Tag: stocks

Rising energy prices, the Fed’s FOMC minutes, and upcoming earnings from NVIDIA could shape market sentiment in the week ahead.

NVIDIA appears set for a potentially volatile and high-impact week as investors await its closely watched earnings report.

Meanwhile, Home Depot is confronting mounting challenges ahead of earnings, with expectations pointing toward a potentially underwhelming report.

U.S. stocks ended sharply lower on Friday, with both the S&P 500 and the Nasdaq Composite retreating from record highs as soaring energy prices fueled inflation concerns and pushed Treasury yields significantly higher.

Despite Friday’s selloff, the major U.S. indexes posted a relatively subdued weekly performance overall. The S&P 500 managed a modest gain of 0.1%, while the Nasdaq Composite and the Dow Jones Industrial Average slipped 0.1% and 0.2%, respectively.

The week ahead is expected to be relatively quiet on the economic data front. Investor attention will likely center on the minutes from the Federal Reserve’s April FOMC meeting, the final meeting chaired by Jerome Powell before the Fed’s leadership transition.

According to the Investing.com Fed Monitor Tool, the probability of the Federal Reserve delivering a 25-basis-point rate hike in December has climbed to nearly 50%, up sharply from roughly 15% just a week earlier.

On the corporate earnings front, results from NVIDIA are expected to be the week’s main highlight as earnings season nears its conclusion. Investors will also get a fresh read on the retail sector, with quarterly reports due from Walmart, Home Depot, Lowe’s, Target, and TJX Companies.

No matter which direction the broader market takes, below I highlight one stock that could attract strong buying interest and another that may face renewed downside pressure. Keep in mind that this outlook covers only the upcoming trading week, from Monday, May 18 through Friday, May 22.

Stock to Buy: NVIDIA

NVIDIA stands out as the top stock to watch this week as investors anticipate a potentially blockbuster earnings report alongside a notable increase in forward guidance. The AI leader is widely expected to deliver a double beat, topping Wall Street forecasts for both revenue and earnings per share, fueled by relentless demand for AI infrastructure.

The company is scheduled to release fiscal first-quarter results after the market closes on Wednesday at 4:30 p.m. ET, followed by a conference call with CEO Jensen Huang at 5:00 p.m. ET. In the options market, traders are pricing in a post-earnings move of roughly ±8% for NVDA shares.

Wall Street expects NVIDIA to post earnings of $1.75 per share, representing a 116% increase from a year earlier. Revenue is forecast to jump 79% to $78.8 billion, driven by sustained strength in AI data center demand.

Analyst sentiment has remained overwhelmingly bullish ahead of the report. According to InvestingPro data, 34 of the past 35 analyst estimate revisions have moved higher, underscoring strong confidence in the company’s ongoing growth trajectory.

CEO Jensen Huang is also expected to emphasize how hyperscalers and enterprise customers continue to accelerate spending on AI infrastructure, reinforcing the belief that the AI expansion cycle is still in its early stages despite the company’s already remarkable growth.

NVDA shares closed near $225 on Friday, retreating slightly after a powerful rally but still appearing well-positioned to advance further on favorable catalysts. Across multiple timeframes — from intraday charts to monthly indicators — technical signals and moving averages continue to point toward a “strong buy” outlook for NVIDIA.

With expectations already elevated yet the company continuing to outperform forecasts, Nvidia maintains strong momentum heading into earnings and may remain attractive for investors seeking exposure to the long-term AI growth trend.

Trade Setup:

• Entry: Approximately $225.00
• Exit Target: $242.00 (+7.5% potential upside)
• Stop-Loss: $213.00 (-5.3% downside risk)

Stock Pick to Avoid: Home Depot

By contrast, HD stands out as a stock to sell. The home improvement giant is set to release its Q1 earnings before Tuesday’s opening bell, and expectations suggest a weak report alongside cautious guidance that could pressure the shares.

Wall Street sentiment has turned increasingly negative ahead of the announcement, with all 22 recent analyst revisions moving lower. Meanwhile, the options market implies a post-earnings move of roughly +/-4.2% in either direction.

Wall Street expects the The Home Depot, Inc. to post earnings of $3.41 per share, down 1.1% from a year earlier, as margins remain under pressure from rising costs and increased promotional activity. Revenue is projected to climb modestly by 4.3% to $41.6 billion.

Consumer spending continues to weaken, especially for large-scale home renovation projects, as stubborn inflation, elevated gasoline prices, and high mortgage rates weigh on discretionary purchases.

Management has already warned of softer core demand, and any reaffirmation of that cautious tone — or even a slight cut to full-year guidance — would reinforce concerns about ongoing cyclical weakness in the housing and DIY markets.

Trading near a 52-week low at around $297.51, HD remains under heavy technical pressure. The shares are trading more than 10% below the 20-day moving average and nearly 30% beneath last year’s peak. While the RSI reading of 32.72 is approaching oversold territory, there are still few signs of capitulation or a meaningful reversal. Broader technical signals — including the Ichimoku Cloud, ADX, and MFI — continue to point to a strong bearish trend.

With the stock already weighed down this year by macroeconomic headwinds, any earnings miss or cautious commentary could trigger additional downside as investors continue rotating away from discretionary retail names exposed to weakening consumer demand.

Trade Setup:

• Entry: Around $297.50
• Target: $275.00 (+7.5%)
• Stop-Loss: $312.00 (-4.9%)

The market mood has shifted dramatically since late March. Back then, soaring oil prices, rising bond yields, and falling equities created a difficult environment for investors. Retail sentiment weakened, and Wall Street analysts faced growing pressure to reconsider their ambitious year-end targets for the S&P 500.

AI Reignites the Rally

Artificial intelligence once again became the market’s driving force. Semiconductor stocks rebounded sharply, with the VanEck Semiconductor ETF gaining more than 60% since its March 30 low. Volatility, as always, proved capable of moving markets in both directions.

Interestingly, the rally has not been led solely by the market’s usual AI giants. While NVIDIA has surpassed its October 2025 highs, some of the strongest gains have come from more traditional chipmakers and memory producers. Micron Technology is approaching a trillion-dollar valuation, while Intel has delivered enormous gains tied to government-backed support. Meanwhile, Asian leaders such as Samsung Electronics and SK Hynix have reinforced the global nature of the AI boom.

Bubble Concerns Return

AI dominates conversations at investor and industry conferences across sectors. Themes such as automation, scalability, and productivity improvements are everywhere, but concerns are growing as well. Investors are increasingly debating workforce reductions, weaker free cash flow in parts of the tech sector, and whether current valuations resemble the speculative excesses of the late 1990s tech bubble.

Portfolio concentration has also become a major concern. With semiconductor stocks accounting for much of the market’s outperformance, generating broad-based alpha has become increasingly difficult.

Leadership Changes Across Corporate America

Beyond macro trends, executive turnover has emerged as another defining theme. Tim Cook recently announced plans to hand leadership of Apple to John Ternus, signaling the beginning of a new era for the company. At Adobe, Shantanu Narayen also indicated plans to step away from the CEO role.

Leadership changes have been especially visible in retail, with major transitions taking place at Walmart, Target, and Lululemon. Even the investment world felt the shift, as Berkshire Hathaway’s annual meeting — often called “Woodstock for Capitalists” — took place without Warren Buffett for the first time.

The Fed Enters a New Chapter

Another major transition is happening at the Federal Reserve. Jerome Powell is set to hand leadership to Kevin Warsh, marking a potentially important turning point for U.S. monetary policy. Markets currently expect the Federal Open Market Committee to remain cautious, with interest-rate cuts largely priced out for now.

This environment has weighed heavily on financial stocks, making Financials the weakest-performing sector in the S&P 500 so far in 2026. As a result, banking conferences may carry a more subdued tone compared with the enthusiasm surrounding technology, industrials, and communication services events.

A Strong Earnings Season

Despite these uncertainties, corporate America has delivered one of its strongest earnings seasons in years. First-quarter profit growth has been impressive, and upward earnings revisions have expanded well beyond the “Magnificent Seven” and leading AI firms. Investors will now closely watch how CEOs and CIOs revise their long-term outlooks as stronger estimates are incorporated into future guidance.

Key Investor Conferences Into Mid-Year

The coming weeks feature a packed calendar of investor conferences spanning technology, healthcare, consumer, financials, industrials, energy, materials, and regional markets. Notable events include:

• Apple Worldwide Developers Conference
• Morningstar Investment Conference
• BloombergNEF Summit Amsterdam
• JP Morgan Global Technology, Media, and Communications Conference
• Goldman Sachs Utilities & Clean Energy Conference

Together, these events are expected to shape market narratives around AI, monetary policy, executive leadership changes, earnings momentum, and sector rotation through the middle of the year.

We are revisiting this chart due to its relevance to the current market rally. The upper panel displays the five-period Relative Strength Index (RSI), while the lower panel shows the daily chart of the SPDR S&P 500 ETF Trust (SPY). Historically, it has been viewed as a bullish signal when the RSI (5) climbs to +90 following a market low. With the indicator currently at 84.75, momentum remains strong and points to the potential for further gains. The green shaded areas highlight prior lows in the SPY, while the blue lines indicate previous instances when the RSI (5) reached the +90 level.

Over the past three years, and across the market’s last three major bottoms, the RSI (5) reached the +90 level at least twice during each recovery phase. In the current setup, the indicator has only recorded one such reading so far, though another could emerge in the near term. Historically, repeated RSI (5) readings above +90 have signaled that the rally may only be at the midpoint of a broader upward move.

The RSI (14) could climb toward the 80 level during the current advance, potentially paving the way for further upside. The indicator is currently at 76.85. As noted in yesterday’s commentary, the upper panel shows the 14-period RSI dating back to 2002, with blue dotted lines highlighting previous occasions when the RSI (14) reached 80. Historically, an RSI reading of 80 has reflected exceptionally strong market momentum and has never coincided with the final peak of a bull move.

Since 2002, the RSI (14) has touched 80 only eight times — roughly once every three years — making it a relatively rare event. Yesterday’s reading stood at 76.52, just 3.5 points below the 80 threshold. The significance of approaching 80 is that, in past cycles, it has often marked the midpoint rather than the end of a market advance. If the RSI does move up to 80 in the near term, it could provide a basis for projecting higher price targets for the ongoing rally. We will continue monitoring this chart closely going forward.

Yesterday, we highlighted the long-term outlook using the monthly RSI of the HUI/Gold ratio. A monthly RSI reading above 50 typically signals that HUI is in an uptrend, while a reading below 50 points to a downtrend. At present, the monthly RSI remains above 50, indicating that the longer-term trend for HUI — along with related indices such as GDX and XAU — remains bullish.

The chart above focuses on the intermediate-term outlook for GDX, which can weaken temporarily even within a broader long-term uptrend. The second panel from the bottom tracks the daily cumulative advance/decline line, while the panel above it shows the daily cumulative up/down volume, both for GDX. When both indicators trade above their mid Bollinger Bands, the intermediate-term trend is considered positive and is highlighted in green. Conversely, when both fall below their mid Bollinger Bands, the intermediate-term trend is viewed as negative and is shaded in pink.

Although the intermediate-term trend currently leans bearish — or more likely sideways in our view — we continue to focus on the longer-term picture, which remains constructive and bullish.

Narrowing market breadth. Overextended positioning. The weakest seasonal stretch of the year. The most challenging phase of the political cycle. And a conflict with no clear end in sight. The ingredients for a market correction are piling up.

The S&P 500 notched another record high last week, yet the typical stock in the index remains about 13% below its 52-week peak. That gap isn’t trivial—it’s one of the clearest warning signs seen since the dot-com era, and it’s emerging at a particularly unfavorable time in the calendar. Correction risks are building, now layered with several forces that rarely align all at once.

Decades of observing market cycles suggest the most dangerous periods are when conditions appear stable on the surface but are weakening underneath. That’s the current setup. The risk of a summer correction isn’t tied to a single bearish signal, but to multiple red flags appearing simultaneously—and overlooking any one of them could prove costly.

Breadth Divergence Is at an Extreme

The current rally’s narrowness isn’t a matter of interpretation—it’s simply the math.

The S&P 500 has climbed about 14% from its late-March selloff to reach a new high near 7,125. But beneath the surface, the market tells a very different story. The equal-weight version of the index is actually down roughly 1% over the same stretch. Meanwhile, the “Magnificent Seven” have gained around 10%, and semiconductor stocks have surged close to 30%, leaving much of the broader market behind.

This level of dispersion has been rare since 1980. Analysts at Goldman Sachs recently highlighted that such weak breadth has often been followed by deeper-than-average declines over the next six to twelve months. They’re not alone in raising concerns. Hedge funds are heavily skewed toward momentum trades, with net positioning near multi-year highs, while overall leverage sits toward the top of its five-year range. When positioning becomes this crowded and leadership is so concentrated, any reversal tends to be abrupt rather than orderly.

While market breadth grabs the headlines, the underlying technical signals are just as concerning.

The 14-day relative strength index (RSI) on the S&P 500 has remained above 70 for much of the past three weeks—a level typically associated with overbought conditions. More importantly, a classic negative divergence has emerged: prices pushed to a new high last week, while RSI failed to confirm and instead formed a lower high.

This exact setup has appeared before at key turning points, including the January 2018 peak, the February 2020 top, and the late-2021 high—and in each case, the aftermath was far from benign.

The advance-decline line for the broader NYSE has started to roll over even as the index continues to push higher. At the same time, the share of S&P 500 stocks trading above their 200-day moving average has slipped to around 56%, despite the index itself setting new highs.

We saw a similar deterioration in breadth during a rising market just ahead of the “Liberation Day” selloff in 2025—a reminder that weakening participation beneath the surface often precedes sharper corrections.

The Volatility Index is hovering in the mid-teens, which might seem comforting—until you recall it sat around 12 in January 2020 and near 15 just before the market unraveled. Low realized volatility tends to foster complacency; complacency encourages leverage; and leverage, in turn, sets the stage for sharp unwinds. Right now, all three conditions are in place.

On their own, none of these indicators can precisely time a correction. But taken together, they point to a market that has largely exhausted its margin of safety.

As noted previously:

“Markets don’t typically unravel from euphoric peaks—they tend to break from periods of complacency. And right now, we’re looking at a complacent backdrop marked by weakening breadth, deteriorating technical signals, and the most unfavorable stretch of the seasonal calendar directly ahead.”

Summer Seasonality Is Real—And This Year Looks Even Tougher

The old “sell in May and go away” saying is often brushed off, usually by those who haven’t examined the historical data closely. But the numbers are hard to ignore.

Since 1950, the S&P 500 has delivered an average return of about 1.7% from May through October, compared to more than 7% during the November-to-April period. Much of that underperformance is concentrated in the summer months—June through September. More importantly, in years when the market enters May at or near record highs, the seasonal weakness has tended to be even more pronounced than the long-term average.

Statistical evidence reinforces the seasonal pattern: a $10,000 investment held from November through April has historically far outperformed the same capital deployed from May through October. Notably, the largest drawdowns also tend to cluster in the “Sell in May” window, with major market breaks occurring in October 1929, 1987, and 2008.

That said, seasonality isn’t a guarantee. There have been plenty of exceptions where markets rallied through the summer months. In 2020 and 2021, for instance, aggressive Federal Reserve support helped drive equities higher well beyond April. By contrast, April 2022 marked a sharp downturn as the Fed pivoted to an aggressive rate-hiking cycle the month prior, underscoring how macro policy can override typical seasonal trends.

To be clear, seasonality on its own isn’t a sell signal—it’s context, not a catalyst. But when a weak seasonal backdrop aligns with deteriorating breadth and crowded positioning, the market loses one of its key shock absorbers.

During the summer months, liquidity tends to thin out, trading volumes decline, and it takes less to move prices. With fewer buyers stepping in, even modest negative catalysts can trigger outsized volatility. That’s the environment the market now appears to be heading into.

Midterm Election Years Tend to Be the Most Volatile

One underappreciated reality is that midterm election years have historically been the weakest and most volatile phase of the four-year presidential cycle for equities.

On average, the S&P 500 posts its softest performance from May through October during these years, with larger drawdowns and a higher frequency of corrections compared to non-election periods.

Looking back to 1962, midterm election years have seen average peak intra-year drawdowns of around 17%—notably worse than the roughly 13% typical in other years. The most difficult stretch tends to fall between spring and autumn: from April through October, the S&P 500 has historically experienced an average peak-to-trough decline close to 19% in midterm cycles. Then, almost like clockwork, markets have often found a bottom in late October before staging a strong rebound into year-end and over the following year.

This pattern isn’t random. As November approaches, policy uncertainty ramps up. Companies grow more cautious in their guidance, while political maneuvering and fiscal debates dominate the narrative. Markets generally struggle with uncertainty, and few periods in the four-year cycle carry more of it than the months leading into midterm elections.

With roughly six months until the next vote, the combination of polling dynamics, policy ambiguity, and geopolitical tensions suggests a more contentious backdrop than usual. History indicates that this is precisely the window when correction risk tends to be at its highest.

Iran, Oil, and the Inflation Pipeline

The market has, so far, managed to compartmentalize the conflict in the Persian Gulf—but that kind of detachment rarely lasts indefinitely.

Brent crude is trading above $109 per barrel, roughly 40% higher than before the conflict began. WTI has followed a similar path, hovering near $102. At the center of the risk is the Strait of Hormuz, a critical chokepoint that handles about 20% of global oil supply. Any escalation that seriously disrupts this passage would represent a step-change risk for energy prices.

Up to this point, markets have absorbed the impact of higher oil without major disruption. But that resilience has limits. The longer energy prices stay elevated, the more pressure builds across the inflation pipeline, eventually feeding into broader economic and market stress.

As noted in Bull Bear Report:
“The duration of the conflict—specifically how quickly the Strait of Hormuz returns to normal shipping conditions—is the single most important variable for downstream economic and market outcomes. From there, we frame three potential scenarios…”

The risk intensifies over time because energy prices transmit into inflation more directly than almost any other input. A sustained $10 rise in oil typically lifts headline CPI by about 0.2–0.3 percentage points within a few months. Shortly after, some of that pressure filters into core inflation as higher transportation costs ripple through the pricing of goods.

That dynamic helps explain why the Federal Reserve has remained cautious about cutting rates. If tensions escalate further and oil climbs toward $130 or even $140, the argument for easing this year likely disappears—and the possibility of renewed rate hikes could come back into focus.

That scenario isn’t reflected in current pricing. Equity valuations are still built on the expectation that inflation will continue to ease and that the Fed will begin cutting rates later this year. Remove those assumptions, and the foundation under multiples weakens quickly—leaving valuations vulnerable to a sharp repricing.

Managing Market Correction Risk

The most credible counterargument is fairly simple. The surge in AI-driven capital expenditure represents one of the largest corporate spending cycles in decades. According to Q1 2026 GDP data, roughly 75% of overall growth was driven by capital investment, helping to offset softness in personal consumption—which itself makes up about 70% of the economy.

On top of that, hyperscaler earnings are still beating expectations. While narrow breadth is a concern, it doesn’t automatically require leaders to fall—there’s a plausible path where lagging sectors simply catch up instead. That’s a legitimate counterpoint, and it deserves to be taken seriously.

There’s a flaw in the “catch-up” argument. For laggards to close the gap, you need a supportive catalyst—and the current macro setup isn’t providing one. Consumer stocks, which carry the largest weight outside of tech, are directly pressured by elevated oil prices acting as a tax on disposable income. Industrials and materials depend on improving global growth, yet ongoing conflict is pulling in the opposite direction. Financials would benefit from a steeper yield curve and tighter credit spreads, neither of which are in place today. In short, a smooth rotation into laggards would require a macro improvement that doesn’t appear likely in the near term.

That said, narrow leadership can persist. Research from Goldman Sachs suggests the typical narrow-breadth phase lasts around three months, though extreme cases—like the late 1990s—can stretch much longer.

To be clear, this isn’t a call for an imminent crash. It’s a recognition that the ingredients for a sharp and disorderly drawdown are as aligned as they’ve been in quite some time—and they’re showing up during the least forgiving part of the seasonal calendar.

The response doesn’t need to be complicated. It’s about sticking to fundamentals and applying them with discipline.

None of these steps depend on calling the exact top, and they don’t require an outright bearish stance. They simply reflect an understanding that the current risk-reward balance is skewed unfavorably—and adjusting positioning with that reality in mind.

As noted earlier, markets rarely unravel from euphoric peaks—they tend to break from periods of complacency. That complacency is increasingly visible today, with weakening breadth, deteriorating technicals, the least favorable seasonal and political backdrop, and an active geopolitical conflict pushing energy prices to multi-year highs. Any one of these factors would be worth monitoring on its own. Taken together, they create one of the most elevated correction risk environments seen since early 2022, particularly heading into the November election window.

This isn’t a call to exit the market entirely, but it is a case for taking measured action now to reduce exposure to potential downside. Rebalancing portfolios, locking in gains, and modestly increasing cash positions are all ways to regain control on your own terms rather than reacting under pressure later.

It’s important to distinguish between elevated risk and certainty. None of this guarantees a correction. Markets can defy logic—rallies can extend, geopolitical tensions can ease quickly, and seasonal patterns can fail. But the real risk lies in inaction when the warning signs are this aligned.

If markets continue grinding higher into year-end, trimming risk may lead to a period of underperformance. That’s manageable. Performance gaps can be recovered over time with disciplined participation. Permanent capital loss is far harder to repair. A 30% decline requires a 43% rebound just to get back to even—and the deeper the drawdown, the steeper the climb.

That asymmetry should guide decision-making. Investors who endure across cycles aren’t those who capture every rally—they’re the ones who avoid being significantly impaired when conditions turn against them.

Key highlights

• Oil surged at the Asian open on Monday, bonds declined, and equities were mixed as Donald Trump warned of “hell” if Iran fails to meet his Strait of Hormuz deadline.
• Crude prices advanced after the Easter break, with the ongoing U.S.-Israel conflict with Iran continuing to disrupt global supply.
• The dollar remained firm, while the yen hovered near the key 160-per-dollar level amid market unease over escalating Iran tensions and Trump’s deadline.
• Japan’s benchmark yields climbed to a 27-year high as Middle East conflict fueled inflation concerns and strong U.S. jobs data reduced expectations for early rate cuts.
• Gold edged lower, weighed down by a stronger dollar, as elevated oil prices and robust U.S. labor data dampened hopes for Federal Reserve easing.

Dow Jones futures ticked higher Sunday night, with S&P 500 and Nasdaq futures also posting modest gains as investors remained cautious amid fresh U.S.–Iran tensions and rising oil prices.

The S&P 500 advanced during the holiday-shortened week, breaking a five-week losing streak. Earlier, the index had recorded its worst quarter since 2022, weighed down by late-February declines linked to the conflict and surging energy costs. However, markets rebounded last week despite continued gains in crude oil.

All three major indexes ended their five-week slides, each rising at least 3%. Still, equities have faced pressure this year due to concerns over AI disruption, weakness in private credit, and ongoing Middle East uncertainty, leaving the S&P 500 roughly 6% below its late-January peak.

U.S. Economic Data & Earnings Preview

Investors are closely watching upcoming inflation data, particularly Friday’s March Consumer Price Index, which is expected to rise 0.9% month-over-month—an early indication of the inflationary impact from the war-driven surge in energy prices. U.S. crude oil has climbed roughly 90% so far this year, pushing average gasoline prices above $4 per gallon for the first time in more than three years.

Another key release comes Thursday with the Personal Consumption Expenditures report, a preferred inflation gauge for the Federal Reserve and a crucial input for its interest-rate decisions.

Economic calendar:

• Monday (Apr 6): Donald Trump holds a press conference at the Oval Office at 1:00 p.m.
• Tuesday (Apr 7): Austan Goolsbee participates in a live Q&A in Detroit at 12:35 p.m.
• Wednesday (Apr 8): Federal Reserve releases minutes from its March meeting at 2:00 p.m.
• Thursday (Apr 9): February PCE report is published.
• Friday (Apr 10): March CPI data is released at 8:30 a.m., with forecasts pointing to a 0.9% monthly increase.

Earnings calendar:

• Wednesday (Apr 8): Delta Air Lines reports Q1 results before the open, while Constellation Brands posts its fiscal Q4 earnings.

Delta’s recent performance reflects the typical volatility of the airline sector, where fuel costs, labor expenses, and consumer demand fluctuate. The company has held up relatively well by focusing on higher-income travelers who are less sensitive to inflation, even as demand for economy-class seats weakened. In Q4, main-cabin revenue dropped 7% to $5.62 billion, while premium ticket revenue increased 9% to nearly $5.7 billion.

The stock reaction to Delta’s January 14 earnings was muted: adjusted EPS declined 13% year-over-year to $1.55, slightly beating expectations, while revenue rose 3% to $16 billion. Looking ahead, the company projects full-year adjusted EPS of $6.50–$7.50 (midpoint $7.00, below the $7.25 consensus) and Q1 adjusted EPS of $0.50–$0.90, roughly in line with market estimates.

Technical Analysis

DJIA Technical Outlook

The Dow Jones Industrial Average recently broke out above a descending channel, which has now turned into support around 45,760.

As long as the index holds above this level, it is likely to extend its rally toward 47,430, followed by a potential short-term pullback. A clear breakout above 47,430 would signal further upside, with the next target near 48,400.

Notably, the index successfully retested and rebounded from the previous all-time high zone around 45,000—an encouraging sign that the broader uptrend remains intact.

Nasdaq 100 Technical Outlook

The Nasdaq-100 has rebounded from the previously identified support near 23,000.

To maintain upward momentum, the index needs to stay above 23,990, which would open the way for a move toward 24,330 this week. However, a rejection at the 24,330 level could push prices back down toward the 23,000 support zone.

In the near term, the NDX is likely to trade within a range of 23,000 to 24,330 until a decisive breakout establishes a clearer direction.

S&P 500 Technical Outlook

The S&P 500 rebounded from the 6,335–6,340 support zone and delivered a strong rally last week, in line with the previous outlook.

To continue the upward trend, the index needs to break above the 6,610–6,615 resistance area, which would open the path toward 6,705.

If that breakout fails, the SPX is likely to move sideways within a 6,510–6,610 range, with potential downside risk extending to around 6,475.

Weekly U.S. Indices Probability Map

The U.S. weekly probability map for March 30 to April 3, 2026 indicates that the following week (April 6–10) has historically been bullish for major U.S. indices, suggesting a favorable environment for upward momentum.

These probability maps are based on historical seasonality trends, while sentiment indicators are generated using a scoring system derived from those seasonal patterns.

Sources: Ali Merchant

• The coming week will be driven by key U.S. data releases, including the jobs report and retail sales figures, alongside ongoing developments in the Iran conflict.
• ExxonMobil is highlighted as a momentum opportunity, supported by increased oil price volatility stemming from Middle East supply risks.
• In contrast, Nike is seen as a stock to avoid ahead of its earnings release, with concerns over potentially weak results and cautious forward guidance.

U.S. equities fell sharply in a broad-based selloff on Friday, with both the Dow Jones Industrial Average and the Nasdaq Composite slipping into correction territory as investors grew concerned about the global economic fallout from the war in Iran.

The S&P 500 extended its losing streak to a fifth consecutive week, falling 2.1%, while the tech-focused Nasdaq Composite dropped 3.2% and the Dow Jones Industrial Average declined 0.9%.

Looking ahead, investors will focus on the upcoming U.S. employment report, a key economic release expected to show around 56,000 job additions and an unemployment rate of 4.4%, alongside ongoing monitoring of the second month of the Iran conflict. The payrolls data is scheduled for April 3, when U.S. markets will be closed for the Good Friday holiday.

Retail sales for February and manufacturing activity data are also scheduled for release next week.

On Monday, Jerome Powell will participate in a moderated discussion at Harvard University, with his remarks likely to influence market sentiment.

On the corporate side, Nike is set to report earnings on Tuesday, while the majority of first-quarter results will come later in the earnings season.

Overall, the focus remains on the week ahead—Monday, March 30 to Friday, April 3—as investors position for key macro data, central bank commentary, and early corporate earnings, along with one stock expected to outperform and another at risk of further downside.

Buy Idea: ExxonMobil

ExxonMobil emerges as the top pick to buy this week, supported by a notable surge in global oil prices as markets react to heightened fears of supply disruptions tied to the ongoing U.S.–Israeli conflict with Iran. Since the outbreak of the war, crude benchmarks have climbed sharply amid growing concern that the turmoil could choke flows through the strategically vital Strait of Hormuz.

U.S. West Texas Intermediate (WTI) crude has surged more than 70% year-to-date, trading near $100 per barrel, while Brent crude futures have climbed above $105 and briefly approached $110 during intraday trading on Friday.

Despite periodic pullbacks and speculation around potential ceasefires, geopolitical risk premiums remain elevated, helping to sustain higher energy prices in the near term.

ExxonMobil is well positioned to benefit from this environment, given its large upstream portfolio, including major production assets in the Permian Basin and Guyana. As a result, each $10 increase in crude prices could add billions of dollars in incremental annual cash flow.

Notably, XOM is trading close to its 52-week high of $171.23. While volatility has increased, the stock continues to demonstrate strong resilience, reflected in its relatively low 1-year beta of 0.27, suggesting limited sensitivity to broader market swings even amid turbulence.

This stability reinforces ExxonMobil’s appeal as a buy or add at current levels, particularly as geopolitical tensions continue to support higher crude prices.

Trade Setup:

• Entry: Around current levels (~$171.00)
• Exit Target: $180.00 (approx. +5.3%)
• Stop-Loss: $165.60 (approx. -3.5%)

Stock to Offload: Nike

Nike, by contrast, is the stock to avoid or sell this week, as it heads into its upcoming earnings release facing multiple challenges. The sportswear giant is scheduled to report fiscal Q3 results on Tuesday at 4:15 PM ET after the market close, and expectations remain weak.

Despite its globally recognized brand, Nike has been under pressure in recent quarters due to weakening consumer demand, rising competitive pressure, and a series of strategic setbacks.

Options markets are currently pricing in an earnings-related move of roughly ±9%, suggesting significant volatility ahead, with downside risk that could drive the stock toward multi-year lows.

Nike is projected to report a 45% year-over-year decline in adjusted EPS to $0.30, with revenue expected to slip 1% to around $11.2 billion. The weaker outlook reflects soft demand in key regions—especially China—along with inventory overhang, higher tariff pressures, and intensifying competition.

Any disappointing forward guidance could further dampen investor sentiment, as the market increasingly questions when Nike’s turnaround strategy under new leadership and restructuring efforts will begin to deliver sustained growth.

Meanwhile, competitors such as On, Hoka, and Alo Yoga continue to take share in both performance and lifestyle segments, gradually eroding Nike’s dominance. At the same time, Nike’s premium pricing strategy is becoming more challenging in an increasingly value-sensitive consumer environment.

Nike (NKE) is currently trading just above its 52-week low at around $51.20, extending a persistent downtrend marked by a 16.8% decline over the past month.

Heading into a key earnings release, management has already flagged continued headwinds, and the combination of elevated valuation concerns and weak price momentum suggests the stock may remain under pressure.

Although the RSI indicates oversold conditions from a technical standpoint, the absence of clear positive catalysts raises the risk that attempting to “buy the dip” could be premature.

Trade Setup:

• Entry: Near current levels (~$51.15)
• Target: $48.00 (approx. +5.5% downside move)
• Stop-loss: $53.24 (approx. 4.4% risk)

Sources: Jesse Cohen

The S&P 500 closed down more than 1.3%, pressured by a hotter-than-expected PPI reading, a sharp rise in oil prices, and growing expectations that the Fed may delay rate cuts into 2026—even without Jay Powell at the helm.

The 2-year Treasury yield tells the story, jumping over 10 basis points to 3.79%, its highest level since August. While there’s minor resistance around 3.8%, it appears limited, leaving the door open for a move back toward 4% in the near term.

More notable is the move in the 30-year yield, which is once again approaching the 5% level. It rose 4 basis points on the day to 4.89%, putting it within striking distance of that key threshold.

If oil prices remain elevated—or push even higher—and inflation continues to trend upward, a breakout above 5% looks increasingly plausible, with a potential move toward 5.1%–5.2% not out of the question.

Turning back to the S&P 500, the index closed at its lowest level since November, finishing at 6,624. With the 200-day moving average just 9 points below, the market is approaching a key technical battleground ahead of Friday’s options expiration (opex).

A decisive break below the 200-day, especially with follow-through selling, would likely raise red flags for investors. For now, however, such a move would more likely signal a test of the next support zone around 6,520.

The real inflection point lies below that—if 6,520 gives way, downside momentum could accelerate. In the near term, 6,500 is also shaping up as a critical level, acting as a put wall at least through Friday.

Based on my CTA model, flows are currently negative, with the next key flip level sitting around 6,570. I’m still refining the longer-term trend signal, so confidence there remains limited. More importantly, though, systematic flows at this point are not providing support for a market move higher.

The Financials ETF (XLF) is nearing a break of key support just below $49. If that level gives way, the next support zone comes in around $47.25—an area that dates back to April last year and also marks an unfilled gap on the chart.

At the end of the day, it all comes back to one key driver: oil—and for now, that trend is still pointing higher. As long as oil continues to climb, it likely keeps upward pressure on rates and the dollar, while weighing on risk assets.

Micron (NASDAQ: MU) just delivered stellar earnings and strong forward guidance, yet the stock is still down more than 3%. It’s not disastrous—at least for now—but notably, shares remain below the $450 level.

In essence, call options at $450 and above could rapidly lose value today if the stock fails to recover. That may trigger selling pressure, which in turn could force market makers to unwind their hedging positions.

As long as the stock holds above $430, gamma should remain positive—at least based on yesterday’s readings—making that level a potential area of support. However, if it falls below $430, dealers may turn into sellers, which could push the stock down toward $400, or possibly even closer to $390.

In this market, it really does feel like the tail is wagging the dog—at least from my perspective.

Sources: Michael Kramer

Key Takeaways

• Utilities are outperforming the S&P 500, signaling growing investor demand for defensive positioning.
• Consumer Staples and Health Care present mixed signals as traders evaluate potential rotation into risk-off sectors.
• Tracking both absolute and relative sector strength can offer insight into broader market risk.

It’s March Madness on Wall Street: the VIX remains in the mid-20s, WTI crude oil has climbed back to $100, and bearish momentum continues to build. With “defense wins championships” in mind, traders may be weighing whether bracing for further downside is the prudent strategy.

In that context, sector analysis deserves a spot in your playbook. Within the 11 S&P 500 sectors, Utilities, Consumer Staples, Health Care, and Real Estate are typically viewed as less cyclical, lower-growth, defensive areas. Together, they account for about 18.5% of the index (under 10% excluding Health Care). From a portfolio standpoint, shifting heavily into these sectors represents a meaningful active bet. If sentiment flips and bulls regain control, a sharp rebound could quickly punish defensive positioning.

Even so, opportunities may lie beyond the high-growth “headline” sectors. Let’s take a closer look.

Utilities Gaining Momentum

Starting with Utilities (XLU), it’s useful to assess both absolute and relative price action. The sector ETF remains firmly in an uptrend.

As shown in the chart, a pattern of higher highs and higher lows has persisted since September 2023. The upward-sloping 200-day moving average indicates that bulls still dominate the primary trend. Meanwhile, the RSI momentum indicator has frequently reached overbought territory—often a sign of strength rather than weakness. In short, XLU continues to show strong upside momentum.

XLU remains in a strong uptrend and is trading near record highs.

But how does it compare to the S&P 500 ETF (SPY)?

To check, enter “XLU:SPY” in the SharpCharts symbol box (or “_XLU:_SPY” for a price-only view). As of last Friday, the ratio hit its highest level since May 2025, breaking above key resistance.

In short, relative strength is shifting toward Utilities, which implies a more bearish tilt for the broader S&P 500.

Staples Near a Crucial Support Zone

Looking at Consumer Staples (XLP), the price trend is less decisive. The ETF is edging closer to correction territory, pulling back toward key support around $84 and its 50-day moving average. Given the strong volume-by-price concentration in the mid-$80s, there’s an expectation buyers may step in at this level. The coming weeks will be pivotal.

Similarly, the XLP:SPY ratio is not as well-defined as XLU:SPY. It formed a rounded bottom around the start of the year and has since moved into a consolidation phase—potentially a bull flag.

From a technical perspective, consolidations typically break in the direction of the broader trend—which is upward here. That suggests XLP could maintain support near $84 and resume outperforming the S&P 500 in the weeks and months ahead.

Health Care Still on the Sidelines

Turning to Health Care (XLV), the chart shows a clear bearish double top, with sellers stepping in twice around the $160 level—first in Q3 2024 and again more recently over an extended period.

The sector, which includes defensive pharmaceutical firms, somewhat cyclical medical device makers, and higher-risk biotech names, has seen its RSI drop to its weakest level since just after Liberation Day. Meanwhile, the rising 200-day moving average sits only a few percentage points below the current price. In addition, after breaking below an upward trendline, the next key level to watch is the 38.2% Fibonacci retracement near $148.

Overall, XLV looks better left on the sidelines for now.

XLV:SPY lacks a compelling setup. The sector found a bottom last August, showed some strength in November, but has largely moved sideways since December.

Much like how Walmart and Costco lead the Staples space, Health Care performance is heavily driven by Eli Lilly, Johnson & Johnson, and UnitedHealth Group.

Don’t Overcomplicate the Defensive Trade

At a high level, it’s easy to get lost comparing relative strength across defensive, cyclical, and growth sectors. But the reality is simple: risk-off areas like Utilities, Staples, and Health Care can rally—and have done so multiple times during this bull market. In fact, companies such as Walmart, Costco, and Eli Lilly often behave more like growth stocks than traditional defensive names.

The takeaway: sector analysis—including relative strength—is just one tool within a broader top-down and intermarket framework.

When Defensive Strength Signals Trouble

So when does outperformance in defensive sectors shift from a caution sign to a real warning? If Utilities, Staples, Health Care (and possibly Real Estate) start showing relative strength while declining in absolute terms, it’s usually a sign the S&P 500 is under pressure.

There have been early hints of this dynamic alongside the index’s bearish rounded top, but so far it’s been inconsistent rather than decisive. While it’s not ideal for defensive sectors to lead, such phases can persist longer than expected.

Bottom Line

While attention is centered on Energy and Technology—with $100 oil and NVIDIA grabbing headlines—along with Financials facing stress from private credit concerns, traders shouldn’t ignore the defensive sectors. Monitoring both absolute and relative trends in these areas can provide clarity and help filter out noise during volatile market conditions.

Sources: Mike Zaccardi

Stocks dropped sharply at Monday’s open but, as anticipated, recovered steadily throughout the session as volatility began to fade. Sentiment improved further later in the day after headlines suggested the war could end soon.

From a bullish perspective, however, one key challenge remains. Today marks the settlement of roughly $15 billion in Treasury bills. Historical data indicates that markets rise only about one-third of the time on settlement days, while in roughly two-thirds of cases equities tend to decline.

It is still possible that elevated volatility overrides the typical settlement pattern, allowing the market to post a modest gain of around 40 to 50 basis points. Even so, the historical analysis has generally proven reliable.

From both an options-market and technical-analysis standpoint, 6,800 is a key level. If the SPX moves above it, the index could quickly advance toward 6,900, which corresponds to the zero gamma level.

Another concern is that the USD/JPY cross-currency basis has been turning more negative, pointing to tighter dollar liquidity. This comes on top of signals from the Treasury settlement data. Overall, the liquidity situation hasn’t improved much so far and may even be slightly worse.

That said, the cross-currency basis could widen if markets begin to believe oil prices will stabilize or decline. For now, however, the outlook remains uncertain and difficult to call.

Oil had clearly become overbought, trading above its upper Bollinger Band while the RSI was above 70. There also appears to be solid support near the $80 level. While prices could decline further, a return to the $60 range in the near term seems unlikely.

Oil at $80 is certainly preferable to $100, but it is still significantly higher than $60. A $20 jump in prices represents more than a 33% increase, which is unlikely to be favorable for the upcoming CPI report or for consumers paying at the gas pump.

Sources: Michael Kramer

U.S. stock index futures edged higher on Monday night after growing uncertainty surrounding Donald Trump’s tariff policies and concerns about AI-related disruption in the software sector triggered steep losses on Wall Street.

Lingering unease over a potential U.S.-Iran conflict, along with caution ahead of this week’s closely watched earnings from NVIDIA Corporation (NASDAQ: NVDA), also kept sentiment restrained.

As of 19:30 ET (00:30 GMT), S&P 500 Futures were up less than 0.1% at 6,855.0 points. Nasdaq 100 Futures gained 0.1% to 24,781.0 points, while Dow Jones Futures added nearly 0.1% to 48,873.0 points.

FedEx sues U.S. government to recover tariff payments

FedEx Corporation (NYSE: FDX) filed a lawsuit against the U.S. government on Monday evening, seeking a “full refund” of emergency tariffs it paid over the past year.

The action comes only days after the Supreme Court of the United States ruled the levies illegal, with the tariffs scheduled to be lifted from midnight Tuesday.

FedEx is the first company to formally pursue reimbursement following the Court’s decision, joining a broader wave of firms mounting legal challenges against tariff measures introduced under Donald Trump.

However, the ruling did not clarify how the more than $160 billion in revenue already collected from the invalidated tariffs will be handled.

Wall Street battered by tariff uncertainty and AI concerns

Wall Street’s major indexes each dropped more than 1% on Monday as uncertainty surrounding Donald Trump’s tariff policies and mounting concerns about artificial intelligence disrupting the software industry kept investors in a risk-off mood.

Technology sentiment remained fragile ahead of quarterly results from NVIDIA Corporation (NASDAQ: NVDA), scheduled for Wednesday. Widely viewed as a key gauge of AI demand, the world’s most valuable company is expected to post robust earnings growth compared with last year.

Markets also grappled with renewed tariff worries after Trump unveiled a 15% universal tariff under a different legal authority. A report from The Wall Street Journal indicated the administration is considering additional levies on at least six more sectors.

The president appeared to double down on his trade agenda, even as several countries that recently reached agreements with Washington sought greater clarity on the scope and implementation of the tariffs. He also cautioned that nations retreating from newly negotiated trade deals could face steeper duties.

The S&P 500 declined 1%, while the NASDAQ Composite fell 1.1%. The Dow Jones Industrial Average led losses, tumbling 1.7%.

Technology stocks continued to lag, with software names hit by renewed selling pressure amid rising anxiety over AI-driven disruption. Part of the concern stemmed from a speculative note by Citrini Research envisioning a June 2028 scenario in which rapid AI adoption leads to widespread displacement of white-collar jobs.

Sources: Ambar Warrick