May 1, 2026

A choppy week ultimately gained upside momentum on strong earnings with the major averages rallying out of April and into May with the S&P 500 and NASDAQ at new record highs. The S&P 500 and NASDAQ extended their weekly win streak to five with the DJIA making it four out of five. The different indexes traded mixed early in the week as the AI trade hit a speed bump after OpenAI reported it missed its own sales and users' goals sending Nvidia (NVDA), Advanced Micro Devices (AMD) and Oracle (ORCL) lower and ending an 18-day win streak by the Philadelphia Semiconductor Index (SOXX). Stocks struggled with higher oil prices as President Trump said he intended to extend the blockade on the Strait of Hormuz and crude oil prices hit a four-year high of $110 a barrel midweek before pulling back to $102.17 as the week ended. As expected, the Federal Reserve left rates unchanged mid-week but the 8-4 decision, the most dissent since 1992, sent yields higher. The rate on the 10-year Treasury climbed to 4.43% before closing the period at 4.38%. Investors looked past the Iran war on Thursday and focused on blow out earnings from Alphabet (GOOGL), Caterpillar (CAT), Qualcomm (QCOM) and others but overall, earnings from the Mag 7 were mixed. Caterpillars (CAT) +9.88% spike however, sent the Dow Jones 790.33 points (+1.62%) higher and the S&P 500, NASDAQ, NASDAQ 100 and Russell 2000 to new all-time highs with every sector finishing in the green. The week ended on a high note as Apple (AAPL) hit a new high after earnings and strong forward guidance getting May off to a mostly positive start. A report that Iran sent in a new proposal to Pakistan on a peace plan also gave equities a lift ahead of the weekend. Next week, the pace of Q1 earnings will begin to slow which could cut back on intraday volatility. According to FactSet Research, 84% of S&P 500 companies reporting so far have beaten estimates with a growth rate of +15.1%. Market participants will also tune in to April job numbers from ADP and the BLS while keeping an eye on headlines from the Middle East.

For the period, the DJIA added 268.56 points (+0.5%) and settled at 49499.27. The S&P 500 tacked on 65.04 points (+0.9%) and closed at 7230.12. The NASDAQ jumped 277.84 points (+1.1%) finishing at 25114.44. The small cap Russell 2000 picked up 25.82 points (+0.9%) and settled at 2812.82.

Market Outlook: The technical condition of the market remains strong but several of the indexes are overbought. New highs were recorded by the S&P 500, NASDAQ, NASDAQ 100, Russell 2000 and Philadelphia Semiconductor Index during the period and the different indexes trade above key MA levels confirming their bullish uptrend. The technical oscillators are in bullish ground with MACD, a short-term trend gauge, in positive territory, while Momentum, as measured by the 14-day RSI, positive and rising. The VIX has nudged lower since mid-April indicating that traders believe the worst is behind us and there remains more upside. Thursday's close of 16.89 was the lowest print since the end of January. While only the Technology (XLK) and REITs (XLRE) sectors have been able to break out to new highs, every market group except Healthcare (XLV) is trading above key MA levels and are in a bullish configuration in their Point & Figure charts. Healthcare (XLV) had a Bearish Double Bottom breakout this week and trades below its 200-day MA. Point & Figure charts for the various sectors can be found in the Market Edge 'Second Opinion' module. Finally, while it's likely that equites get a fresh leg higher if we see a conclusion to the Middle East conflicts, the Market Edge Cyclical Trend Index (CTI) is projected to revert to a negative setting in mid-May. That is due to the influence of longer cycles prevalent in the market and could signal that the major averages could be topping out over the next few weeks. At this juncture, I don't see evidence that the 'Sell in May' Wall Street adage is coming into play. However, the AI-infrastructure and semiconductor rally point to a narrowing group of stocks leading the market to new highs.

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 +2, unchanged from the previous week. Cycles B and C are bullish, while Cycles A, D and E are bearish. The positive CTI configuration is projected to remain bullish into May as longer cycles with more influence are expected to return the CTI to negative.

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 Bullish at +4, unchanged from the previous week. Breadth was positive at the NYSE as the Advance/Decline line gained 249 units while the number of new 52-week highs exceeded the number of new lows on each session. Breadth was mixed at the NASDAQ as the A/D line eased 121 units while the number of new highs out did the new lows on four days. Finally, the percentage of stocks above their 50-day moving average increased to 66.3% vs. 63.1% the previous week, while those above their 200-day moving average eased to 59.3% vs. 59.8% 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, inching higher, but the NASDAQ A/D line lost ground which also shows a narrower group of stocks leading the advance. New 52-week highs continue to outpace the new lows but for a second week, the new highs contracted in the NASDAQ and were again anemic in the NYSE. That negative divergence represents a warning that the rally could be showing signs of running low on fuel.

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.

Investor sentiment is negative and becoming more bullish, but we saw a divergence between retail and institutional bulls. The American Association of Individual Investors (AAII) saw retail bulls reverse last week's jump to 46.0%, the most bullish retail has been since mid-January, falling back to 38.1%, a touch above the historical average of 37.5%. The National Association of Active Investment Managers (NAAIM) Exposure Index shows money managers are 'all in' jumping to 94.2% from just 69.4% two weeks ago. That's also the most exposure to equities this group has had since mid-January. The Percentage of Bullish Investment Advisors saw an increase to 50.0%, the highest number since the first week of March.

Market Posture: Based on the status of the Market Edge, market timing models, the 'Market Posture' is Bullish as of the week ending 04/10/2026 (DJIA - 47916.57). 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 4/30/26. Strongest: Technology Hardware, Conglomerates, Agricultural and Energy. Weakest: Paper & Forest Products, Building Materials, Consumer Goods and Automotive. 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 4/30/26 were: Commodity-Energy (+7.52%), Sector-Energy (+6.02%), Specialty technology (+4.60%), Commodity-Blend (+3.61%) and Sector-Alternative Energy (+2.70%). The weakest categories were: Shorts (-2.21%), Commodity-Precious Metals (-1.86%), Commodity-Base Metals (-1.22%), Sector-Basic Materials (-1.22%) and Bond-Government Long Term (-0.95%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT