The Bottom Line

Following a five-week losing streak, the market has now posted two positive weeks.

Bear trap reversals are in motion, laying the foundation for continued strength with numerous trailing support levels underneath in the multi-month trading range.

With buyers taking back control these past two weeks, much will depend in the short term on the reaction to earnings and any further fallout from the Iran war. It is quite possible this back-and-forth volatility will persist longer.

The Price Action

Ahead of Easter, the bear trap was set.

After Easter, the bulls took advantage of it.

For seven straight positive days, including four last week, price climbed +8% from its March 31st intraday low. By last Friday’s close, the S&P 500 was only +2.7% below its prior January high.

An intraday turnaround last Tuesday followed by a large gap-higher open on Wednesday was the one-two punch markets needed for the bounce back to continue.

The bear trap reversal (inverse head and shoulders play) saw strong and sustained upside follow through. The longer price holds strong this week, the more likely it is that at least one, if not both, targets will be reached.

The weekly view below shows price has climbed well into its multi-month trading range, effectively trapping the double-top reversal within the range. Previously, the area between S&P 6800 and 7002 proved to be formidable overhead resistance:

It is quite possible that the volatility we’ve seen over the past two months, first down and then right back up, could beget even more volatility ahead.

While everyone seems to think/expect that we’ve seen another event like last year that the market will quickly put behind it and move on to new highs, this one may not play out the same way. There is a lot of recency bias type thinking out there, so we very much have to be prepared for anything and make minor adjustments along the way instead of taking on aggressive, one-directional positioning like before.

If there is an attempt to target and fill last week’s big unfilled gap (which seems at least possible), I will be watching to see if price finds trailing support at the major moving averages (especially the 200 day). It is quite an achievement to see price rally above all of these levels last week. It would be an even greater achievement to hold above them on any throwback retests.

I will also be keeping an eye on the AVWAPs for potential trailing support levels. With overbought conditions back in effect, we want to see prices continue to remain overbought for even longer as a sign that price action is improving, not just a severe oversold bounce and nothing more.

After this lengthy period of consolidation combined with the five-week nearly -10% drawdown from the fury, markets will be hoping that was enough to stage another “shake out, then breakout” move we’ve seen so often before.

That seems overly optimistic all things considered, but we are keeping an open mind.

Performance Matrix

Given the significant strength seen since the last day of the first quarter, we should take note of the early improvement trends so far in April and the second quarter.

While weakness in energy-related stocks and commodities will come as no surprise due to the reduced war-premium, a few additional themes include:

• Stocks viewed as benefiting from the AI revolution significantly outperformed (chips, memory, computing, hardware, telecom, robotics, industrial automation, nanotechnology, rare earths)

• Stocks viewed as losers from the AI revolution were significantly weaker (software and cybersecurity)

• Stocks related to the space industry outperformed (satellites, infrastructure, data analytics, logistics and launch services, etc.)

Best Performers: Semiconductors (SMH), South Korea (EWH), S&P 500 Momentum (SPMO), S&P 500 Pure Growth (RPG), Spin-Offs (CSD), Turkey (TUR), Quantum Computing (QTM), Netherlands (EWN), Taiwan (EWT), and Gold Miners (GDX)

Worst Performers: Sugar (CANE), Natural Gas (UNG), Wheat (WEAT), Oil & Gas Exploration (XOP), Energy (XLE), Energy Equal Weight (RSPG), Gasoline (UGA), Cloud Computing (SKYY), Software (XSW), and Energy Commodities (DBE).

A few reminders:
• Watch breadth, not just index levels
• Monitor leadership consistency, not one-day moves
• Track reaction to news rather than news itself
• Pay attention to how dips are bought or sold

My Take

After threatening to blast Iran back to the stone age during Easter weekend, it was quite a turn of events over just a few days, even for Trump

With the Iran war “already won” and any and all potential negative impacts “only transitory,” the hope on the Street is that the correction has finished and the market has “reset itself” for much better days ahead.

Trump said as much last Thursday morning:

In other words, the old “let’s knock them down, so we can ride them back up” game. After all, those mid-term poll numbers aren’t going to improve all by themselves!

While it wasn’t the “It is a great time to buy!” tweet, perhaps this was enough now that the U.S. Navy is effectively in charge of the Strait of Hormuz toll booth?

My perspective is that as much as we want to believe the Iran war risk has been removed for good, it is still possible it may not play out that way.

Read more

The Bottom Line

The market just set a trap.
The only question now is whether it holds.

Following five straight negative weeks and a near -10% drawdown, last week’s bounce has created a potential bear trap.

If it confirms, the path higher opens quickly.
If it fails, the next leg lower could unfold just as fast.

This is the inflection point.

What happens next will determine positioning, risk exposure, and opportunity for the weeks ahead.

What follows is how I’m thinking about it and how I’m positioning around it.

Read more

The Bottom Line

Price action remains weak, signaling a market under distribution.

The bull trap reversal put into motion this month has now captured its target.

The S&P 500 has now closed below its 200-day moving average and its November low.

A new double-top reversal has triggered, threatening to deepen this pullback into a double-digit correction.

With the most extreme oversold conditions since last year’s correction, the focus shifts to watching for follow-through or a bear trap.

How the Week Played Out

Amid rising concerns over higher energy prices and inflation, stocks remained under pressure last week.

• Nasdaq: -2.1%
• Dow: -2.1%
• S&P 500: -1.9%
• Russell 2000: -1.7%
• Midcaps: -1.3%

Once again, stocks attempted to rally early in the week, only to fail.

Whenever we see strength, it consistently gets sold.

Gap higher opens on Monday and Tuesday were quickly followed by weakness, with gap lower opens dominating the remainder of the week.

The Price Action

The S&P 500 has now pulled back for a fourth-straight week and six of the last seven.

Since the January 28th intraday high at 7002 to last week’s intraday low at 6473, the S&P 500 has pulled back -7.5%.

The bull trap, head-and-shoulders reversal we’ve been tracking this month has successfully captured its target at S&P 6548.

With price below its November low and 200-day moving average, the focus this week is whether this new double-top reversal sees strong, sustained follow-through.

This larger reversal is targeting S&P 6060 which is -6.9% from last week’s close.

With extreme oversold conditions and a multi-month consolidation, probabilities favor…

Read more

Hello friends!

I hope this finds you well, getting in some much needed and well-deserved rest and enjoying this weekend. In review, I have only a few thoughts to share this weekend along with some of my favorite notes from the past week in case you missed them! :)

First 5% Pullback Of 2026

It proved to be yet another captivating time in the markets last week.

The entire week was a battle for control. :)

The week began with a large gap lower open on Monday, followed by a +3.15% ripper bounce back from the first hour low. The bounce carried higher until a Tuesday afternoon turnaround in which the sellers mostly took control for the remainder of the week except for Friday’s strong open which was also sold.

The S&P 500 closed -1.60% for the week, -3.59% for the month, and -3.12% for the year-to-date. Yes, it certainly feels like a lot more than these small percentage declines reflect, mostly because there has been deeper, far more corrective price action and rotation.

More importantly, this is the first -5% pullback from the intraday January 28 high at S&P 7002 and our first three-week losing streak since just over a year ago!

Bull Trap Reversal Tests 200 Day

Within this period of multi-month consolidation and corrective rotation, a bull trap head and shoulders reversal play targeting S&P 6548 was put into motion, followed by strong and sustained follow through.

The breakout to new all-time highs this year has failed.

In addition to the reversal target in close reach, additional levels of interest include the 200 day moving average at 6604, the unfilled gap at 6602 from November, as well as the November low at 6521.

This zone is the next major battleground of many more to come!

Read more

The Bottom Line

With the loss of upward momentum, the S&P 500 and NASDAQ increasingly appear vulnerable for more consolidation. Not only through time and corrective rotation, as we have already seen since November, but through price at the index level, too.

The Price Action

Another positive start to last week was sold off with another three-day losing streak.

Friday’s unimpressive, indecisive bounce was not of much help.

The third breakout attempt has failed, along with continued loss of upward momentum. A new attempt to set a bull trap and roll it over is now underway.

A new reversal pattern has formed within this year’s relatively tight, but increasingly more volatile, 222-point trading range between January’s high and February’s low.

If this bull trap proves successful, it would roll prices down to 6558. That level sits just above the prior November low at 6521, roughly -6% from the January high.

Two unfilled opening gaps at 6720 and 6602 would be in play on the way down, too.

The NASDAQ 100 has a similar price structure as it attempts to hold above its 150-day moving average, with its 200-day climbing above November’s intraday low.

Long-Term Moving Averages

Tight consolidation through time and corrective rotation in a long-term uptrend is bullish until proven otherwise.

The sellers still have the burden to prove they are gaining control. That means taking out this month’s lows and sustaining movement below the 100-day moving average, as they did a year ago in the S&P 500.

It is not lost on market participants what transpired a year ago, which is why there is so much anxiety over this loss of momentum.

So far, this tight consolidation, more through time than price, has been enough to pull up the 150-day and 200-day moving averages and bring them back into play.

In an uptrend, the prevailing presumption is that the 200-day will likely be defended if and when tested. Patient, longer-term investors who deploy passive strategies often look for those tests as opportunities to buy favored stocks at more attractive entries.

All things considered, it may be far more constructive to see weakness before strength. That would clear out weak holders and trailing stops and allow for a stronger price reset, rather than relying mostly on time, internal rotation, and rolling corrections as we’ve already seen.

Throughout this bull market, we’ve seen numerous attempts to roll the market over and set bull traps. Each time, an initial break lower failed to gain traction, resulting in a breakout that continued the uptrend instead. We have the potential to see it again.

Something this prediction model, based on the past 5+ year price action, suggests is a potential scenario in the month ahead:

Read more

The Bottom Line

Price action has sent us a clear and unmistakable message: stay prepared for a more volatile year with wild swings. Be flexible enough to see opportunities in areas where you are not accustomed to looking. Be more careful chasing hot rotations, as they can shift quickly and often for no readily apparent reason.

Price Action

The first week of February experienced increased volatility.

With bookend strength last Monday and Friday, the S&P 500 closed the week with a -0.1% loss.

After breaking the lower wedge line, price tested the 100 day moving average, a level of trailing support last tested in November, as well as its January low last Thursday. This key support area was defended, followed by Friday’s nearly +1.97% reversal.

With price closing back above its October high, this year’s breakout is barely alive and in need of strong and sustained follow-through to overcome what increasingly resembles a developing bull trap between S&P 6800 and 7000.

Read more

The Bottom Line

This week is about follow-through.
Not headlines. Not narratives. Follow-through.

Follow-through higher keeps the breakout in motion.
Follow-through lower extends this consolidation through time and rotation.

Investors are positioning in assets they believe will be this year’s best performers.

The result is consolidation driven more by rotation and time than by price.

While volatility may persist, until price proves otherwise, overall probabilities continue to favor an upward resolution that challenges S&P 7000 and beyond.

The Price Action

Last week’s tape was dominated by headlines, geopolitics, and early earnings reactions.
Choppy, headline-driven, and prone to air pockets and reversals.

Yet aggressive dip buying continues to appear whenever weakness emerges.

Last Tuesday, the S&P 500 fell 2.1%. Buyers then spent the next three sessions recovering those losses.

That behavior remains the defining feature of this market.

The S&P 500 finished the week down -0.35%, its first back-to-back weekly decline since June.

Damage remains limited.

The index is just 1% below its January high and effectively flat at -0.07% versus its October 29th range high.

Price Action Patterns

While the wedge broke, sellers failed to generate sustained follow-through beyond Tuesday.

Without decisive confirmation…

Read more