From Fear to Chase
After four weeks of relentless strength, there are a number of key catalysts ahead
What You Need To Know
For a fourth straight week, bullish price action persisted.
The desire to buy stocks, especially AI-related tech, remains strong.
Improving price action continues to favor bullish breakout scenarios.
The Price Action
After its historic three-week, v-shaped reversal to a new all-time high, stocks had every reason to see some exhaustion last week.
The consolidation was shallow and brief, reinforcing resilience with no sign of a bull trap or throwback at new highs. The S&P 500 closed at another all-time high, up +9.75% for April and +4.7% year-to-date.
Meanwhile, the Nasdaq 100 continues to lead and closed at a new high. It was up +2.4% last week, +15% for April, and +8.1% for 2026.
The Russell 2000 also made new highs last week and closed at a new all-time high. However, the Dow has struggled to keep up, closing -0.4% lower last week and -2.6% below its February high.
All things considered, this is the most bullish outcome: a breakout with strong, sustained follow-through toward S&P 7425 (Fibonacci extension) and 7459 (prior range breakout), or +3.6% to +4.1% higher.
The breakout is now confirmed and more likely to continue. Another higher weekly close would strengthen those probabilities even more.
As with all breakouts, the more sustained upside follow-through we see, the lower the probability of a bull trap or throwback retest of 7002.
Market Movement
Every major index is positive, with the Nasdaq leading.
Below the surface, price action was mixed, with technology (AI-driven) and energy (Iran war) leading.
Sector performance was mixed.
Risk-on factors such as momentum, high beta, and growth outperformed.
Large cap growth is making a comeback.
Energy commodities led, with strong gains in oil and gasoline.
International markets lagged as oil concerns and growth risks persist.
Crypto was mixed. The Ten Large Cryptos (BITW) have been added for better visibility.
With a negative initial reaction to Tesla’s earnings last week, the Magnificent 7 (MAGS) continue to trade below last October’s high.
Some hedges were bought as leveraged shorts remain under heavy pressure.
The performance map shows how concentrated the strength was last week.
Top S&P 500 Winners
$AMD (Advanced Micro Devices, Inc.): 24.9%
$URI (United Rentals, Inc.): 22.4%
$TXN (Texas Instruments Incorporated): 20.6%
$INTC (Intel Corporation): 20.5%
$ON (ON Semiconductor Corporation): 18.5%
Top S&P 500 Losers
$LMT (Lockheed Martin Corporation): -13.3%
$NOC (Northrop Grumman Corporation): -13.6%
$LULU (Lululemon athletica inc.): -14%
$TSCO (Tractor Supply Company): -18.4%
$CHTR (Charter Communications, Inc.): -23.9%
Notable New 52-Week Highs:
$AVGO (Broadcom Inc.)
$AMD (Advanced Micro Devices, Inc.)
$MU (Micron Technology, Inc.)
$INTC (Intel Corporation)
$CAT (Caterpillar, Inc.)
Notable New 52-Week Lows:
$ABT (Abbott Laboratories)
$DHR (Danaher Corporation)
$ACN (Accenture plc)
$BSX (Boston Scientific Corporation)
$CTSH (Cognizant Technology Solutions Corporation)
Four Positive Factors
In my view, there were four major positive factors in play last week:
Renewed confidence in the AI infrastructure cycle. Strong demand and solid earnings across everything connected to the Artificial Intelligence Revolution are being bought aggressively again, overcoming prior concerns about sustainability and valuations potentially setting up a bust to this massive boom.
Renewed confidence in the Trump put. Trump appears to be trying to back away from the Iran war, looking for any off-ramp, and perhaps thinking of shifting the burden to others to clean up in order to focus on the mid-terms. What was initially framed as a “brief excursion” to target those he believes attempted to kill him has evolved into something far worse, including triggering a supply and energy crisis. For now, markets have collectively decided that higher oil and gas prices will not derail the strong U.S. economy or market, especially given how sharply it has rebounded over the past four weeks.
Renewed confidence in the Fed put. After the likely next Fed chair, Kevin Warsh, argued that he would use his preferred dovish approach to measuring inflation so that it no longer “reflects the extremes,” his comments were music to the market’s ears. Despite higher energy prices, rate cuts could still be forthcoming. When the DOJ dropped charges against JPow last week, it marked a meaningful step toward putting Warsh in charge and pushing JPow closer to the exit door next month.
Renewed stimulus for markets and corporations: Between new actions from the Treasury to provide increased liquidity, along with new tariff refunds in the billions for corporations, the government is continuing to do what it can to support corporations and their stock prices whenever possible.
Together, these forces are driving broad risk-on accumulation across the market.
The primary risk is anything that puts this renewed confidence back into jeopardy.
The Week Ahead
This week will make or break the breakout.
The rally either confirms or consolidates here.
Key catalysts this week include:
The Fed will meet and update policy, and JPow will likely take his final victory lap.
GDP and PCE will provide updates on solid growth and higher inflation.
Five of the Mag7 report in what is the most important week for earnings reactions.
Price Levels To Watch
Price action favors continued strength toward targets above S&P 7400.
However, if consolidation occurs through price rather than time, first support rests between last week’s lows at 7050 to 7046 and then the January high at 7002.
This first support area is likely to hold on a throwback retest.
However, if that is proven wrong, sustained movement back below 7002 by week’s end will effectively set a bull trap on this breakaway. In that event, secondary support comes in at the fast rising 21 EMA (Exponential Moving Average) at 6918.
Major longer-term support sits between key moving averages and AVWAPs at 6841 to 6705. Given the continued strength over the past four weeks, it is unlikely price will fall back to this third support area.
A breakdown below all three support areas would require a new negative catalyst. Possible, but unlikely. That’s why we set trailing stops to manage risk if the event that the market rolls back over again.
Probabilities
Strong markets do not have to go straight up.
They need to hold gains, digest strength, and avoid setting obvious bull traps.
Just like they did last week.
This is the most bullish short-term scenario. Follow-through next week would confirm the breakout before any consolidation.
We should guard against letting expectations and fear of missing out outrun price. We should be prepared for consolidation after the past four weeks of gains.
For this reason, I continue to favor the base case of consolidation, while recognizing I underestimated this market. I prefer to underestimate rather than overestimate.
I continue to take a more cautious approach, favoring a base case of consolidation over continued follow-through strength.
Bullish “Breakout Continues” Scenario (35%)
• Breakout sees strong and sustained upside follow through toward S&P 7400
• All minor dips are bought, lower gaps remain unfilled, no price consolidation
Base Case “Breakout Sees Consolidation” Scenario (55%)
• Short-term consolidation mostly through time, price, and rotation
• If price throws back to first support at January high at 7002 it will hold it
• Where the week ends up is far more important than intraday/daily support violations
Bearish “Bull Trap” Scenario (10%)
• First, second and tertiary supports are all broken successfully filling the April 8th gap
This is a notable improvement versus last week, when I favored a 60% probability for consolidation through rotation filling the prior two weeks’ gaps. Only one gap was filled, and once it was, price rallied to a new all-time high. This justifies a more favorable, but cautious stance.
The market has earned the benefit of the doubt but must keep the breakout in motion. Much depends on the reaction to mega-cap earnings next week.
Weekly Checklist
Can the S&P 500 hold near its breakout zone?
Do mega-cap tech earnings confirm AI demand?
Does semiconductor leadership broaden or narrow?
Does oil stabilize or re-accelerate?
Do yields stay contained after GDP, PCE, and the Fed?
Does market breadth improve beyond AI and mega-cap tech?
Are dips bought quickly, or does selling pressure start to persist?
The plan is simple: respect the trend, do not chase blindly.
The Bottom Line
The bullish price action in this quick v-shaped recovery and rebound, following an extended period of sideways consolidation, remains bullish until proven otherwise.
Probabilities favor continued strength and consolidation, not a bull trap. Further follow-through would reinforce that view.
The risk is not that the rally has gone too far, too fast.
The risk is elevated expectations heading into a catalyst-heavy week.
It will be an important test of the conviction behind this chasing strength behavior, rather than the buy-the-dips mindset that has dominated this month.
“To be successful, you have to believe in yourself and your abilities. Confidence is a lot of this game or any game. If you don’t think you can, you won’t.” - Jerry West