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October 5, 2026
Stocks Climb In Spite Of Bond Yields
Stocks are off to productive start this week.
The Nasdaq 100 is seeing bullish follow through on its breakout to new highs. The S&P 500 is not far behind. Even the Russell 2000 is continuing to bounce for last week’s retest and defense of its 200 day moving average.
We shouldn’t be too surprised.
If you were keeping tabs last week, there was clearly the presence of risk-on rotation as growth continues beating value. High beta and momentum were among last week’s strongest factors. Technology led the sectors. Semiconductors led the thematic groups. Cybersecurity was right behind them.
That’s an interesting combination because it tells us investors haven’t exactly crawled into a bunker despite 5%+ Treasury yields.
They’re still taking risk.
However, they’re becoming much more selective about where they take it.
And increasingly, they’re choosing businesses connected to AI, computing, semiconductors and the infrastructure required to support them.
Higher rates aren’t killing the market. They’re separating it!
Companies capable of producing strong enough earnings and cash-flow growth are continuing to attract capital. Businesses that depend heavily upon cheap financing aren’t getting the same benefit of the doubt.
The vast majority of the swing strategy I track are now shifting long again.
Nasdaq 100 (QQQ)
S&P 500 (SPX)
Russell 2000 (IWM)
Equal-Weighted Opportunity?
Has breadth been so bad lately it is now an opportunity?
I know, wishful thinking, right? Especially since the S&P 500 Equal Weighted (RSP) is on a rare 7-week losing streak, pulling back to test its VWAP from the April low.
The last time it had a 7-week looking streak?
May 2022 as the bear market that year was beginning.
Will we see a repeat turn from here?
As we see the AVWAP from the April 2025 low was tested twice and both times buyers returned. It certainly appears this pullback is enticing dip buyers who have no interest in only obtaining “safe” 5% yields. Boring.
That’s why I watch these anchored VWAPs (AVWAPs) as they often will be the levels were buyers emerge and a reversal can begin.
The key will be to see sustained higher low, higher highs follow through strength being aggressively bought into instead of being sold at the first opportunity to do so.
S&P 500 Equal Weight (RSP)
S&P 500 Equal Weight (RSP) - 2 Year View
S&P 500 Equal Weight (RSP)
Smart Money Loves SpaceX?
SpaceX is seeing bullish follow through on the cup/handle pattern we’ve been tracking. In addition to positive launches and bullish analyst and social media commentary, an analyst called the stock cheap.
While concerns linger that those who are already heavily long this stock like Harvard will need to take profits in order to simply-diversify, the price action above the 21EMA and AVWAPs suggests the post-IPO retail investors are buying.
SpaceX (SPCX):
Strength Begets More Strength, Mostly
When the S&P 500 has gained at least 10% through September, history has usually favored more strength into year-end.
Since 1970, that setup has occurred 22 times. The market went on to rise during the fourth quarter in 18 of them, with an average gain of about +4% which would put the S&P 500 above 8,000.
Three of the four losing quarters barely qualified as losses, falling no more than -1.26%.
The fourth?
1987.
Markets do enjoy keeping at least one horror story around to make sure nobody gets too comfortable.
So no, history isn’t promising us a strong fourth quarter. But it is gently reminding us that a market already up double digits doesn’t automatically need a timeout.
Especially for a market that has been in consolidation mode with significant internal corrections within it for the past four months.
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Looking ahead to this “pre-earnings” week, there are a few additional things I’ll be keeping an eye on.
Let’s review.