week. The National Association of Active Investment Managers (NAAIM) Exposure Index also saw a drop in bullishness down to 79.3%, after being fully invested at 98.6% just two weeks ago. Market participants have been moving more into the bear camp the last few weeks as a peace deal between the US and Iran remained elusive.

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 Group Rankings: What's Hot (12) - What's Not (18): The following are the strongest and weakest Industry Groups for the period ending 6/11/26. Strongest: Technology Hardware, Healthcare Services, Conglomerates and Industrial Goods. Weakest: Paper & Forest Products, Agriculture, Infrastructure and Integrated Oil & Gas. 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 6/11/26 were: Sector- Consumer Staples (+3.10%), Specialty Retail (+2.66%), Sector- Consumer Discretionary (+1.73%), Specialty Financial (+1.30%) and Specialty Real Estate (+1.29%). The weakest categories were: Sector-Alternative Energy (-10.51%), Commodity-Precious Metals (-6.78%), Specialty Natural Resources (-5.04%), Sector-Internet (-4.86%) and Sector-Basic Materials (-4.83%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT