TheChartEdge

Market Temperature Edges Up to 5.7 - The Rotation Swings Back to Tech & AI

Marcus Grant, CFTe — Sun, 12 Jul 2026 09:35:53 GMT

Last week (ending July 10) the S&P 500 (SPY) rose 1.4%, the Nasdaq 100 (QQQ) 1.8% and FANG+ (FNGS) 2.4%. The Dow (DIA) fell 0.4%, the equal-weight S&P 500 (RSP) 0.3%, the S&P MidCap 400 (MDY) 0.6%, the Russell 2000 (IWM) 0.5% and microcaps (IWC) 1.1%. A week after the all-time-high list was dominated by healthcare, financials, value and the Dow, money rotated back into the mega-caps, tech and AI.

Subscribe now

SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

SPY held its 50-day SMA on Wednesday during the midweek pullback and finished the week strongly, closing less than 1% from an all-time high.

QQQ Chart

QQQ closed below its 50-day SMA on Tuesday and failed to reclaim it on Wednesday, despite having a strong day after the initial gap down. But it also finished the week strongly, closing just back above its 20-day SMA, and is back in a Strong Uptrend.

Market Temperature

The Market Temperature came in at 5.7, up from 5.6, holding in the Goldilocks Zone. On the surface almost nothing changed. Underneath, the pillars mostly offset each other.

The Tape/Trend pillar firmed. The QQQ moved from an Uptrend back to a Strong Uptrend and the SPY’s weekly RSI rose to 65.1 from 62.7. Breadth eased slightly, with 58.4% of US stocks above their 50-day moving average, from 59.4%, and 57.9% above their 200-day, from 59.1%.

The Regime pillar improved as the discretionary vs staples ratio (XLY/XLP) continued to turn up. High beta vs low volatility remains risk-on, and growth vs value still scores in value’s favour - though growth outperformed on the week itself, with Russell 1000 Growth (IWF) up 2.3% and Value (IWD) flat, but the ratio is still below its moving averages, so the model’s signal hasn’t flipped.

Sentiment and Monetary/Macro went the other way. The VIX fell to 15.0 from 15.8, which the model reads as a contrarian negative. Bond volatility edged up, with the MOVE index at 69.6 from 65.4, and the dollar ticked higher.

GICS Sector Relative Strength

Technology (XLK) is back in Leading, up 2.9% on the week, after spending two weeks in Weakening. It’s the only sector there. Industrials (XLI) crossed out of Leading into Weakening after a 1.1% decline.

Financials (XLF) is the only sector in Improving, up 0.2% on the week.

The other eight sectors are all in Lagging. Health Care (XLV) fell 1.8% and dropped out of Improving, as did Discretionary (XLY), up 0.1%, and Communications (XLC), despite being up 1.9%. Energy (XLE) was the strongest sector on the week, up 3.5%, but remains in Lagging with its RS-Trend just under the 100 line. Materials (XLB) fell 2.2%, Staples (XLP) 1.0%, Utilities (XLU) 0.8% and Real Estate (XLRE) 0.5% - all remaining in Lagging.

Momentum Leaderboard

There are eight new names on the board this weekend. Ethereum (ETHA) now tops it, with Bitcoin (IBIT) and China Internet (KWEB) also on the board, but all three are still in downtrends and a long way off their highs.

Technology (XLK), Cloud & Storage (FCLD), AI & ML (THNQ), Internet (FDN), the equal-weight Nasdaq 100 (QQEW), FANG+ (FNGS) and IPOs (IPO) all rejoined the board. XLV fell off the board, but healthcare sub-sectors - ARK Genomics (ARKG), Biotech (XBI), Pharmaceuticals (XPH) and large-cap biotech (IBB) are all still there, as are equal-weight financials (RSPF) and Insurance (KIE).

Trend quality improved. Thirteen of the twenty are in Strong Uptrends, up from nine last week, and only three - ETHA, IBIT and KWEB - are in downtrend states.

Still no semiconductor names on the board for a third straight week. SMH and XSD have RS-Momentum readings of 99.4 and 97.0.

Trend States Across the Universe

Something new I’ll be tracking each week - the count of all 121 ETFs in my universe by trend state.

The reason I want to track this: the quadrant map narrowed last week. Lagging went from 40 names to 62, because most things lost ground against a strong SPY week. But the absolute picture barely moved - 65 names are in one of the three uptrend states versus 63 the week before. The narrowing is relative, not a breakdown in underlying trends.

China and Crypto Bounce - Within Downtrends

China Internet (KWEB) rose 5.6% and China Large-Cap (FXI) 4.9%, with FXI crossing into Improving to join KWEB. Bitcoin (IBIT) rose 3.9% and Ethereum (ETHA) 5.2%. KWEB, FXI and IBIT all upgraded from Strong Downtrends to Downtrends, and ETHA was already there. All four are still a long way underwater - IBIT and ETHA sit roughly 50% and 63% below their all-time highs.

Tech, Semis and AI Bounce

Mega-cap tech was strong, as seen in FANG+ (FNGS). It’s still in a Recovering Uptrend, but another strong week would likely flip it to a Strong Uptrend.

FNGS Chart

Semiconductors (SMH) rose 3.2% and sits above its rising 50-day SMA, though still below its 20-day. Equal-weight semis (XSD) added 1.4% but looks the weaker of the two.

SMH Chart

XSD Chart

Generative AI (CHAT) rose 3.3% after holding the AVWAP from the March 30 low, which is where I said last weekend I’d be watching for a bounce.

CHAT Chart

The RS-Momentum moves across the AI complex were the biggest of the week. CHAT went from 90.5 to 99.1, Digital Infrastructure (IDGT) from 91.0 to 99.0, Data Center Infrastructure (DTCR) from 89.0 to 95.6 and SMH from 92.9 to 99.4. Crypto miners (WGMI), which mostly trade as an AI compute proxy now, had the biggest RS-Momentum gain of any ETF I track, from 79.4 to 94.9 after a 4.3% week, but still looks weak, with price unable to close above the AVWAP from the March 30 low. None of them have crossed back above 100 yet. Re-accelerating, but not yet outperforming SPY on RS-Momentum.

WGMI Chart

Healthcare Slides and Biotech Hit on Friday

XLV was weak and dropped out of Improving, while equal-weight healthcare (RSPH), which was on the all-time-high list a week ago, fell out of Leading - both now sit in Lagging.

XLV Chart

Biotech’s weekly numbers hide the story. XBI finished the week down only 0.9%, but 3.2% of that came on Friday - an ugly candle after the run it’s had since mid-June. Large-cap biotech (IBB) fell 1.9% and ARK Genomics (ARKG) 3.7%. Pharmaceuticals (XPH) was up 1.9%.

XBI Chart

Aerospace & Defense Rejected at ATHs

A week after crossing into Leading and sitting 2.7% from an all-time high, Aerospace & Defense (XAR) fell 5.6% and now sits in Lagging. Its trend state went from a Strong Uptrend to Neutral, and its RS-Trend fell more than 8 points.

XAR Chart

Financials Stall

Last weekend Insurance (KIE), equal-weight financials (RSPF), Financials (XLF) and Capital Markets (KCE) were all on the momentum leaderboard. Last week XLF rose 0.2%, RSPF 0.6%, KCE 1.7%, and KIE fell 1.0% - only equal-weight financials and insurance retained their place on the leaderboard but dropped nine and fourteen places respectively.

All six financial ETFs we track lost RS-Momentum. The big banks (KBE) were up 0.2% and the regional banks (KRE) finished flat, but both dropped out of Leading into Lagging, sitting right on the boundary.

Despite the slowing momentum, all six remain in Strong Uptrends. The big banks kick off earnings season on Tuesday next week.

KBE Chart

The Week Ahead

The temperature is steady in the Goldilocks Zone, SPY and QQQ are back above their 20-day SMAs in Strong Uptrends. However, both are still consolidating in a range and lack shorter term trend direction. The rotation swung back towards tech and AI names; I will be watching next week to see if that continues. I scaled out of my biotech (XBI) position and sold Eli Lilly (LLY) last week but would buy them back if they can consolidate here for a bit, or even on some strength after a deeper pullback to their 20 or 50-day moving averages. I am waiting for SPY and QQQ to resolve from their consolidations before aggressively entering new positions. I did enter the S&P 500 CFD on Monday, as I mentioned last weekend, but did not hold through Tuesday and Wednesday’s pullback. A few individual names I’m watching that have held up relatively well are Dell (DELL), Advanced Micro Devices (AMD), Cisco (CSCO), and Astera Labs (ALAB).

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

Subscribe now

Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Market Temperature Rebounds to 5.6 - One Week in Cautious and Back to Goldilocks

Marcus Grant, CFTe — Sun, 05 Jul 2026 12:09:12 GMT

US markets were closed on Friday for the Independence Day long weekend, so last week’s data runs to the close on Thursday July 2. The S&P 500 (SPY) rose 2.2%, the Nasdaq 100 (QQQ) 0.9%, and FANG+ (FNGS) bounced 3.6% after leading the selloff the week prior. The equal-weight S&P 500 (RSP) rose 2.2% and the Dow (DIA) 2.0%. The mid and small caps lagged last week - the S&P MidCap 400 (MDY) slipped 0.2% and the Russell 2000 (IWM) fell 0.8%, though microcaps (IWC) added 1.4%.

However, the weekly numbers hide how the picture changed mid-week.

Subscribe now

SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

Monday and Tuesday were strong. The SPY reclaimed its 20-day SMA on Tuesday and held above it into Thursday’s close - but the back half of the week the relative strength was concentrated in financials, healthcare, and some of the FANG+ mega-cap names.

QQQ Chart

The QQQ looked the better of the two mid-week, with a strong Tuesday close above its 20-day SMA. However, the selling kicked in on Wednesday with a gap down and close near the lows, and continued on Thursday, falling 1.7%, with the losses concentrated in the semiconductor and AI names. SMH fell 4.5% on Thursday alone and equal-weight semis (XSD) 6.7%. The QQQ finished the week back below its 20-day SMA, sitting just above its 50-day.

Market Temperature

The Market Temperature rebounded to 5.6 from 4.7, moving back into the Goldilocks Zone after a single week in Cautious. Last weekend I wrote that a single week in Cautious is close to a coin-flip, and that it’s sustained weakness below 4.0 that has historically mattered.

The recovery came mostly from the Tape/Trend pillar. The S&P 500 went from Neutral directly back to a Strong Uptrend, the weekly RSI rose to 62.7 from 58.4, and breadth improved for a second week - 59.4% of US stocks are above their 50-day moving average and 59.1% above their 200-day.

Monetary/Macro also firmed. The dollar pulled back after several strong weeks, bond volatility eased with the MOVE index at 65.4, and credit spreads tightened.

The Regime pillar improved as the discretionary vs staples ratio (XLY/XLP) turned back up. High beta vs low volatility remains risk-on, and growth vs value still favours value, both unchanged.

Sentiment was the only pillar to fall. The VIX dropped to 15.8 from 18.4, which the model reads as a contrarian negative.

GICS Sector Relative Strength

Only Industrials (XLI) sits in Leading after a 1.5% week. Technology (XLK) held in Weakening on a flat week. Discretionary (XLY) was up 2.4%, and Communications (XLC) 3.2%, both crossed up from Lagging into Improving, joining Health Care (XLV), up 2.1%, and Financials (XLF), the strongest sector on the week, up 3.8%. Materials (XLB), up 0.8%, and Real Estate (XLRE), down 1.2%, dropped out of Leading, while Utilities (XLU), down 1.0%, and Staples (XLP), up 0.3%, slipped out of Improving - all four into Lagging. Energy (XLE) fell 1.2% and went from Weakening into Lagging.

Momentum Leaderboard

There are nine new names on the board this weekend. The healthcare and biotech leadership held its ground. ARK Genomics (ARKG) still tops the board, with Biotech (XBI), large-cap biotech (IBB) and Pharmaceuticals (XPH) all in the top dozen and all in Strong Uptrends.

Three of the new arrivals are financials - equal-weight financials (RSPF), broad financials (XLF) and Capital Markets (KCE) - joining Insurance (KIE), which sits second on the board after a 5% week. There are no semiconductor names on the board for a second week. Trend quality is much the same as last week, with nine of the twenty in Strong Uptrends and four in downtrend states.

All-time Highs

The Dow (DIA), Insurance (KIE), Russell 1000 Value (IWD), Health Care (XLV), equal-weight healthcare (RSPH), Pharmaceuticals (XPH), large-cap biotech (IBB), equal-weight financials (RSPF), and the equal-weight S&P 500 (RSP) all finished the week within 0.4% of all-time highs.

DIA Chart

IWD Chart

XLV Chart

IBB Chart

Semis and AI Names Down, Software Up

Semiconductors (SMH) fell 3.2% on the week and equal-weight semis (XSD) 2.8%. Generative AI (CHAT) fell 5.2%, Data Center Infrastructure (DTCR) 7.2% and AI Innovation (BAI) 4.3%. Crypto miners (WGMI), which mostly trade as an AI compute proxy now, fell 19.1% - the worst week of any ETF I track. Bitcoin (IBIT) and Ethereum (ETHA) rose 3.0% and 8.2% for the week and both made the Momentum Leaderboard. However, they remain in severe downtrends, still more than 50% and 65% below their all-time highs.

SMH Chart

XSD Chart

CHAT Chart

WGMI Chart

IGV rose 6.1%, despite that ETF containing many of the crypto miner names. Equal-weight software (XSW) was up 5.3%, and cybersecurity (CIBR) 6.2%, back in a Strong Uptrend. IGV is still in a Downtrend, 3.6% below its 200-day SMA. XSW doesn’t look as bad, above its 200-day, but I’m not looking to trade them until their moving averages align bullishly.

IGV Chart

CIBR Chart

Financials - Insurance and Capital Markets Lead

Within financials, the strength was in insurance and capital markets rather than the banks. KIE rose 5.0% and KCE 3.9%. The banks looked good until Thursday, when both KBE and the regional banks (KRE) sold off to finish the week roughly flat - KBE up 0.3% and KRE down 0.2%.

KIE Chart

Rates Up, Rate-Sensitives Down

Treasury ETFs fell across the curve, with the 20+ year (TLT) down 2.1%, and every fixed income ETF I track dropped from Improving into Lagging. The rate-sensitives went with them. Utilities and Real Estate lost RS ground, as mentioned above, and the homebuilders were hit harder - Home Construction (ITB) fell 1.9% and Homebuilders (XHB) 2.7%, both dropping out of Leading.

TLT Chart

Aerospace, Defense and Space

Aerospace & Defense (XAR) rose 4.9%, crossed into Leading and is now in a Strong Uptrend, only 2.7% from an all-time high. ARK Space (ARKX) rose 6.1%, also crossing into Leading.

XAR Chart

The Week Ahead

The temperature is back in the Goldilocks Zone and the SPY returned to a Strong Uptrend, but the leadership picture is very different to what we have seen for most of the year. The names at all-time highs are healthcare, financials, value, and the Dow. I will be watching the semi and AI ETFs next week to see if they can hold around their 50-day SMAs and/or AVWAP from the March 30 lows. That would be a logical place for a bounce, but I’m not in a hurry to add back individual stock exposure until it becomes clearer the volatility has settled. I was stopped out of Teradyne (TER) on Thursday, which was the last remaining position I held in AI-related stocks. Currently, my only positions are in XBI and Eli Lilly (LLY). I am considering entering a new position in the S&P 500 index CFD on Monday with a stop under last Thursday’s low and the 50-day SMA, which sits just below that. If semi and AI names bounce next week, I may look to play that through the Nasdaq 100 index CFD. However, if the pullback continues, I will monitor for stocks holding up and showing relative strength for my watchlist.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

Subscribe now

Market Temperature Drops to 4.7 - Mega-Caps Underperform While Breadth Broadens

Marcus Grant, CFTe — Mon, 29 Jun 2026 13:29:22 GMT

Last week (ending June 26) the large-cap indices fell - the S&P 500 (SPY) down 2.4% and the Nasdaq 100 (QQQ) off 4.6% - while the FANG+ index (FNGS) dropped 6.3%. However, the S&P MidCap 400 (MDY) rose 0.6%, the Russell 2000 (IWM) 1.4%, microcaps (IWC) 1.5%, the Dow (DIA) 0.4% and the equal-weight S&P 500 (RSP) 0.2% - all of them still above their 20-day simple moving averages. The selling was concentrated in the heavyweights and recent AI winners.

Subscribe now

SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

After Monday’s failure and Tuesday’s gap down, the chart has a very different look compared to last weekend. Friday’s low bounced right at the AVWAP from the March 30 low. However, I want to see it regain the 20-day SMA, which sits at 743.60 as I write this, before getting bullish again.

On the other hand, if we are to have another leg down, I would be looking at the 690 to 695 zone, which is the convergence of the rising 200-day SMA and the prior highs from January and February this year, as potential support.

QQQ Chart

The QQQ looks stronger than the SPY. It’s still holding its 50-day SMA for now. But as with the SPY, I will be waiting for a reclaim of the 20-day SMA, which currently sits at 724.76, before getting bullish or aggressive. If we get a flush lower and undercut the June 9 low, I would be looking at the AVWAP as potential support. If it could undercut and then rally from there, that may be the reset needed before a new leg up. But if it were to continue lower, I would be looking at the 632 to 637 zone, which is the convergence of the 200-day SMA and the prior highs in October last year and January this year.

FNGS Chart

FNGS is the ugliest chart of the three. Friday’s candle undercut the AVWAP and closed positive, but it still has a lot of work to do to get back above its 50-day SMA and declining 20-day SMA. There’s potential support not far below at the 200-day SMA, which currently sits at 68.78, but if it loses that, the chances of a more substantial drawdown in the SPY and QQQ would increase significantly.

Market Temperature

The Market Temperature fell to 4.7 from 5.7, dropping out of the Goldilocks Zone and into Cautious. That’s a full-point fall, which is very uncommon. In the ten-year backtest of the model, a one point or greater weekly drop only happened in around 7% of weekly observations.

The majority of the drop came from the Tape/Trend pillar. The S&P 500 lost its uptrend and slipped to Neutral, and the Nasdaq 100 dropped from a Strong Uptrend to an Uptrend. The S&P 500’s weekly RSI fell to 58.4 from 66.3. Breadth, though, went the other way: the share of US stocks above their 50-day moving average rose to 58.1% from 53.1%, and the 200-day count to 58.2% from 55.0%.

On the Monetary/Macro side, the dollar had another strong week and remains in a Strong Uptrend. Bond volatility ticked up slightly, with the MOVE index at 66.8, and credit spreads widened a touch, though both stayed at relatively low levels.

The Regime pillar also eased, on the back of the discretionary-to-staples ratio (XLY/XLP) turning lower; the high-beta and growth-versus-value signals were unchanged.

Sentiment was the only pillar not to drop on the week. The VIX rose to 18.4 from 16.8, which the model reads as a contrarian positive.

A word on the interpretation of a Cautious reading. A single week in Cautious is the model’s least reliable signal. In backtesting, the 4-5 band is the one zone that flipped sign out of sample, so one week here is close to a coin-flip. The reading that really mattered is sustained weakness below 4: when the temperature stayed below 4.0 for two weeks or more, a genuine drawdown has followed around nine times out of ten, while a one-week dip that recovers has almost always been noise. So caution is warranted and I will trade accordingly. However, the next few weeks will be telling.

GICS Sector Relative Strength

There were some very notable changes to the RS map last week. Technology (XLK) fell 5.4% and dropped out of Leading into Weakening.

Communications (XLC) fell 3.0% and Discretionary (XLY) 2.4%.

The genuine strength was in the defensives: Health Care (XLV) was the standout, up 7.3%, with Utilities (XLU) and Real Estate (XLRE) up around 3% each and Staples (XLP) up 1.7%.

One caveat in reading the map, though: with the S&P 500 down 2.4%, a sector only had to fall less than the benchmark to gain ground against it. Materials (XLB) crossed into Leading while finishing the week down, so some of the broadening is relative rather than absolute strength.

Momentum Leaderboard

The leaderboard looks very different than it did last weekend. Thirteen of the twenty names are new, and the entire semiconductor and AI cohort that had been consistently dominating it dropped off - the only tech-related name still on the board and in an uptrend is cybersecurity.

Six of the top nine are now healthcare or biotech, led by ARK Genomics (ARKG) up over 12% and Biotech (XBI) up over 10%, with Pharmaceuticals (XPH) and large-cap biotech (IBB) close behind. Homebuilders, real estate, insurance and the regional banks are also in the top 20.

The quality of the leadership is worth noting, though. A week ago, sixteen of the top twenty names were in Strong Uptrends. Now only nine are, with a handful - software, water, medical devices, natural gas - sitting in downtrend states.

The Week Ahead

What stands out most is how much the picture changed in five days. Not just the one-point drop in the market temperature, but the price action on the charts throughout the week. Going into Monday the Nasdaq 100 looked ready to break out to new all-time highs. I was long and preparing to add more exposure during the week. However, on Monday, before reaching an all-time high, the QQQ reversed and closed lower on the day. Then there was the large gap down on Tuesday. Thursday’s gap up rejected right at the declining 20-day SMA. Friday’s close was weak and only just above the 50-day SMA. The SPY was even weaker. For these indices to recover and make new all-time highs, the mega-caps need to stop falling. Since they carry such a heavy weighting in the SPY and QQQ, even with a broadening out, I don’t think the other sectors are large enough to carry the indices to new all-time highs.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

Subscribe now

Market Temperature Ticks Up to 5.7 - Leadership Narrows Back Towards Tech & AI Names

Marcus Grant, CFTe — Mon, 22 Jun 2026 13:09:51 GMT

US markets were closed Friday for Juneteenth, so last week’s data runs to the Thursday June 18 close, except the VIX, which kept trading on Friday in Cboe’s extended-hours session. The Nasdaq 100 (QQQ) rose 2.7% and the S&P 500 (SPY) 0.7%. FANG+ (FNGS) jumped 4.5%. The S&P MidCap 400 (MDY) slipped 0.4%. Small caps held firm, with the Russell 2000 (IWM) up 0.9% and microcaps (IWC) 1.5%, while the equal-weight S&P 500 (RSP) eased 0.8%.

Subscribe now

SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

FNGS Chart

Market Temperature Up to 5.7

The Market Temperature rose to 5.7 from 5.3 and held in the Goldilocks Zone. The lift came entirely from the Tape/Trend pillar. The QQQ flipped back into a Strong Uptrend, while the S&P 500 held its Uptrend, finishing right on its 20-day SMA rather than above it. The S&P 500’s weekly RSI also edged up to 66.3 from 65.1 - a small move week-on-week, but the model has a 2-week lookback window, so it gave the score a bigger lift. Breadth held roughly steady, with the share of US stocks above their 50-day moving average easing only slightly to 53.1% from 56.6% and the 200-day count flat near 55%.

On the Monetary/Macro side, bond volatility compressed further, with the MOVE index down to 65.4 from 69.4. The US dollar had a strong week, which the model reads as a drag. I’ll be watching the dollar closely over the week ahead. If it keeps moving up strongly, it could cause some headwinds for equities.

Sentiment stayed a small negative: the VIX eased to 16.8 from 17.7, which the model treats as a contrarian signal. The Regime pillar score held steady, unchanged from last week.

DXY Chart

GICS Sector Relative Strength

Only two of the eleven GICS sectors are in Leading: Technology (XLK), up 3.6%, and Industrials (XLI), which crossed in from Weakening after a 2.7% week. Two sectors sit in Improving, Financials (XLF) and Discretionary (XLY), and none are in Weakening.

That leaves seven in Lagging. Materials (XLB) dropped out of Leading after leading the week before, and Real Estate (XLRE), Staples (XLP) and Health Care (XLV) all slid from Improving to Lagging. Energy was the softest sector, with XLE off 6.6%.

Momentum Leaderboard

Tech and AI names dominate the top 20 again, with Taiwan (EWT) and Korea (EWY) the only international names to make it.

Tech & AI Related Names Resume Their Outperformance

SMH rose 6.4%, its second strong week running, and equal-weight semis (XSD) 5.0%, both in Strong Uptrends and sitting at or near their highs.

SMH Chart

XSD Chart

ARK Genomics (ARKG) jumped over 10% but is still a long way off its prior all-time highs.

The new-issues ETF basket (IPO) had another big week and still sits second on the table.

QTUM is on the verge of a breakout to all-time highs.

Crypto miners (WGMI) sit in fifth place again, even though Bitcoin (IBIT) and Ether (ETHA) are both in Strong Downtrends - most crypto miners trade as an AI proxy now.

WGMI Chart

Biotech firmed too. XBI is back in Leading and has finally broken out of the range it’s been in since mid-April.

The Nasdaq Next Gen 100 (QQQJ) looks like it might be ready to make another run: Leading, in a Strong Uptrend, and within 2.5% of its all-time highs.

The Banks Stall Out

The banks stalled out right at their recent highs. I posted on X midweek about the bearish engulfing candles on the S&P Bank ETF (KBE) and the Regional Banking ETF (KRE).

By Thursday’s close it had fed through to the relative strength. KBE slipped from Leading to Lagging and KRE from Leading to Weakening. Broad financials (XLF) held positive on the week but printed a bearish engulfing candle on Thursday.

KBE Chart

KRE Chart

XLF Chart

The Week Ahead

The Market Temperature is up slightly to 5.7 and the QQQ reclaimed and held its 20-day SMA, so I’ll be looking to add more exposure this week, primarily in tech and AI names and probably through ETFs and Nasdaq 100 CFDs, as most of the leading AI names have very high ATRs and the individual stock positions I’ve currently got on don’t have enough of a cushion yet for me to add new positions aggressively. I also like XBI here and bought the breakout on Wednesday.

I’ll update and post my This Week’s Trading Plan later tonight, if I have time, or tomorrow, Melbourne time.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

Subscribe now

This Week's Trading Plan

Marcus Grant, CFTe — Sun, 14 Jun 2026 13:23:31 GMT

Following up on open trades

In my June 3 update I had four positions on - CIEN, HUT, MKSI and KLAC. Three are now closed and one’s still running. Here’s what happened.

CIEN - stopped out at $607.23 on June 3, the same day that update went out. I’d moved my stop up to $607.50 ahead of earnings and it pulled back and stopped me out. +8.5% on the trade. It had a very negative reaction to the earnings and price has continued lower since then - it closed at $446 on Friday June 12.

HUT - moved my stop to $117.85 to lock in some profit after an ugly looking daily candle on Tuesday June 2. Stop got hit on June 5 at $117.31. +3.4% in the end - but I never let a decent winning trade turn into a loser and the stop served its purpose here.

MKSI was a loss. During the June 5 selloff my stop was hit and I exited at $305.52, down 8.2% from my $332.82 fill.

KLAC I am still in but took half off on Friday June 12 in the pre-market. KLAC did a 10-for-1 split on June 12, so I got 10 shares for each 1 held - same position, just 10 times the number of shares at a tenth the original price. I took half off at $239.45 for a touch over +22%, which was 2.4R (2.4 x my original risk on the trade). The other half is still running with the stop up at breakeven, $196.01. It closed on Friday around $253.

On the daily charts, the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

Subscribe now

The plan for the week ahead

I put out my Market Temperature piece earlier today. The short version: strength broadened out last week across semis, small caps, cyclicals and international, but the SPY and QQQ still haven’t reclaimed their 20-day SMAs. I want to see the indices reclaim this moving average before I get aggressive with new positions.

So, this is a plan for how I’ll approach the week without a list of exact entries. There’s event risk over the weekend, with the potential signing, or non-signing, of the MOU between the US and Iran. No point suggesting precise entry levels on a Sunday night (Melbourne time) when these names could gap significantly in either direction. However, I know where my stops will be if I enter.

Here’s how I’m thinking about it. If there’s an agreement and the market starts running when the futures open, I’ll take a position in the Nasdaq 100, through CFDs (contracts for difference), which are available in Australia. I use them for a lot of my short-term and swing trading. I’ll be looking to enter on a break back above the 20-day SMA. That gets me in without waiting for the US market to open. And because they basically trade 24/5, I can manage risk more tightly and take a larger position.

For the individual stocks, I’ll watch the pre-market Monday without committing to a specific entry level in advance. If nothing happens over the weekend and stocks are opening a little up or down with no breakout and no severe gap down, I’m considering taking some early entries in half position size before a breakout, then leaving a resting buy stop order for the second half, probably with a tighter stop on the second piece. If it looks like there will be a severe gap down on the US open - I’m not interested and will patiently wait it out.

The names below all held up well through the early-June pullback and are consolidating near all-time highs or already making new ones.

The names

Teradyne (TER) - automated test equipment for semiconductors and electronics. Weakening, Strong Uptrend. Up 12.7% last week (week ending June 12). 9.4% above the 20-day SMA (1.4x ATR), 6.9% ATR. 4.5% below its all-time high. RSI 58.

Consolidating since making an all-time high at the end of April. Volatility is contracting and it’s making higher lows. My stop would sit below $356.60, under the 20 and 50-day SMAs and the low on Thursday, June 11.

Semtech (SMTC) - analog and mixed-signal chips. Leading, Strong Uptrend. Up 10.4% last week. 7.9% above the 20-day SMA (1.0x ATR), 7.7% ATR. 3.3% below its all-time high. RSI 62.

Consolidating since late May. Had a shakeout under the 20-day SMA on Tuesday, June 9. My stop would sit under $150, below the 20-day SMA, if buying on a breakout. If I take an early entry, I’ll use $143.61 to give it a little more room.

DigitalOcean (DOCN) - cloud infrastructure for developers. Weakening, Strong Uptrend. Up 0.3% last week. 4.2% above the 20-day SMA (0.5x ATR), 7.7% ATR. 7.6% below its all-time high. RSI 61.

Consolidating tightly since the earnings gap up on Tuesday, May 5. It’s held its 20-day SMA the whole time, other than a shakeout on Tuesday, June 9, where it breached it during the trading session but closed back above it. I’m strongly considering an early entry in half size on this one. If I do, my stop will probably sit under $148.23, the low from Thursday, May 28, although I may use a tighter stop under $153.71 - the shakeout low on Tuesday, June 9 - depending on the entry price.

Western Digital (WDC) - hard drive and flash storage maker. Weakening, Strong Uptrend. Up 10.0% last week. 8.7% above the 20-day SMA (1.4x ATR), 6.2% ATR. 6.6% below its all-time high. RSI 61.

Trending beautifully for over a year. During the recent pullback, it undercut its 20-day SMA but recovered strongly last Thursday and Friday. My stop would sit under $480.87, the pivot low from the recent pullback.

On watch - the steel names

Two steel names I’m watching. After a strong week for materials (XLB), I flipped through all the individual stock charts and these two stood out. Both finished last week at all-time closing highs, but they’re the most extended names on my list. I’d want a pullback or some tightening first, or maybe just use a tight stop - though entering here with the tighter stop is a lower-probability trade.

Nucor (NUE) - steelmaker. Lagging, Strong Uptrend. Up 4.7% last week. 8.4% above the 20-day SMA (3.0x ATR), 2.8% ATR. 0.9% below its all-time high. RSI 73.

It’s a bit extended at 3.0x ATR. If I do enter, my stop would sit under $252.69, or $245.33 below the 20-day SMA and the shakeout low on Tuesday, June 9.

Steel Dynamics (STLD) - steel and aluminium producer. Improving, Strong Uptrend. Up 5.3% last week. 10.2% above the 20-day SMA (3.3x ATR), 3.1% ATR. 1.1% below its all-time high. RSI 75.

The most extended name at 3.3x ATR. If I do enter, my stop would sit under $267.46, or $259.52 - the shakeout low on Tuesday, June 9.

Given the weekend event risk, I am open to anything next week, but I still find it helpful to have a clear plan. If things go badly, I will just step aside and wait for the dust to settle. The new Federal Reserve Chair Kevin Warsh is also scheduled to make his first press conference as Chair on Wednesday following the conclusion of the central bank’s two-day rate-setting meeting - adding even more uncertainty and risk to the week.

The four tech names are high-ATR, between 6 and 8%, so be careful and size accordingly if trading them and/or other similar names.

Stay open-minded and manage your risk carefully.

Cheers!

Marcus Grant, CFTe

Subscribe now

Market Temperature Ticks Up to 5.3 - A Broad Bounce, But Mixed Signals

Marcus Grant, CFTe — Sun, 14 Jun 2026 05:26:41 GMT

Last week the Nasdaq 100 (QQQ) rose 2.3% and the S&P 500 (SPY) 0.6% (week ending June 12). But FANG+ (FNGS) fell 1% and Russell 1000 Growth (IWF) 0.9%.

The small-cap Russell 2000 (IWM) rose 4%, microcaps (IWC) 4.4%, the S&P MidCap 400 (MDY) 2.8%, the equal weight S&P 500 (RSP) 1.8%, and Russell 1000 Value (IWD) 2.4%.

RSP, MDY and the small caps (IWM) closed at weekly all-time highs and are all in Strong Uptrends. SPY is still a touch below its 20-day SMA, the QQQ closed right on it. I want to see a daily close above their 20-day SMAs and the highs from Tuesday the 9th of June before assuming this pullback is over and getting more aggressive.

SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

IWM Chart

Market Temperature Ticks Up to 5.3

The Market Temperature came in at 5.3, a tick up from 5.2, and stayed in the Goldilocks Zone.

On the surface not much changed, but underneath, two pillars moved in opposite directions.

Sentiment was the biggest faller. The VIX dropped from 21.51 to 17.68. The model reads a falling VIX as a contrarian negative signal.

Monetary was the biggest gainer and offset the Sentiment drop exactly. Bond volatility (the MOVE index) came in from 75.20 to 69.36, and the US Dollar Index eased back below 100 to 99.80.

The Tape pillar firmed up a little. Breadth recovered on the week - the percentage of US stocks above their 50-day moving average rose from 49.55 to 56.58, and the percentage above their 200-day from 52.48 to 55.38. The SPY and QQQ trend states held at Uptrend and the SPY weekly RSI edged up from 64.04 to 65.06.

Regime barely moved. High beta (SPHB) outperformed low volatility (SPLV). Growth (IWF) underperformed value (IWD) again - discretionary (XLY) also underperformed versus staples (XLP).

GICS Sector Relative Strength

Only two of the eleven GICS sectors are in Leading: Technology (XLK), up 2.5% and still the strongest sector on a relative basis, and Materials (XLB), which crossed in from Lagging after a strong 3% week.

Five sectors sit in Improving: Staples (XLP) 2.9%, Financials (XLF) up 2%, Real Estate (XLRE) 1.5%, Discretionary (XLY) 1.5% and Healthcare (XLV) 0.5%. Discretionary moved up from Lagging, the other four held their place from the prior week.

Two sectors entered into Weakening. Energy (XLE) dropped out of Leading, down 0.2% and the softest sector on the week - crude (USO) fell nearly 6% - energy equities held up far better than the commodity itself. Industrials (XLI) slipped out of Improving despite a 1.2% week but sits right on the border.

That leaves Utilities (XLU) and Communications (XLC) in Lagging, with XLC the weakest sector on the board.

Leadership is thin at the top, but the Improving group is broad - a spread of cyclical, rate-sensitive and defensive sectors all carrying positive momentum.

XLB Chart

XLP Chart

XLF Chart

A Broadening at the Top

Fifteen of the top twenty names on my momentum leaderboard are new compared to the prior week.

Last weekend, after the Friday June 5 selloff, half of the usual growth leaders that have been dominating the board in recent times - crypto, cloud, software, AI, semis, solar - dropped off, replaced by healthcare, financials, insurance, real estate, the USD (UUP) and anti-beta. The defensive names are now gone, and the board is led by Airlines (JETS), then IPOs (IPO) and retail (XRT), with home construction (ITB), homebuilders (XHB) and the regional banks (KRE) and banks (KBE) all inside the top dozen. Semiconductors (SMH), equal-weight semis (XSD) and the AI names (QTUM, BAI), crypto miners (WGMI), along with Taiwan (EWT) and South Korea (EWY), have made a return to the top 20.

Airlines and retail at the top of the momentum board is not something I have seen in a long time. And most of these names are in uptrends, not just oversold bounces. A couple, home construction (ITB) and EW consumer discretionary (RSPD), are bouncing within a downtrend, but the remainder are in one of the three uptrend states.

This suggests things are risk-on and broadening. But it isn’t clear-cut. Staples (XLP) was the second-strongest GICS sector on the week, behind materials (XLB), and outperformed both the S&P 500 and discretionary (XLY). Growth (IWF) also lagged relative to value (IWD) for a second week running. We are getting conflicting signs regarding risk appetite.

Semis Bounce, Software Breaks Down

Inside tech, semis and software diverged massively last week. Semiconductors (SMH) rose 8.8%, one of the biggest weekly gains on the board, and is back in Leading. Equal-weight semis (XSD) added 6%. Both are in Strong Uptrends, sitting well above their 50-day moving averages, with three-month gains of 58% and 84%. The selloff barely dented their trend - over the past two weeks SMH is up 3.5% and XSD is about flat.

SMH Chart

Software (IGV) fell 5.4% last week, on top of a 5.7% drop the prior week - down nearly 11% over the fortnight. It dropped from Improving to Lagging and into a Downtrend, again below its 200-day SMA, after briefly getting above it in late May and early June. Equal-weight software (XSW) and internet (FDN) tell the same story, both down 6 to 7% over the two weeks and back in downtrend states.

The extreme weakness lies in the large SaaS names, which have lagged all year. Cyber and crypto miners continue to perform well, but not enough to hold up the IGV.

IGV Chart

International - Highs Abroad, China Left Behind

South Korea (EWY) and Taiwan (EWT) are the strongest names on the international board, up nearly 13% and over 4.5% respectively. Both dropped into Weakening during the selloff two weeks ago and both are now back in Leading, in Strong Uptrends. South Korea’s relative-strength trend is the highest of any international market I track, by some margin.

EWY Chart

International Developed (IEFA) and Japan (EWJ) are the quiet standouts. IEFA rose 2.5% on the week and Japan 2.2%, leaving IEFA within 1% of its all-time high and Japan within 2%, both in Strong Uptrends. Japan has moved up into Leading and IEFA into Improving.

IEFA Chart

On the flip side, China Large-Cap (FXI) and China Internet (KWEB) were up 1.6% and 0.4% on the week but are both in Strong Downtrends and Lagging - down 10% and 25% year-to-date and sitting 52% and 75% below their all-time highs. Hong Kong (EWH) was up less than 1% on the week and has held up better over longer time frames - up just over 1% year-to-date - but it is still Lagging and in a Downtrend.

KWEB Chart

Mixed Messages

Strength returned broadly across parts of AI, semiconductors, small caps, cyclicals and international markets. Internals expanded; Leading quadrant names went from 15 to 35, Weakening dropped from 31 to 20.

However, staples and value both outperformed, while mega-caps lagged. The SPY and QQQ are yet to reclaim their 20-day SMAs. I will be watching the futures when they open and want to see these indices reclaim this moving average before entering too many new positions. Later today I will put out a post with my trading plan for the week ahead, featuring some of the top stocks on my watchlist. They all held up well during the pullback and are consolidating near or already making new all-time highs.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

Subscribe now

Market Temperature Drops to 5.2 - The Pullback Arrives

Marcus Grant, CFTe — Mon, 08 Jun 2026 11:09:09 GMT

After nine consecutive up weeks, the S&P 500 (SPY) fell 2.5% (week ending June 5), the Nasdaq 100 (QQQ) dropped 4.5%, the Russell 2000 (IWM) 3%, microcaps (IWC) over 5%, and FANG+ (FNGS) over 7%.

The Dow (DIA) was barely down at 0.2%, the S&P MidCap 400 (MDY) off 0.9%, the equal weight S&P (RSP) 0.5%, and Russell 1000 Value (IWD) 0.7%. The damage was concentrated in growth, the mega caps, small caps and speculative areas. The broad, value-tilted and defensive parts of the market held up far better.

Subscribe now

SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

Market Temperature Drops to 5.2

The Market Temperature fell to 5.2 from 6.4, dropping out of Strong and into the Goldilocks Zone.

The Tape/Trend pillar suffered the most damage. Both the SPY and QQQ trend states downgraded from Strong Uptrend to Uptrend, the weekly RSI on the S&P came in from 72.97 to 64.04, and breadth weakened. The percentage of US stocks above their 50-day moving average fell from 58.88 to 49.55 and the percentage above their 200-day fell from 55.66 to 52.48.

The Regime pillar also softened as discretionary lost ground to staples and growth underperformed value.

On the Monetary/Macro side, the dollar firmed back above 100 on the US Dollar Index and bond volatility (the MOVE index) rose from 70.22 to 75.20.

The one pillar that improved was Sentiment - the VIX jumped from 15.32 to 21.51 - the model reads a rising VIX as a contrarian positive.

Friday’s Change of Character

A normal, healthy pullback in a strong trend tends to be more orderly - a few down days, drifting back toward the 20-day, buyers stepping in - Friday wasn’t that.

Many of the leading ETFs and the major indices sliced straight through their 20-day moving averages in a single session. By the close, 79 of the 121 ETFs I track were sitting below their 20-day. Of the names that had been in the Leading quadrant and dropped into Weakening last week, 14 of 15 finished below their 20-day.

The character of the selling matters more than the size of it. A 2.5% down week on the S&P 500 isn’t extreme on its own. But the speed and breadth of Friday’s move is the kind of thing worth respecting until the market shows you otherwise.

FNGS Chart

FNGS not only broke decisively through its 20-day SMA but also closed below its breakout zone.

XSD Chart

SPDR Sector Relative Strength

Only two of the eleven GICS sectors are in Leading: Technology (XLK) and Energy (XLE). Energy crossed in from Weakening after a 2.45% week - crude (USO) was up 3%.

Five sectors moved up into Improving, all from Lagging: Healthcare (XLV) up 2.4%, Real Estate (XLRE) 1.6%, Financials (XLF) 1.4%, Staples (XLP) 0.6% and Industrials (XLI) 0.6%.

The biggest weekly falls came from the growth-tilted sectors - Technology (XLK) -5.6%, Consumer Discretionary (XLY) -5.0% and Communications (XLC) -3.5%.

What Held and What Didn’t

The rotation showed up clearly at the top of my momentum board. Two weeks ago it was wall-to-wall growth - crypto, cloud, software, AI, semis, solar - and all of it rising. Last week half that group dropped off, replaced by healthcare, financials, insurance, real estate and anti-beta. The growth names that hung on near the top, cyber (CIBR), software (IGV), genomics (ARKG) and equal-weight tech (RSPT), were all down for the week. They kept their place on longer-term momentum, not because they rose.

The names going up were defensive, value, and interestingly also cyclicals; regional banks (KRE), banks (KBE), insurance (KIE), homebuilders (XHB) and medical equipment (IHI) all finished green. Low volatility (SPLV) rose 1.7% - while high beta (SPHB) fell 4.5%.

On the other side, the hardest hit were the names that had been leading. Solar (TAN) fell over 13%, clean energy (PBW) 10%, and the ARK funds (ARKK, ARKQ) around 9%. South Korea (EWY) fell nearly 15%. Semiconductors (SMH) was down 4.9% and equal-weight semis (XSD) 6.8%.

PBW Chart

Crypto had some of the worst selling - Bitcoin (IBIT) down around 18%, Ethereum (ETHA) over 21%, the crypto miners (WGMI) nearly 10%.

IBIT Chart

The metals all got hit, no split between the precious and strategic names - gold miners (GDX) off around 12%, silver miners (SIL) 15%, lithium (LIT) and rare earth (REMX) both down 10 to 11%.

GDX Chart

REMX Chart

Bonds Didn’t Catch a Bid

The whole Treasury curve was down on the week, from the short end (SHY) to the long end (TLT), along with investment grade (LQD) and high yield (HYG) credit. A few of these moved into the Improving quadrant, but only because they fell less than equities, not because they rose, and most are still in downtrends.

Where to From Here

I’m in no hurry to buy this pullback. The major indices are only 2 to 6% off their highs - SPY and QQQ fell from Strong Uptrend to Uptrend, so the longer-term uptrends are not broken - but Friday’s action deserves some caution.

A test of the 50-day SMAs is possible and wouldn’t be abnormal - which sit around 3.4% below current prices for the S&P 500 and 5.6% for the Nasdaq 100.

If we continue to correct, I will be watching for relative strength, particularly stocks and ETFs holding their 20-day SMA, and their 50-day if the correction becomes longer and deeper.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

Subscribe now

Following Up on Last Week’s Focus List

Marcus Grant, CFTe — Wed, 03 Jun 2026 12:44:12 GMT

Last week I put out a focus list of ten names I was stalking. I placed resting orders on eight of them and was just watching the other two.

The three buy stop orders triggered on Tuesday, May 26: KLAC, MKSI and HUT. CIEN was a limit order and triggered on Friday, May 29.

The four other resting orders didn’t trigger, and I’ve cancelled those and moved the names back to my watchlist.

Charts below are from the pre-market on Wednesday (June 3, US time). CIEN and HUT are intraday so I can show the recent price action up close.

Subscribe now

KLAC (daily)

On the daily charts, the black line is the 20-day SMA, green is the 50-day, red is the 200-day.

I entered on strength with a buy stop, filled at $1,960.05 on May 26. I’ve raised my stop-loss from $1,780 to $1,860, which sits back below the breakout area, the low on Monday, June 1, and the rising 20-day.

MKSI (daily)

This is a good example of the buy stop gap risk I flagged in the original post. My order was at $325, but it gapped up and filled at $332.82 on May 26. I’ve raised my stop-loss from $289 to $306, under the low on Monday, June 1, and the rising 20-day.

HUT (30 min)

Filled at $113.50 on May 26. It ran to about $140 yesterday, June 2, but reversed, closing below where it opened. I don’t like the look of that daily candle, so I’ve moved my stop-loss up to $117.85 to lock in some profit if it continues lower. Since it pretty much went straight up from the breakout, there’s no obvious daily pivot low to put it under, so I looked at the 30-minute chart and placed the stop under what would be a break to lower lows on that timeframe.

CIEN (15 min)

The limit order at $560 filled at $559.55 on Friday, May 29. It had a big day yesterday, closing at $627. Ciena reports earnings before the open on Thursday (June 4, US time). Normally I want at least a 10% profit cushion before I’ll hold a swing trade through earnings. I’ve raised my stop-loss to $607.50, which is about 8.5%, just under that buffer. If it stays around current levels or pushes higher again tonight, I’ll be happy to hold through earnings. If it drops to around $610 and doesn’t stop me out, I won’t quite have the buffer I’d like, but it isn’t a very large position so I’m willing to accept that risk.

I’ll try to keep sharing these so you can see how the setups actually play out, not just the entries.

Cheers!

Marcus Grant, CFTe

Subscribe now

Market Temperature at 6.4 - Risk Appetite is Rising

Marcus Grant, CFTe — Mon, 01 Jun 2026 08:06:04 GMT

After a holiday-shortened week - US markets were closed Monday for Memorial Day - every major index closed at a weekly all-time high (week ending May 29). The S&P 500 (SPY) gained 1.45%, the Nasdaq 100 (QQQ) 2.89%, the Dow (DIA) 0.92%, the S&P MidCap 400 (MDY) 1.49%, the Russell 2000 (IWM) 1.86%, the Microcap (IWC) 2.33%, the S&P 500 Equal Weight (RSP) 1.09%, the Nasdaq 100 Equal Weight (QQEW) 3.71%, and FANG+ (FNGS) 6.24%.

FNGS Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

FNGS had a very strong week, breaking out to a weekly closing all-time high. But NVDA actually fell 1.95% last week and sits in Lagging. The FANG+ breakout was carried by Micron (+29.29%) and Broadcom (+7.88%), with Microsoft (+7.57%) and Palantir (+14.36%) also up significantly, but both remain below their 200SMAs.

Subscribe now

Market Temperature

The Market Temperature rose to 6.4 from 5.9, moving out of the Goldilocks Zone into Strong.

Three of four pillars improved. The Tape/Trend was the main driver - breadth firmed off the mid-May low and weekly RSI on the S&P pushed to 72.97. One nuance: the breadth scores look strong because the model has a two-week lookback period, showing a recovery off the May 15 low, not a big jump last week. Week-on-week, the percentage of US stocks above their 50-day average only ticked from 57.18 to 58.88.

Monetary/Macro also improved. In last week’s note I said this pillar had the most room to run if bond volatility compressed and the dollar eased. The MOVE index fell from 78.43 to 70.22, and TLT rose (interest rate fell). The dollar (UUP) also fell slightly.

Regime firmed too, with discretionary outperforming staples and high beta continuing to outperform low vol.

The one drag was Sentiment. The VIX fell to 15.32, which the model reads as a contrarian signal.

SPDR Sector Relative Strength

Technology (XLK) is the only GICS sector in the Leading quadrant. It gained 5.89% on the week, is up around 20% over the past month and 31.17% year-to-date. Every other sector is in Lagging, except Energy (XLE) which is in Weakening.

Two weeks ago, the three best-performing GICS sectors on the week were XLU (Utilities), XLV (Healthcare), and XLRE (Real Estate). Last week the defensive sectors underperformed: Consumer staples (XLP) fell 2.23%, utilities (XLU) -2.05%, real estate (XLRE) -1.28%, healthcare (XLV) -0.28%.

Risk Appetite is Rising

This broader risk-on tone also showed up in the factor ETFs. High beta (SPHB) gained 5.68% and closed at a new weekly all-time high. Low volatility (SPLV) fell 2.54%, and BTAL, which is long low-beta and short high-beta, dropped 5.33%, closing at a weekly all-time low.

ARK Innovation (ARKK) jumped 7.26% and crossed back into Leading. The fund is still 49% below its 2021 highs and is not something I would buy, but it’s an interesting gauge of risk sentiment. ARK Genomics (ARKG) was up 12.94% on the week. But it is also still in a massive drawdown, around 70% off its 2021 highs.

XBI is the vehicle I am looking at to play biotech. A break above recent highs around $139 could open the way to a run at the 2021 all-time highs around $174. It is in a Strong Uptrend, sitting less than 2% below its 52-week high and only about 1 x ATR above its 20-day, with RSI at 58.6. It is in the Weakening quadrant, but is sitting right on the border of Leading, with a momentum reading just under 100.

XBI Chart

Software Reclaims its 200-Day

IGV gained 8.14% last week and around 20% over the past month and has closed back above its 200-day moving average for the first time since the January break. It is 13.84% off its all-time highs, with a daily RSI now at 76.1.

The leadership underneath is still mainly in cybersecurity, the crypto miners, and potential AI beneficiaries like AppLovin (APP) and Oracle (ORCL). Most of the large enterprise SAAS names are bouncing but remain “broken” under their 200SMAs.

IGV Chart

Energy - Oil Down, Gas and Clean Energy Up

Crude oil (USO) was down again last week, falling 8.39%, oil services (OIH) -5.79%, energy (XLE) -5.38%, E&P (XOP) -4.63%. All of them are still in Weakening.

Interestingly natural gas went the other way, albeit from very depressed levels. UNG gained 9.05% and was the single biggest momentum riser in our entire universe last week, crossing from Lagging into Improving.

Clean energy remains strong. Solar (TAN) gained 12.10% and Clean Energy (PBW) 5.39%, both holding in Leading.

Bonds and Rates

In last week’s note I flagged TLT’s prior low of 82.77 as a level to watch - a break below it would have been a warning. Instead, bond ETFs across the whole Treasury curve were green (rates down) for the week. TLT was up 1.28%, IEF +0.82% and IEI +0.51%.

The MOVE index, which measures expected volatility in Treasuries, fell from 78.43 to 70.22. If rate volatility had continued to rise, it would have been a possible red flag for equities.

Thoughts for the week ahead

Things look very healthy right now - every major US market index at new highs, risk appetite rising, breadth holding up, and bonds steadying as rate volatility comes down. A cautionary note is the VIX at 15.32, which is low, but not historically extreme. But after nine consecutive up weeks for the SPY, which is still quite extended from its 50SMA, a pullback shouldn’t come as a surprise when it happens.

In My Weekly Focus List piece last week, I outlined 10 stocks I was watching, 8 with specific entries and stops. 4 triggered last week: HUT, CIEN, KLAC and MKSI. I will update that in a new post today or tomorrow, detailing any changes and a few potential new entries. I am not taking large new positions here, though, and am being patient.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

Subscribe now

My Weekly Focus List

Marcus Grant, CFTe — Tue, 26 May 2026 10:39:57 GMT

Each week I review a few hundred charts across my coverage universe. These are 10 stocks I have on my focus list for potential new entries this week. These are swing trades - if they work, I’d expect to hold for a few weeks to a couple of months. If they don’t, I’ll be out in days. I generally start taking partial profit at 2-3R and trail the rest using moving averages.

Seven out of ten are semis or semi equipment. Due to the high correlation between these stocks, I will not be entering them all in full size positions - even if they all offered “perfect entries”. What I’ll do instead is reduce position size and use a scatter-gun approach (buy them all but in smaller size) if good entries are on offer early in the week. One benefit is that you’ll get stopped out of the positions that don’t work and can look to add to the ones that do - or if you’re lucky, they may all work. However, it’s possible they all fail, so I would not risk more than about 3 or 4% of my entire portfolio when entering this many new positions in a short period. For example, if taking 8 new positions I would risk 0.5% per trade. Another option is to enter two or three names and only add new positions if you get traction on the original ones. Both methods have their own pros and cons - and I do both at different times.

I am writing this at 7pm Melbourne time on Tuesday May 26 - depending on the price action during the week, I may and likely will change at least some of the entry prices and methods (pullback buy or breakout/strength), tighten stop losses, or outright cancel resting orders if the market starts acting badly. If they explode higher without me, I’ll let them go, I do not chase. Flexibility, adaptability and discipline are key to my trading style.

Subscribe now

Semi Equipment

Applied Materials ($AMAT) - Semiconductor equipment. Up 3.6% last week. 3.8% above the 20-day SMA, 4.1% ATR, extension 0.9x ATR from 20-SMA. 3.6% from the all-time high. RSI 62.

AMAT Chart

Note: All daily charts - the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

My strategy for AMAT is to leave a resting limit order at $418 with a stop loss at $392. Those of you in the US or at least in a similar time zone can be more tactical and work your entries better. As with most things in life there are positives and negatives. I usually can’t get the best, most precise entries. However, one benefit of being in the opposite time zone is you can’t panic out of your positions based on daily price action, which makes riding your winners easier.

KLA Corporation ($KLAC) - Semiconductor equipment. Up 4.7% last week. 4.5% above the 20-day SMA, 4.1% ATR, extension 1.1x ATR from 20-SMA. 2.6% from the all-time high. RSI 63.

KLAC Chart

I will enter a buy stop order on KLAC, so I only enter on strength. This also helps reduce risk - if markets pull back and you only have limit orders, they would all trigger and get stopped out if prices continue lower.

I use pretty tight stops most of the time. I usually set a stop between 1-3 ATR for each stock trade - not randomly, but always using a price point on the chart that would invalidate my thesis. For KLAC I will enter a buy stop at $1960 and place my stop at $1780. Could use a tighter stop under Friday’s low around $1861 - because if it breaks out you want it to keep running. If it falls back below Friday’s low, that’s a logical spot to get out, but I’m going to give it a little more room.

One thing to be aware of with buy stop orders: if the market gaps up above your order price, you get filled at the market price on the open, which may be well above the level you set. To manage that risk, I check pre-market prices before going to bed and decide whether to leave the order active or cancel it.

Lam Research ($LRCX) - Semiconductor equipment. Up 4.9% last week. 9.0% above the 20-day SMA, 4.5% ATR, extension 2.0x ATR from 20-SMA. 1.5% from the all-time high. RSI 66.

LRCX Chart

The pre-market is currently showing LRCX (and most of these stocks) will gap up on the open. So I don’t want to be entering too many positions using buy stop orders - if we gap and run that means I’ll miss out, but I’m cool with that. I can’t make tactical entries with tight low-of-day or AVWAP stops unless I stay up until midnight, so it’s a trade-off I need to accept.

Two options I’d consider: a limit order on a slight pullback to about $300, which was resistance during the recent short consolidation, or a lower limit order around $282 which lines up approximately with the 20-day SMA. The first feels a bit aggressive, so I’m going with $282. Stop loss goes under the May 19 low with a little extra breathing room at $252, which would also be under the 50-day SMA. In my opinion there’s no reason to hold a swing trade if the stock is breaking its 50-day SMA - I’m looking for the strongest stocks continuing their uptrend.

MKS Instruments ($MKSI) - Semiconductor equipment. Up 3.4% last week. 7.5% above the 20-day SMA, 4.7% ATR, extension 1.6x ATR from 20-SMA. 1.9% from the all-time high. RSI 66.

MKSI Chart

I’m looking at buying a breakout on MKSI - will place a buy stop order at $325. This has been a very strong stock, so if it goes it could go quickly. I would prefer if it just went sideways for a week or so between the 20-day SMA and the $320 level that’s been holding it back. But you don’t always get what you want. It is currently trading at $334 in the premarket.

The May 19 low is too far away for a stop loss on a breakout setup. An aggressive stop would be Friday’s lows around $311. I’m going to give it more room and put the stop under Wednesday’s (May 20) low, which also sits under the 20-day SMA. Stop loss at $289.

Semiconductors

Monolithic Power Systems ($MPWR) - Power management semiconductors. Up 2.6% last week. 0.8% above the 20-day SMA, 4.4% ATR, extension 0.2x ATR from 20-SMA. 5.1% from the all-time high. RSI 56.

MPWR Chart

I’m just gonna watch this one for now. I may end up missing it - after the shakeout and strong recovery last week, it could get going again here. Pre-market it’s currently trading at $1,625. I considered placing a buy stop order for this as well, with a tight stop loss around $1,550. If I entered this, I’d want it to run quickly. I wouldn’t want to give it too much room as it’s not the cleanest, tight setup. It already pulled back to around $1400 and recovered last week - so if it breaks higher and fails, I wouldn’t want to hold it. Also, I don’t want to enter too many positions on a gap up today, in case they gap and reverse. I’ll just watch this for now and see how it develops during the week. However, if you can take a tactical entry during the live trading session, with a stop under the low of the day, I’d consider that if I was able to do so.

ON Semiconductor ($ON) - Power and sensing semis. Up 2.7% last week. 9.7% above the 20-day SMA, 4.9% ATR, extension 2.0x ATR from 20-SMA. 2.4% from the all-time high. RSI 67.

ON Chart (Daily)

ON Chart (Weekly)

Above are both the daily and weekly charts for ON Semiconductor, so you can see the longer-term base breakout. It peaked in July 2023 on earnings, entered a massive decline of about 70% bottoming in April 2025, and has since staged an impressive recovery. These longer-term base breakouts can often be a little messy. Obviously not always - it might just rip from here. It already retested the breakout zone and bounced strongly last week. I might end up missing it, but that’s okay with me.

Buy limit order at $108.50 with a stop at $101.50.

Credo Technology ($CRDO) - High-speed connectivity for data centres. Up 26.9% last week. 17.9% above the 20-day SMA, 7.5% ATR, extension 2.4x ATR from 20-SMA. 0.2% from the all-time high. RSI 65. Beta of 3.8 - size accordingly.

CRDO Chart

Credo is too wide and loose to enter here, but the strength is undeniable. It closed at all-time highs last Friday but needs to settle down and tighten up to offer a lower risk entry. Definitely on the watch list.

Networking & Infrastructure

Ciena Corporation ($CIEN) - Optical networking equipment. Up 5.3% last week. 6.7% above the 20-day SMA, 5.9% ATR, extension 1.1x ATR from 20-SMA. 2.6% from the 52-week high - but still 44.8% below its all-time high, which dates back to the dot-com era in 2000. RSI 61.

CIEN Chart

This is probably one of my favorite charts. The trend has been so clean, and it has respected the 50-day SMA on pullbacks going back around a year. I’m going to use a limit order here, looking for a bit of a pullback. Limit at $560, stop at $480 - which is below both the May 19 low and the 50-day moving average (currently at $484 but rising quickly). I will also risk 1% of my portfolio on this trade rather than the 0.5% on the others.

Applied Digital ($APLD) - AI/HPC data centre infrastructure. Up 7.8% last week. 14.5% above the 20-day SMA, 8.5% ATR, extension 1.7x ATR from 20-SMA. 5.6% from the 52-week high - but still 59.1% below its all-time high from 2003. RSI 61. Beta of 2.7 - so size accordingly.

APLD Chart

Applied Digital is pretty wild - 8.5% ATR. Limit order at $40.50, which is the convergence of the 20-day SMA and some previous resistance and support. Stop loss under the May 19 low at $34.50, just to give it a little breathing room.

Crypto / Digital Assets

Hut 8 Corp ($HUT) - Bitcoin mining and data centre operations. Up 3.4% last week. 13.5% above the 20-day SMA, 7.7% ATR, extension 1.8x ATR from 20-SMA. 5.7% from the all-time high. RSI 65. Beta of 3.8 - size accordingly.

HUT Chart

I’m taking the opposite strategy with HUT and buying strength. Buy stop order at $113.50 with a tight stop - it should either work or not, and quickly. Friday’s low was $101, so my stop goes at $98.50.

I find writing out a full public plan forces you to think very deeply about each trade - this is as much for me as it is for anyone reading. But I hope you gain some knowledge and insights along the way. I'll try to share updates and make this a regular Sunday night or Monday morning (US time) post.

Wishing everyone a great week ahead!

Cheers,

Marcus Grant, CFTe

Subscribe now

Market Temperature at 5.9 – The AI Trade is Back, but Participation is Broadening

Marcus Grant, CFTe — Mon, 25 May 2026 07:04:57 GMT

The S&P 500 (SPY) gained 0.88% last week (May 22). The Nasdaq 100 (QQQ) rose 1.21%. But the bigger story was underneath - the Russell 2000 (IWM) gained 2.71%, the S&P MidCap 400 (MDY) added 1.72%, and the equal-weight S&P 500 (RSP) was up 2.49%. The Dow (DIA) rose 2.17%. Small caps, mid-caps, and equal weight all outperformed the cap-weighted large-cap indices.

Two weeks ago (May 15), only 21 of 121 ETFs were positive. Last week, 98 were positive.

Subscribe now

SPY Chart

QQQ Chart

Market Temperature

The Market Temperature ticked up to 5.9 from 5.7, remaining in the Goldilocks Zone.

Breadth recovered - MMFI (% of US stocks above their 50-day moving average) climbed from 49.74 to 57.18, and MMTH (% above 200-day) improved from 50.44 to 53.60.

The VIX dropped from 18.43 to 16.70.

Why only +0.2 despite a broad rally? Three of four pillars improved, but Sentiment was a drag - the VIX dropped to 16.70, which the model scores as a contrarian signal. The Monetary pillar improved marginally but still has the most room to run if bond volatility compresses and the dollar eases. The MOVE Index barely budged (79.87 to 78.43), the US dollar (UUP) stayed flat at 27.77, and credit spreads improved marginally, but remain at low levels and are not indicating any signs of stress currently. TLT bounced 1.22% last week after falling 2.81% the prior week, closing strongly after probing new lows during the week - I will be watching last week’s low of 82.77. A break below that would be a potential warning sign.

SPDR Sector Relative Strength

XLK (Technology) is the only GICS sector in Leading. Interestingly, the three best-performing GICS sectors on the week were all more defensive - XLU (Utilities, +3.37%), XLV (Healthcare, +3.30%), and XLRE (Real Estate, +3.08%). XLV and XLRE both moved from Lagging to Improving, and XLU is right on the boundary.

Broadening Participation

Across our 121-ETF universe, eight names moved from Lagging to Improving - utilities (RSPU, UTES), real estate (RSPR, XLRE), healthcare (XLV), Germany (EWG), airlines (JETS), and software (XSW).

23 ETFs in our ETF universe are now within 1% of their all-time highs. And it’s not all tech - it includes RSP (S&P 500 Equal Weight), IWD (Russell 1000 Value), DIA (Dow 30), IWM (Russell 2000), and QQQJ (Nasdaq Next 100) alongside the usual AI and semiconductor names. QQQJ - which contains the next tier of non-financial NASDAQ names below QQQ - gained 4.37% vs QQQ’s 1.21%.

Semiconductors, Software, Cyber, and Speculative Tech

XSD (Equal-Weight Semiconductors) gained 9.89% last week finishing the week at a new all-time closing high. RS-Momentum hit 113.62 - the highest reading in our universe. The leadership is mid/small-cap semis: NVTS +37%, ALAB +32%, CRDO +27%, LSCC +19% on the week. SMH (Market Cap weighted Semiconductors) was up 3.59%.

XSD Chart

IGV (Software) is in the Improving quadrant, but a drill-down into its components tells a more nuanced story. Of the 21 Leading names in the software universe, seven are cybersecurity and three are crypto miners. The large enterprise software names - CRM, ADBE, NOW, WDAY, HUBS - are almost all Lagging with YTDs ranging from -30% to -49%. INTU lost 18.59% just last week. The “software rally” is really a cyber and AI infrastructure story wearing a software label.

CIBR (Cybersecurity) continued its run, gaining 6.62% and closing at a weekly all-time high. 17 names are Leading or Improving. The Improving quadrant has 10 names, almost all with double-digit weekly gains (TENB +18.43%, ZS +13.24%, QLYS +13.72%, OKTA +11.44%, S +10.97%).

WGMI (Crypto Miners) was up 8.25% with RS-Momentum accelerating to 108.46. This is increasingly an AI compute story as miners pivot infrastructure toward providing compute for AI - WGMI decoupled entirely from IBIT (Bitcoin, -4.15%) and ETHA (Ethereum, -7.10%) last week.

QTUM (Quantum & AI) rose 7.24%, entering the Leading quadrant. The quantum pure-plays had a massive week - RGTI +48%, QBTS +44%, IONQ +22% are all Leading, while ARQQ +31%, BTQ +29%, and QUBT +17% are all Improving. That said, QTUM is still heavily semiconductor-weighted, and the broader semi rally is doing a lot of the heavy lifting underneath.

Energy - Fossil Fuel Momentum Pauses, Clean Energy Holds

Six energy and oil names dropped from Leading to Weakening in a single week: USO (Crude Oil), XLE (Energy), RSPG (Energy EW), XOP (Oil & Gas E&P), OIH (Oil Services), and DBC (Broad Commodities) - reversing the move from the prior week.

Clean energy is telling a different story. TAN (Solar) and PBW (Clean Energy) both remain in Leading, and LIT (Lithium & Battery) which has an RS-Trend of 117.72 despite Weakening momentum, is bouncing after a roughly 12% pullback between May 12-19.

Tan Chart

PBW Chart

LIT Chart

Thoughts for the upcoming week

Two weeks ago, six energy ETFs were surging into the Leading quadrant while everything else sold off - only 21 of 121 names were positive and breadth deteriorated sharply. Last week that picture reversed completely. The bounce wasn’t just tech snapping back - RSP, IWM, and MDY all outperformed SPY, breadth recovered, and 23 ETF names are at or very near all-time highs, across tech, value, and small caps. That’s a much healthier looking tape in the space of one week. If oil stabilizes around current levels or continues lower, TLT can hold last week’s low, or even better continue higher (rates lower), and the US dollar weakens or goes sideways, the conditions are there for a resumption of the rally off the March 30^th low. Some of the fast movers are already up a lot since Tuesday’s (May 19) low, so I would avoid any new buys if too extended (I am looking for stocks and/or ETFs ideally within 2-3 x ATR% of May 19 low). I will be looking to add exposure this week, generally using the May 19 low as my stop loss.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

Subscribe now

Market Temperature Drops to 5.7 - Oil Leads, Breadth Weakens

Marcus Grant, CFTe — Thu, 21 May 2026 04:04:47 GMT

Apologies for the delayed post this week - my car was stolen on the weekend, and I spent most of the week dealing with the fallout. This is a condensed version of the weekly note covering the week ending May 15, focusing on the Market Temperature reading and the key themes rather than the full rotation breakdown.

The S&P 500 (SPY) gained just 0.21% last week. The Nasdaq 100 (QQQ) slipped 0.32%. FANG+ (FNGS) was down 0.32%. The equal-weight S&P 500 (RSP) lost 1.24%, the S&P MidCap 400 (MDY) dropped 2.36%, and the Russell 2000 (IWM) fell 2.31%.

Flat index returns, but that doesn’t tell the real story. Only 21 of 121 ETFs in our universe posted a positive return last week. The other 100 were down.

That divergence got worse on Friday. SPY was up around 1.4% through Thursday before falling 1.20% on Friday alone. QQQ dropped 1.51%, IWM lost 2.41%, and SMH (Semiconductors) gave back 3.80%. The only GICS sector positive on Friday was Energy.

Subscribe now

Market Temperature

The Market Temperature dropped a full point to 5.7, back into the Goldilocks Zone after sitting at 6.7 the prior week.

Breadth deteriorated quite sharply - MMFI (% of US stocks above their 50-day moving average) fell from 63.15 to 49.74. MMTH (% of US stocks above their 200-day moving average) declined from 56.34 to 50.44.

The Monetary pillar weakened as well. The MOVE Index (rate volatility) spiked from 67.25 to 79.87, and the dollar strengthened with UUP rising from 27.34 to 27.77.

The discretionary vs staples ratio (XLY/XLP) also deteriorated, dragging the Regime pillar lower.

What’s holding the reading up? SPY and QQQ both remain in Strong Uptrends and the weekly RSI is still healthy at 69.45. SPHB/SPLV is still signalling Risk-On. But other components in the model - breadth, rates vol, dollar, defensive leadership - all pulled the temperature score down last week.

Energy Sweeps Into Leading

The dominant theme of the week. Five energy and commodity ETFs flipped from Weakening to Leading in a single week: USO (Crude Oil) +10.96%, XLE (Energy) +6.71%, RSPG (Energy Equal-Weight) +5.95%, XOP (Oil & Gas E&P) +5.43%, and OIH (Oil Services) +4.68%. DBC (Broad Commodities) also moved to Leading. UNG (Natural Gas) jumped 7.19% and moved from Lagging to Improving.

SPDR Sector Relative Strength

XLK (Technology) and XLE (Energy) are the only two SPDR sectors in the Leading quadrant. The other nine are all Lagging. XLP (Consumer Staples) is worth watching - its trend state upgraded to Strong Uptrend despite sitting in the Lagging quadrant, and it was one of only four GICS sectors positive on the week alongside XLK, XLE and XLV.

The Other Side

Housing (ITB -7.04%, XHB -6.04%), retail (XRT -6.65%), airlines (JETS -6.99%), and utilities (UTES -4.62%) were among the worst performers. These are all rate-sensitive or inflation-sensitive sectors. Higher oil and rising rates hit them directly.

The mining and metals complex also pulled back hard. URA (Uranium) fell 9.51%, REMX (Rare Earth) dropped 9.22%, GDX (Gold Miners) lost 7.65%, and LIT (Lithium) was down 6.75%. Every mining-related ETF in our universe was negative on the week.

TLT (Long-Term Treasuries) fell 2.81%, and the MOVE Index spike from 67 to 80 signals ongoing rate volatility. In last week’s post I flagged the prior MOVE/VIX divergence resolving - it un-resolved. Rate vol is climbing again while equity vol remains relatively subdued.

What I’m Watching

The Leading quadrant contracted from 25 to 21 names despite SPY being flat. Lagging expanded from 62 to 66.

At 5.7, the temperature is still comfortably in the Goldilocks Zone. But breadth is weakening with large-cap indices holding near highs. It remains to be seen whether this is a short-term rotation and pullback or the early stages of longer consolidation or deeper pullback. We are still quite extended from the 50-day SMAs in SPY, QQQ, SMH and other tech/AI ETFs.

Stay open-minded and manage risk tightly.

Cheers,

Marcus Grant, CFTe

Subscribe now

Market Temperature Rises to 6.7 - Tech Continues to Dominate

Marcus Grant, CFTe — Sun, 10 May 2026 10:03:20 GMT

The Nasdaq 100 (QQQ) gained 5.50% last week (week ending May 8) and closed at a new all-time high. The S&P 500 (SPY) was up 2.35% and also closed at a new all-time high. The equal-weight S&P 500 (RSP) gained 0.63%. The Dow (DIA) was up 0.22%. The S&P MidCap 400 (MDY) added 1.64% and the Russell 2000 (IWM) gained 1.75%.

FANG+ (FNGS) gained 4.94% and moved back into the Leading quadrant after slipping to Improving the prior week. It finished the week at an all-time closing high for the first time since October 2025.

Subscribe now

SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

FNGS Chart

Extensions

QQQ and SPY are getting to extreme levels of historical extension from their 50-day SMA. QQQ closed the week 14.55% above its 50-day (up from 10.04% last week). SPY was 7.80% above its 50-day (up from 5.94% last week). In our backtest from May 1999 to April 2026 (6,782 weekly observations for SPY and 6,774 for QQQ), QQQ is almost in the 99th percentile, with only just over 1.0% of observations (70 out of 6,774) at or above current levels. SPY is in the 99th percentile, with slightly less than 1.0% of all observations (67 out of 6,782) at or above this level.

The semiconductor ETFs are even more stretched in percentage terms. SMH (Semiconductors) is 30.37% above its 50-day. XSD (equal-weight semis) is 43.85% above its 50-day.

Market Temperature

The Market Temperature rose slightly to 6.7 last week, up from 6.4 the prior week.

The Tape pillar improved (3.03 → 3.24 out of 4) driven by SPY’s weekly RSI pushing to 69.13 from 65.47.

The Monetary/Macro pillar score dropped (1.48 → 1.26) but the underlying readings were largely unchanged. MOVE actually fell from 70.41 to 67.25, but the model’s direction component scored lower because the 4-week comparison base rolled forward from the April 3 stress peak (84.41) to the April 10 reading (72.15). The rate of improvement slowed, not the conditions themselves. UUP was essentially flat (27.41 → 27.34) but scored slightly lower for the same reason - the more favourable 4-week comparison is fading, as the April 3 stress peak rolled off.

The Sentiment pillar was basically unchanged, with a tiny tick up in the VIX week over week.

The Regime pillar score was up 0.33, due to the IWF/IWD ratio (growth vs value) component flipping from negative to neutral.

Fixed Income Update

In last weekend’s note I flagged equity vol falling while rate vol rising was a divergence worth watching. That resolved last week - MOVE dropped from 70.41 to 67.25 while VIX ticked higher (16.99 → 17.19). Fixed income ETFs bounced slightly - TLT +0.55%, LQD +0.55%, IEF +0.23% - but all remain Lagging with downtrend trend states. LQD was the only one to see its trend state improve (Strong Downtrend → Downtrend). TIP continues to be the outlier, holding a Recovering Uptrend and the only fixed income ETF positive YTD (+1.27%).

SPDR Sector Relative Strength

XLK (Technology) is the only SPDR sector in the Leading quadrant. Nine of the eleven SPDR sectors are now Lagging, up from six last week. XLI (Industrials), XLB (Materials), and XLRE (Real Estate) all dropped into Lagging last week. The only sector not Lagging besides XLK is XLE (Energy), which sits in Weakening after a tough week.

Semiconductors and AI

Semiconductors and AI continue to lead. SMH gained 11.13% for the week and is up 33.88% over the past month. XSD (equal-weight semis) gained 11.18% and is up 54.19% over the past month. Both closed at all-time highs. Thirteen ETFs in our universe currently have RS-Momentum above 105, and all thirteen are tech, semiconductor or AI related names, if you include WGMI (Crypto Miners), EWY (South Korea) and EWT (Taiwan) – which I believe you should given their components.

CIBR (Cybersecurity)

CIBR gained 9.54% last week and its RS-Trend jumped from 92.15 to 97.15. It remains in the Improving quadrant with RS-Momentum at 105.60. The trend state flipped from Recovering Downtrend to Recovering Uptrend and is now 3.85% off its all-time high.

ARKQ

ARKQ (Autonomous Tech) moved from Weakening to Leading last week, gaining 4.72%. RS-Trend at 109.09, RS-Momentum at 100.50. Strong Uptrend and up 15.73% YTD.

I’m considering a new position in ARKQ, with a stop under $127 (could use $129.50 for a tighter or multi-level stop).

Crypto

WGMI (Crypto Miners) gained 20.40% and jumped from Weakening to Leading. RS-Momentum surged to 116.85 - the highest in our entire ETF universe. RS-Trend at 134.31. Strong Uptrend and up 48.24% YTD.

IBIT (Bitcoin) was up 2.20% and remains in Improving. RS-Trend improving steadily (84.79 → 90.32) but still well below 100 and still in a Recovering Downtrend.

ETHA (Ethereum) moved from Lagging to Improving, but only gained 0.34% - underperforming Bitcoin.

IBIT Chart

I don’t usually trade laggards below their 200-day SMAs, but I’m willing to make an exception for Bitcoin. However, personally, I prefer the 24/7 liquidity of the underlying to avoid the gap risk associated with the ETF.

BTC Chart

If BTC continues higher and can consolidate for 2-4 weeks between about $83K-86K and then breakout, that would be an ideal entry. I’ll be watching closely but not planning on buying now with the 200-day SMA (red line) and AVWAP from the all-time high (black line) just overhead. It may just rip through all that potential resistance but that’s OK, and if it does it will offer another better lower risk entry in the future.

Energy

Energy pulled back hard across the board last week. XLE was down 5.35%, XOP -6.51%, OIH -5.37%, USO -6.45%, and RSPG -5.99%. XOP, USO, and RSPG all dropped from Leading to Weakening. RS-Momentum fell sharply across all five names.

OIH and USO charts look the best of the bunch and are sitting right around their 20-day SMAs (OIH -0.87% below, USO -0.01%). XLE, XOP, and RSPG have pulled back below their 50-day SMAs (XLE -3.84% below its 50-day, XOP -3.23%, RSPG -2.93%).

OIH Chart

I’m considering a new trade in OIH, but would enter on strength above Thursday’s (May 7) high, with a stop under the low from the same day.

TAN

TAN (Solar) gained 4.50% and is sitting just 0.27% off its 52-week high. RS-Momentum at 99.44, just below the 100 line. Strong Uptrend and up 23.02% YTD.

Watching TAN for an entry. Ideally would like a pullback toward $59.50 and see some support/signs of strength around the 20-day SMA which should keep rising towards that level over the next week or two.

COPX (Copper Miners)

COPX had a strong week, up 8.75%. The trend state flipped from Neutral to Strong Uptrend and RS-Momentum jumped from 88.17 to 97.46. Still in Weakening but accelerating. Still 14.02% from its 52-week high.

I am also considering taking a position in COPX. Would look to buy strength above Friday’s (May 8) high, with a stop under the low of the 6th, or maybe under $81 to give it a little more breathing room.

With the QQQ and SPY massively extended, driven by tech, semis and AI names, the question becomes how will this resolve itself in the near-term? Will we see a continuation of this explosive performance leading to a massive “blow-off” top, a sharp mean-reversion move in the leaders or just a mild pullback or consolidation while money rotates into some of the laggards. Unfortunately, I don’t have a crystal ball, but in my opinion, given the level of extension in the leaders, it’s prudent to take at least some partial profits on big winners and/or tighten your trailing stops. I won’t be deploying a lot of new capital here, but considering small positions in TAN on a pullback, COPX and OIH on strength, and ARKQ, which just rotated into the Leading quadrant.

Stay open-minded and manage risk tightly.

Cheers,

Marcus Grant, CFTe

Subscribe now

Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and/or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and/or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Introducing the ASX 300 Relative Strength Framework

Marcus Grant, CFTe — Sun, 03 May 2026 10:13:00 GMT

I run a relative strength framework on US equities - 121 ETFs benchmarked against the S&P 500, drilling down into individual stocks by benchmarking them against their ETF. I then eyeball the charts for the best-looking setups. It works well because the US market has a deep ecosystem of sector and thematic ETFs to work with and thousands of liquid stocks. You can benchmark technology and all its sub-sectors against the broad market, then drill into semiconductors, then into individual chip names. Two layers, two benchmarks, each revealing something different.

Australia doesn’t have that luxury.

The ASX is a much smaller and concentrated market. Banks, resources, and a handful of healthcare and property names make up the bulk of the index. The thematic ETF ecosystem that makes the US framework possible simply doesn’t exist here. You can’t run a two-layer analysis when there’s no first layer to build on.

So, I had to think about it differently.

The ASX 300 Relative Strength Framework takes 301 stocks (VAS holds 304 stocks as at 31 March 2026, but three are suspended from trading) in the Vanguard Australian Shares ETF (VAS), which tracks the S&P/ASX 300 Index and benchmarks each one directly against VAS itself. Instead of ETF groups, I built 33 curated categories - Gold, Critical Minerals, Oil Gas & Coal, Banks, Software, and so on - that group the universe in a way that makes relative strength comparisons meaningful across the ASX 300. Each stock gets an RS-Trend score (how much is it outperforming or underperforming VAS over time?) and an RS-Momentum score (is that outperformance accelerating or decelerating?). Those two dimensions place every stock into one of four quadrants - Leading, Weakening, Lagging, or Improving - exactly like the US framework. Every stock also gets a Trend State rating depending on the current price relative to its Simple Moving Averages (SMAs).

The methodology underneath is the same. The structure around it is different because the market demanded it.

Subscribe now

How weak is the Australian market right now?

Across all 301 stocks in VAS, less than half (48.5%) are above their 20-day moving average. Only a third (33.7%) are above their 200-day. Just 19.7% sit in the Leading quadrant.

At the category level, the leadership is narrow. Only seven of the 33 categories have more than 40% of their stocks in the Leading quadrant - and most of them are resource or energy related. Utilities & Energy Infrastructure leads at 80%, followed by Oil Gas & Coal (67%), Critical Minerals (50%), and Mining & Industrial Services (50%). On the other side, 10 categories have zero stocks in Leading, including Software, Discretionary Retail, Property, and Medtech. The strength in this market is concentrated and thematic.

The first scan

After applying the RS framework, I then run a bottom-up scan for the strongest names.

For the first live run (week ending May 1, 2026), I ran a scan across all 301 stocks looking for names in either the Strong Uptrend or Uptrend state, not overly extended, and trading near their 52-week highs. The parameters are the same ones I use for US stocks - trend states, extension from the 20-day SMA within about three days of normal price movement (measured in ATRs, so it adjusts for each stock’s volatility), and within 10% of the 52-week high.

29 stocks passed the initial scan and there were 10 near misses on the criteria. I then went through all the charts and picked the 15 names that I believe have the cleanest, strongest trends and have the potential to offer low-risk entries over the coming week(s).

Critical Minerals

The standout category. Four of the 15 names come from here, and the broader category has 50% of its stocks in the Leading quadrant.

PLS Chart

(Note: In all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.)

PLS Group Ltd (PLS) - Lithium producer (spodumene concentrate). Critical Minerals, Leading, Strong Uptrend. Up 6.4% last week (week ending May 1). Currently 8.1% above the 20-day SMA with a daily ATR of 4.4%, giving an extension of 1.8 days of normal range. 0.5% from the 52-week high (-0.5% ATH). RSI 67.

Consolidating at all-time highs, with blue skies above.

SRL Chart

Sunrise Energy Metals Ltd (SRL) - Nickel, cobalt, scandium, and battery materials. Critical Minerals, Weakening, Strong Uptrend. Up 0.8% last week. 6.5% above the 20-day SMA, 7.6% ATR, extension 0.8x. 7.8% from the 52-week high (-32.6% ATH). RSI 60.

Consolidating nicely, first target could be around $16, just shy of the late 2017 all-time highs.

LTR Chart

Liontown Ltd (LTR) - Lithium miner (battery materials). Critical Minerals, Leading, Strong Uptrend. Up 17.9% last week. 24.3% above the 20-day SMA, 5.4% ATR, extension 4.5x - well outside the scan threshold. Right at the 52-week high (-17.4% ATH). RSI 75.

I like the chart, but too extended to buy here for me. Add to pullback watchlist.

MI6 Chart

Minerals 260 Ltd (MI6) - Niobium exploration and critical minerals. Critical Minerals, Weakening, Uptrend. Down 3.4% last week. 3.9% below the 20-day SMA, 6.6% ATR, extension -0.6x. 13.2% from the 52-week high (-14.8% ATH). RSI 50. Near miss on 52-week high gate.

Could wait to see if it breaks out to all-time highs, or if you’re looking for an early entry, could buy strength on a clear reclaim of the 20 SMA.

Diversified Resources

RIO Chart

Rio Tinto Ltd (RIO) - Iron ore, aluminium, copper. Diversified Resources, Weakening, Strong Uptrend. Up 0.2% last week. 0.3% above the 20-day SMA, 2.4% ATR, extension 0.1x. 2.2% from the 52-week high (-2.2% ATH). RSI 57. The Weakening quadrant means momentum is fading relative to VAS, but the trend state is still Strong Uptrend.

Consolidating near all-time highs. Had a shakeout on Thursday, the 30th of April. I’d probably be looking to buy strength above $176. Blue skies above.

MIN Chart

Mineral Resources Ltd (MIN) - Mining services, iron ore, lithium. Diversified Resources, Leading, Strong Uptrend. Up 12.4% last week. 11.2% above the 20-day SMA, 4.5% ATR, extension 2.5x. 1.6% from the 52-week high (-31.2% ATH). RSI 68.

Recent price action is a bit loose. Could wait for it to tighten up, or if you are more aggressive, buy strength above Thursday the 30th of April’s high of $67.80 - Potential targets $75 and $91.

Gold

Both of these names are in the Weakening quadrant with fading RS momentum, and both just miss the 52-week high threshold. However, I thought they were worth including given their outperformance relative to the broader gold category and the gold price.

GGP Chart

Greatland Resources Ltd (GGP) - Gold and copper. Gold, Weakening, Uptrend. Down 2.8% last week. 5.0% below the 20-day SMA, 5.1% ATR, extension -1.0x. 11.9% from the 52-week high (-11.9% ATH). RSI 50. Near miss on 52-week high gate.

I wouldn’t buy this one here, but possibly on strength if it can reclaim the 20-day SMA and prior resistance around $14.50 zone - but I’d be watching the gold price too. I would be hesitant to buy a breakout if the gold price isn’t improving.

PDI Chart

Predictive Discovery Ltd (PDI) - Gold explorer. Gold, Weakening, Uptrend. Down 4.7% last week. 2.9% below the 20-day SMA, 5.8% ATR, extension -0.5x. 11.7% from the 52-week high (-66.2% ATH). RSI 49. Near miss on 52-week high gate.

Another one for the watch list. A potential buy on strength over recent highs around $1.015 - Trading a bit loose at the moment though. Potential targets after a breakout would be $1.50 and $2.00.

Engineering & Contractors

Both of these are mining services plays.

SRG Chart

SRG Global Ltd (SRG) - Engineering, contracting, mining services. Engineering & Contractors, Leading, Strong Uptrend. Up 0.7% last week. 4.9% above the 20-day SMA, 3.5% ATR, extension 1.4x. 5.7% from the 52-week high (-5.7% ATH). RSI 64.

Not the cleanest base, but if it can tighten up a bit in its consolidation here and then break out to all-time highs, could provide a low-risk entry - Watchlist

NWH Chart

NRW Holdings Ltd (NWH) - Engineering, contracting, mining services. Engineering & Contractors, Leading, Strong Uptrend. Up 4.6% last week. 6.6% above the 20-day SMA, 3.3% ATR, extension 2.0x. 2.3% from the 52-week high (-2.3% ATH). RSI 65.

Also not a clean base. But if it tightens up a bit here and breaks out to all-time highs, could provide an entry - Watchlist

Transport & Infrastructure

DBI Chart

Dalrymple Bay Infrastructure Ltd (DBI) - Coal export port terminal. Transport & Infrastructure, Leading, Strong Uptrend. Up 2.2% last week. 5.5% above the 20-day SMA, 2.1% ATR, extension 2.6x. 0.5% from the 52-week high (-0.5% ATH). RSI 70.

I wouldn’t buy this here but on the watchlist for a lower risk entry.

Digital Infrastructure

CDA Chart

Codan Ltd (CDA) - Communications equipment and metal detection technology. Digital Infra & Hardware, Leading, Strong Uptrend. Up 21.6% last week. 21.0% above the 20-day SMA, 4.3% ATR, extension 4.9x. 0.7% from the 52-week high (-0.7% ATH). RSI 77. The RS acceleration is the strongest in the scan.

Extended - pullback watchlist.

ELS Chart

Elsight Ltd (ELS) - Connectivity solutions and drone communication technology. Digital Infra & Hardware, Weakening, Strong Uptrend. Flat last week. 0.3% above the 20-day SMA, 6.2% ATR, extension 0.0x. 7.0% from the 52-week high (-7.0% ATH). RSI 56.

Consolidating nicely - shakeout on Thursday the 30th of April. Could buy on strength on a clear 20-day SMA reclaim for the more aggressive or wait for all-time high breakout.

Food & Agriculture

CBO Chart

Cobram Estate Olives Ltd (CBO) - Olive oil producer. Food & Agriculture, Leading, Strong Uptrend. Up 8.6% last week. 8.5% above the 20-day SMA, 3.7% ATR, extension 2.3x. 4.6% from the 52-week high (-4.6% ATH). RSI 76.

If it forms a handle here under $4, could provide a low-risk entry.

Telco

SLC Chart

Superloop Ltd (SLC) - Fibre broadband and business connectivity. Telco, Leading, Strong Uptrend. Down 0.3% last week. 2.6% above the 20-day SMA, 2.9% ATR, extension 0.9x. 4.8% from the 52-week high (-4.8% ATH). RSI 61.

Consolidating nicely under all-time highs - on breakout watch.

What ties it together

Ten of the fifteen pass all scan criteria. Two (LTR and CDA) are extended after strong recent runs. Three (GGP, PDI, MI6) narrowly missed the proximity to 52-week highs threshold.

The resource and mining services theme dominates, which tells you something about where the ASX’s genuine relative strength lives right now. But the outliers - CBO, SLC, CDA, ELS - are arguably the more interesting stories precisely because their business models are independent of the commodity cycle that drives most of the other names on the list.

Stay open-minded and manage risk tightly.

Cheers,

Marcus Grant, CFTe

Subscribe now

Market Temperature Drops to 6.4 - Major Indices Continue to Grind Higher

Marcus Grant, CFTe — Sat, 02 May 2026 13:09:52 GMT

It was another constructive week for the major indices at or near all-time highs. The S&P 500 (SPY) gained 0.94%, the Nasdaq 100 (QQQ) was up 1.55%, and the Dow (DIA) added 0.57%. The S&P MidCap 400 (MDY) was essentially flat at -0.02%, and the Russell 2000 (IWM) gained 0.95%. Micro-caps (IWC) were up 1.27% and moved into the Leading quadrant. FANG+ (FNGS) gained 1.10% but dropped back from Leading to Improving.

Both SPY and QQQ closed at new all-time highs for the week. Worth noting though - SPY gapped up on Friday and pushed higher but reversed to close on the lows, just under where it opened. QQQ held its gains and continues to be the leader.

Subscribe now

SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

The Market Temperature dropped from 7.4 to 6.4 - back below the Surge zone (7.0+) after one week. The 6.4 reading is classified as Stable due to the 1 point drop.

If you read last week’s post, I went through the historical context for Surge readings. In the model’s backtest period from 2016, post-correction thrusts into Surge have typically lasted just one week. November 2023, December 2023, and July 2025 all dropped back below 7.0 the following week. So this is consistent with the pattern.

What is a bit different this time is the size of the drop. Those three prior falls from Surge fell by 0.37 to 0.48 points. This week’s drop of 1.0 is roughly double that, and the landing level of 6.4 is lower than any of those precedents. Still comfortably in the Stable zone - but worth being aware of.

Pillar Breakdown

Two pillars drove the drop in roughly equal measure.

Tape/Trend fell from 3.40 to 3.03 (out of 4). SPY and QQQ both held their Strong Uptrend trend states - the decline came entirely from breadth and RSI momentum scores. There’s a nuance here though. The model uses a two-week lookback for breadth scoring, so it sees MMFI (percentage of US stocks above their 50-day MA) declining from 69.2% to 63.7%. But week-over-week, MMFI actually ticked up from 62.4% to 63.7%. MMTH (200-day) was essentially flat at 55.9%.

Regime fell from 1.66 to 1.28 (out of 2). Driven mostly by the IWF/IWD (growth vs value) ratio turning down. Year-to-date, IWD (Value) is up 9.40% while IWF (Growth) is up just 0.75%. XLY/XLP (discretionary vs staples) also declined for a second consecutive week - XLY is down 1.21% year-to-date while XLP is up 8.31%. Both ratios are trading below their 200-day moving averages.

Monetary and Sentiment were barely changed. However, one divergence worth flagging - VIX dropped from 18.71 to 16.99 while MOVE (bond market volatility) rose from 66.97 to 70.41. Equity vol falling, rate vol rising. That sits alongside deterioration across fixed income ETFs - more on that later.

Extension from SMAs

The 20-day moving averages are catching up. SPY closed the week (May 1st) 3.17% above its 20-day SMA, down from 4.84% the prior week. QQQ was 5.63% above, compared to 7.90% the prior week. The 50-day extensions are barely changed (SPY 5.46% to 5.94%, QQQ 9.48% to 10.04%).

SPDR Sector Relative Strength

The SPDR sector picture is largely unchanged from last week. Technology (XLK) remains the only sector in the Leading quadrant. Real Estate (XLRE) is the one shift - it moved into Improving. Six of eleven sectors are Lagging, with Healthcare (XLV) and Financials (XLF) the weakest.

Semis and AI

The semiconductor and AI infrastructure complex continues to lead. Every AI-related ETF I track - SMH, XSD, IDGT, DTCR, GRID, BAI, CHAT, THNQ - is in the Leading quadrant with a Strong Uptrend trend state. XSD (equal-weight semis) is still the strongest with an RS-Momentum of 113.49, up another 4.06% last week.

In our AI Custom Universe (81 names benchmarked against SMH), the number of Leading names rose from 16 to 25 and Lagging dropped from 37 to 28. Worth noting that last week’s elevated Lagging count was due to the SMH itself being up around 9%. Big moves in Leading names include Intel (+20.7% on the week), Bloom Energy (+25.8%) and STX (+24.00%).

FNGS slipped back from Leading to Improving. Its RS-Trend dropped back below 100 after only crossing it by 0.04 points last week.

Critical & Precious Metals

LIT (Lithium) and REMX (Rare Earths) both moved back into the Leading quadrant after slipping to Weakening last week. LIT was up 5.88% and REMX up 8.08%. Both remain in Strong Uptrends. URA (Uranium) stayed in Weakening but still has a Strong Uptrend trend state.

LIT Chart

REMX Chart

COPX Chart

Copper Miners (COPX) have diverged from LIT and REMX. COPX was down 4.03% for the week and is now below its 20 and 50-day SMA.

SLV Chart

SLV (silver) looks weak, below its 20 and 50-day SMA, down 0.73% for the week, and SIL (silver miners) down 6.54%.

GLD Chart

GLD also looks weak, below its 20 and 50-day SMA, down 2.32% for the week and dropped into the Lagging quadrant. GDX (gold miners) fell 7.66%. If GLD continues to fall and closes below the 395-400 zone, where the late March lows and the 200-day SMA are converging, I wouldn’t want to own it, even in a longer term “investment” portfolio.

Oil and Clean Energy

USO (crude oil) remains the strongest name in the entire 121-ETF universe by RS-Trend (149.27), up another 7.85% last week. OIH (oil services) slipped from Leading to Weakening - still outperforming on trend but the momentum paused. XOP (oil & gas E&P) moved the other way, from Weakening back to Leading.

PBW Chart

PBW (Clean Energy) is in the Leading quadrant with a Strong Uptrend, up 4.23% on the week.

TAN Chart

TAN (Solar) is Weakening - still outperforming on trend but momentum fading.

Speculative Growth, Quantum and Robotics and Micro-Caps

QTUM (Quantum Computing & AI) and ROBO (Robotics & AI) are both in the Leading quadrant with Strong Uptrend trend states.

QTUM Chart

ROBO Chart

IWC Chart

IWC (micro-caps) moved from Weakening to Leading - up 1.27% on the week and 14.19% year-to-date.

Biotech

XBI (Biotech) pulled back last week but bounced off its 50-day moving average and the shelf of prior resistance (now potentially support) on Wednesday.

XBI Chart

Fixed Income

Nearly all fixed income ETFs are now in downtrends. TLT, IEF, and LQD are all Lagging with Strong Downtrend trend states, all down last week: TLT -1.27%, IEF -0.86%, LQD -0.91%. HYG (high yield) was down 0.52% and is Lagging with a Recovering Downtrend. TIP (U.S. Treasury Inflation-Protected Securities) is the only one holding a Recovering Uptrend.

SPY and QQQ are at all-time highs with VIX at 16.99 - but fixed income ETFs (excluding TIP) are broadly deteriorating, and the MOVE Index ticked up from 65.69 to 70.41 over the last 2 weeks. Equity vol falling while rate vol rises is a divergence worth watching. Continued consolidation or a mild pullback for the major indices around these levels would be constructive and potentially lead to new entries.

I’ll post another piece tomorrow with some potentially actionable names from my scans.

As always, I am open to all possibilities. Stay open minded and manage risk tightly.

Hope everyone has a great week!

Cheers,

Marcus Grant, CFTe

Subscribe now

Under The Hood

Marcus Grant, CFTe — Tue, 28 Apr 2026 07:52:13 GMT

Yesterday’s post covered the Market Temperature and the relative strength at the ETF-level, showing relative performance of sectors and themes relative to the S&P 500 (SPY). Today I will drill down one level deeper into the individual stocks inside some of those ETFs.

There’s a visual explainer here covering the relative strength quadrants and trend states so you can understand the terminology I use in this analysis.

I also screened across the drill-down data in this note for names in the top two trend states (Strong Uptrend or Uptrend), near their 52-week highs, and not too extended from their 20-day SMA relative to their own volatility (as of Friday April 24^th closing prices). I use each stock’s ATR to normalise. I then ran through all the charts to eyeball the better potential setups. You can grab the watchlist here if you want. Be mindful some names are still to report earnings. I highlight some potentially actionable names below.

The AI Stack - one week later

Last week’s AI Stack piece benchmarked 81 names against SMH and found interconnect, specialty foundries, the miner pivot, and systems integration leading. A week later, many of those names have dropped from Leading to Weakening.

However, context matters here. SMH gained over 9% last week (week ending April 24). When the benchmark moves that much, not all names keep pace. Ciena, Coherent, Fabrinet, Vertiv, Celestica, Jabil - all dropped to Weakening. But all of them still have RS trend readings well above 100 and Strong Uptrend trend states. They didn’t weaken. They just didn’t match a 9% benchmark week.

“Weakening” in this context means the outperformance stopped accelerating, not that something is wrong.

The names that outperformed through the 9% SMH week did so with extreme moves. ARM gained over 40% and now has the highest momentum reading in the entire universe. AMD up nearly 25%. Intel up over 20%. Texas Instruments crossed into Leading, as did Astera Labs (ALAB).

NVIDIA went the other way - moving from Improving to Lagging, despite gaining 3.27% on the week. Broadcom also slipped to Lagging, with its momentum reading at 99.99. Both had decent weeks in absolute terms but couldn’t keep pace with SMH’s move.

The miner-to-AI pivot names all lost ground. WULF, HUT, IREN, and APLD dropped from Leading to Weakening - same story as the interconnect names, still outperforming on trend but couldn’t match the benchmark move. CORZ was already the weakest of the group last week in the Improving quadrant and has now slipped to Lagging.

GE Vernova Inc. (GEV) Chart

Leading, Strong Uptrend, gapped up on earnings Wednesday then traded tight Thu/Fri. I am watching to see if it can hold Wednesday’s low. If it does, that’s a sign of real strength. Even if it fills part or all the gap, but holds the 20 SMA, it could provide a new entry opportunity.

Lam Research Corporation (LRCX) Chart

Weakening, Strong Uptrend, Gained 0.07% last week - basically flat while the rest of semis surged. Tight consolidation near all-time highs.

Software remains almost entirely absent. Every enterprise SaaS name is Lagging versus SMH. ServiceNow down 41% YTD. Workday down over 44%. HubSpot down 44%. Intuit down 40%. Salesforce down nearly 33%.

Software - the benchmark illusion

Staying with software for a moment - Microsoft is Leading within IGV. Sounds good until you check the other benchmarks - MSFT is Lagging versus XLK and SMH.

Even among the actual ‘software leaders’, Synopsys (SNPS) and Cadence (CDNS) are EDA companies - they sell the design tools chipmakers use. They’re classified as software in IGV, but their business is entirely tied to the semiconductor cycle.

Crypto miner names like CORZ are also showing up as Leading within IGV. Classified as software, behaving like something else entirely.

Two names from the IGV universe that came up in my screen were Clear Secure (YOU) and A10 Networks (ATEN) - both Leading within IGV with Strong Uptrend trend states. YOU runs the CLEAR biometric identity platform at US airports and has been expanding into B2B identity services. ATEN is a cybersecurity and application delivery company expanding into AI workload security. Both have earnings coming up though.

Clear Secure (YOU) Chart

A10 Networks (ATEN) Chart

XLF - the most misleading ETF

XLF is Lagging with a Recovering Downtrend trend state. Down almost 2% last week, down over 6% YTD. At the ETF level, financials look like an avoid.

But the drill-down reveals something interesting.

The banks are dominating. State Street (STT), Citi (C), BNY Mellon (BK), Northern Trust (NTRS), Morgan Stanley (MS), and Goldman Sachs (GS) - all Leading with Strong Uptrend trend states. JPMorgan is also Leading in a Recovering Uptrend.

Morgan Stanley (MS) Chart

Tight consolidation under all-time highs.

Dragging XLF down: insurance brokers AJG and BRO, Visa and Mastercard, Blackstone and Ares, Berkshire Hathaway, and Schwab - all Lagging, most in Downtrend or Strong Downtrend trend states.

Visa (V) Chart

OIH - the rebound has structure

OIH bounced over 9% last week. The drill-down shows it wasn’t uniform.

Land-focused names are Leading. Drillers ProPetro (PUMP) and Patterson-UTI (PTEN) are in Strong Uptrend. Tenaris (TS), a tubular goods manufacturer, is also Leading with a Strong Uptrend.

Tidewater (TDW) is Leading too - TDW is an offshore marine services company, so it’s bucking the broader offshore trend.

Offshore drillers - Transocean (RIG), Valaris (VAL), Noble (NE) - are Weakening.

The big integrated names SLB, HAL, and Baker Hughes (BKR) are Lagging or Improving but all have Strong Uptrend trend states.

Not a single name in the 25-stock OIH universe has a Downtrend trend state.

Weatherford (WFRD) Chart

Weatherford (WFRD), a diversified oilfield services company, is also Leading with a Strong Uptrend.

TechnipFMC (FTI)

TechnipFMC (FTI), a subsea systems and technology company, is Weakening with a Strong Uptrend. Earnings April 30th though.

The ETF-level data shows the broad direction but often masks what’s happening underneath. The AI stack’s large shift from Leading to Weakening is more about a 9% benchmark week than any real deterioration. Software ‘strength’ within IGV doesn’t translate to strength against stronger benchmarks. XLF Lagging hides strength in big banks. And OIH’s bounce has structure underneath.

As always, stay open minded to all possibilities and manage risk tightly.

Cheers,

Marcus Grant, CFTe

Subscribe now

Market Temperature Hits 7.4 - Into The Surge Zone

Marcus Grant, CFTe — Mon, 27 Apr 2026 04:25:51 GMT

AI related names and oil outperformed everything last week. The S&P 500 (SPY) gained 0.54%, but it was a week of constructive consolidation after rallying around 12% over the three weeks prior, closing out the week at an all-time high. The Nasdaq 100 (QQQ) was up +2.32%, and FANG+ (FNGS) up 1.48%. The Dow (DIA) slipped 0.41%, the S&P MidCap 400 (MDY) was basically flat at -0.14%, and the Russell 2000 (IWM) eked out a +0.32% gain.

The Market Temperature - which I introduced in detail in this post - hit 7.4 out of 10, up from 6.9 the prior week. That puts us into the Surge zone (7.0+) for the first time since July 2025.

Surge is the highest zone in the model, and it’s very rare - in my 10-year backtest, the model only spent about 7% of weeks at 7.0 or above. It’s hard to reach because it needs almost everything firing at once: the tape and trend pillar - which captures moving average alignment, breadth, and momentum - accounts for 4 of the 10 points and needs to be near-maxed. On top of that, credit and monetary conditions need to be supportive, risk appetite and regime indicators need to be healthy, and for sustained readings in the Surge zone, VIX elevated enough to act as a contrarian signal. That last one is why the COVID Surge run (VIX 20-35, peaked at 7.98) lasted for months.

Outside of COVID, the model has only touched Surge five times in ten years (prior to this week’s reading) - and never for more than a week or two. Two of those were at tops: January 2018 (7.29, two weeks before a 10% correction) and November 2021 (7.19, eight weeks before the 2022 bear market). Both came at the end of extended rallies.

The other three were momentum surges after corrections. The model hit 7.04 in late November 2023 after the October bottom and touched 7.02 again in late December 2023. The last one hit 7.32 in early July 2025 - about three months after the tariff selloff bottom. All three were single-week spikes that dropped back below 7.0 the following week. The tariff recovery took three months to reach Surge because the correction was over 20% - deep enough to drag the moving averages far apart, requiring a long rally to get them realigned. The October 2023 correction was a similar depth to this March 2026 one (a little over 10%) but more drawn out - three waves down over three months - and the recovery, while strong, wasn’t as extreme as what we’ve just seen.

This week’s 7.4 is different from all of those, and it is unique in the model’s history. The correction was just under 10%, and yet the reading is higher than any previous post-correction Surge spike. What sets this one apart is the speed and intensity of the snap-back. Even though last week’s gain was modest in percentage terms, the four-week rally of around 12.7% off the low was enough to push the moving averages into full bullish alignment. Three of the model’s four pillars - tape, monetary, and regime - are all running at 77-85% of their maximum scores. The only pillar not fully contributing is sentiment, where VIX at 18.71 isn’t elevated enough to provide a contrarian boost.

I’m genuinely not sure what to make of this week’s reading. The rapid movement into the Surge zone could be setting us up for a sustained uptrend. Or it could mean the model reached Surge too easily because the correction was shallow, and the reading is less meaningful than it looks. SPY and QQQ are extended - SPY is 5.46% above its 50-day SMA, and QQQ is 9.48% above its 50-day. To put that in context, SPY’s extension sits between the 89th and 95th percentile of the last 26 years of daily data, depending on whether you adjust for the current volatility regime - meaningfully stretched but not extreme. QQQ’s is at the 95th-97th percentile on both measures - historically rare, and a level where forward returns have tended to compress. The next few weeks should tell us a lot. If we consolidate above the breakout zones or have an orderly pullback to the 20-day SMA or even the 50-day SMA - with the market temperature remaining above 5 - it would be positive and likely offer new lower-risk entries.

I track how each index ETF sits relative to its key moving averages - the 20-day, 50-day, and 200-day SMAs. When all three are stacked in bullish order (price above the 20, the 20 above the 50, the 50 above the 200), that’s a “Strong Uptrend”. When price is above at least the 20 and the 200, but the 20 and 50 haven’t sorted into bullish sequence yet - typically after a sharp correction drags them down - that’s a “Recovering Uptrend”.

Last week, both SPY and QQQ flipped from Recovering Uptrend to Strong Uptrend - their 20-day moving averages crossed above their 50-day. I flagged this potential in last week’s post. MDY and IWM are also in a Strong Uptrend. FNGS and DIA are still Recovering - DIA is about to cross into bullish alignment, but FNGS is messier. Price is above all of the moving averages, but they are not bullishly aligned - the 200 is above the 20, which is above the 50.

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

Those trend state upgrades were the biggest driver of the temperature move from 6.9 to 7.4. Conversely, breadth narrowed slightly - the percentage of US stocks above their 50-day moving average dropped from around 69% to 62%, and those above their 200-day fell from around 59% to 56%.

VIX closed at 18.71, up slightly from 17.48 the prior week. Still comfortably below 20.

The sector-level data reinforces that picture. At the GICS level, Technology is the only sector in the Leading quadrant (outperforming SPY and accelerating). Only two sectors posted meaningful gains last week - Technology (+3.80%) and Energy (+3.36%). Consumer Staples was up just under 1%. Materials and Utilities were essentially flat. Everything else was down, including Comms Services (-2.99%), Healthcare (-3.10%), Financials (-1.93%), Consumer Discretionary (-1.43%), and Real Estate (-1.46%).

Last week I highlighted Real Estate and Consumer Discretionary as Improving sectors (still underperforming on trend, but showing short-term momentum). Both dropped back to Lagging (underperforming and decelerating) this week. No sectors remain in the Improving quadrant at the GICS level.

Only one sector Leading. Will the other sectors catch up, or will tech catch down?

The semiconductor and AI complex continues to be the dominant theme. XSD (the equal-weight semiconductor ETF) had the strongest short-term momentum reading in our entire 121-ETF universe last week, with a gain of 15.51%. SMH (the cap-weighted version) gained 9.11%. The equal-weight outperforming the cap-weighted tells you the strength is broad-based across the sector. Both are massively extended, with the XSD 34.08% above its 50-day SMA, and SMH is 22.58% above.

The AI hardware and infrastructure complex - generative AI, digital infrastructure, data centre infrastructure ETFs - all remain in the Leading quadrant with Strong Uptrend trend states. Most of these names are extended after the recent run. Software (IGV) remains the missing piece - it was roughly in line with SPY last week (+0.14%) and the gap between hardware and software widened meaningfully.

FNGS confirmed into the Leading quadrant last week - its relative strength trend reading crossed above 100, but barely. It’s sitting at 100.04 - four hundredths of a point above the boundary.

The more interesting story is what’s happening underneath. Within the FNGS components, it’s a split: four names are Leading - MU, AVGO, NVDA, and AMZN. Two are Weakening - GOOGL and AAPL (still outperforming on trend but losing momentum). And four names are Lagging with Downtrend trend states - META, MSFT, NFLX, and PLTR. It’s the semiconductor and cloud infrastructure names driving the ETF into Leading, not broad mega-cap strength.

The divergence between US tech and Chinese tech is extreme. XLK (Technology Sector SPDR ETF) is in a Strong Uptrend and is in the Leading quadrant. KWEB (China Internet) is in a Strong Downtrend and is one of the weakest ETFs in the entire universe. Last week XLK gained 3.8% while KWEB fell 5.32%. Below is a ratio chart showing XLK/KWEB. The outperformance since October 2025 is stark.

Even within KWEB, the names that are technically outperforming their peers - JD, Baidu, Alibaba, Trip.com - mostly have Downtrend or Weakening trend states. They look relatively good only because the rest of the universe is worse.

Financials are another divergence story worth mentioning. XLF (the Financials sector ETF) is Lagging with a Weakening trend state. Last week XLF dropped 1.93% and is now down 6.22% year-to-date. It got turned away right at its 200-day moving average.

The banks within XLF tell a different story. Goldman, Morgan Stanley, Citi, State Street, and BNY Mellon are all Leading with Strong Uptrend trend states. JPMorgan - the largest US bank - is also Leading but still in a Recovering Uptrend. Bank of America is right on the boundary - its momentum reading is 0.03 below Leading.

What’s dragging XLF down is the non-bank weight - insurance brokers (AJG, BRO - in Strong Downtrends), payment networks like Visa and Mastercard, alternative asset managers (ARES, BX), and brokerages like Schwab.

Energy was the reversal story of the week. In last week’s post I highlighted the energy complex as the area where rotation was clearly moving away from - USO (crude oil) fell over 7% while SPY gained over 4.5%.

However the bounce back was strong, USO gained 14.10%.

USO has the strongest longer-term relative performance reading in the entire 121-ETF universe. Meanwhile UNG (natural gas) continues to fall with a Strong Downtrend - two energy commodities, two completely different stories.

In the mining and metals space, the picture has shifted. Last week lithium (LIT), rare earths (REMX), and uranium (URA) were all Leading. This week all three lost that status as their momentum faded below 100, moving them into the Weakening quadrant (still outperforming on trend, but the acceleration has paused).

However, all three are still in Strong Uptrend trend states. The longer-term relative performance is intact; the acceleration has just paused. Worth keeping an eye on. That’s a different character from the precious metals complex. Gold (GLD) and gold miners (GDX) have dropped to Neutral trend states - the moving averages have lost their directional bullish alignment and price is below both the 20 and 50-day SMAs. Silver (SLV) and silver miners (SIL) are in slightly better shape at Recovering Uptrend, but the momentum declines were sharp across all four - GLD was down 2.84% last week, GDX down 5.98%, SLV down 6.57%, and SIL down 6.05%.

GLD’s relative strength reading on a trend basis is less than a point above the boundary between Weakening and Lagging. If it crosses below next week, it moves from “still outperforming but fading” to “underperforming.”

A few other notable moves. ARKK and ARKG, which I mentioned last week as approaching the Leading boundary after double-digit weekly gains, both dropped back to Lagging. ARKK fell 3.45% with a Weakening trend state, and ARKG fell 4.06% with a Recovering trend state. The deep-Lagging names to avoid remain the same as recent weeks: UNG, KWEB, and IHI (Medical Devices, down 15.12% YTD in a Strong Downtrend). Healthcare broadly remains the weakest GICS sector.

So we have the Market Temperature in Surge territory, with leadership concentrated in semiconductors and the AI hardware build-out, while breadth narrows and most major sectors lag. The leading groups are mostly all extended, as is QQQ and SPY. Some more consolidation or an orderly pullback in the coming week(s) would be optimal for any new entries. If we push higher from here without the SMAs catching up the risk of mean reversion increases.

I’ll be posting a drill-down piece later today or tomorrow looking at what the component-level data reveals underneath some of these ETFs.

As always, I am open to all possibilities. Stay open minded and manage risk tightly.

Hope everyone has a great week!

Cheers,

Marcus Grant, CFTe

Subscribe now

Thanks for reading TheChartEdge! This post is public so feel free to share it.

The AI Stack - A Trader’s Map

Marcus Grant, CFTe — Tue, 21 Apr 2026 08:58:04 GMT

I built a watchlist of the AI stocks - broken into layers from power and grid at the bottom to software and applications at the top - and then ran it through our relative-strength rotation framework.

I measure two things for each stock - RS-Trend, which tells me whether it's outperforming or underperforming the benchmark on trend, and RS-Momentum, which tells me whether that relative performance is accelerating or decelerating. That gives four quadrants: Leading (outperforming and accelerating), Weakening (outperforming but losing steam), Lagging (underperforming and getting worse), and Improving (underperforming but turning around).

For this analysis, I benchmarked against SMH (the VanEck Semiconductor ETF), not against SPY. I’ll explain why that matters in a moment.

Two of the most discussed names in the AI trade - NVIDIA and Broadcom - aren’t leading. The real strength is in other parts of the stack.

Subscribe now

The AI trade is not one trade

Most people lump “AI stocks” into one bucket. But the AI build out has at least a dozen distinct layers, each at a different stage of the investment cycle.

I built a TradingView AI Stack Watchlist, grouped by layer. You can grab the watchlist yourself (here) if you want.

The bottom of the stack is the physical infrastructure - power, data-centre real estate, and networking. The middle is the semiconductor complex - compute silicon, foundries, equipment, memory, and analog chips. The top is cloud platforms, software, and applications. Alongside the main stack, a group of companies pivoting from crypto mining to AI compute. And at the edge, a handful of companies bringing AI inference to devices.

Why SMH and not SPY?

If I’d benchmarked this universe against SPY, nearly everything would show up as “Leading” because most AI names are outperforming the SPY. Benchmarking against SMH asks a much harder question: which AI names are outperforming the already-strong semiconductor complex?

So let’s dive into where the strength within AI is concentrated.

Interconnect - the leading layer

One sub-theme that stands out is networking and optical interconnect - the companies that connect GPUs inside data centres. Nearly every interconnect name in the watchlist is confirmed Leading versus SMH.

Credo Technology (CRDO) has the highest RS-Momentum of all 81 stocks currently. It had a nearly 60% drawdown between December 2025 and the end of March 2026, but has recovered extremely strongly since. It still sits below its all-time highs, but if it can form a handle or tighten up here under the ATHs, allowing the 20 and 50-day SMAs to catch up to price and cross above the 200-day SMA, it might allow a good entry in the future. One to watch.

Credo Technology (CRDO) Chart

On all the daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

Corning (GLW) held its 50-day SMA throughout the entire March pullback.

Corning (GLW) Chart

Fabrinet (FN), Coherent (COHR) and Ciena (CIEN) are all in the Leading quadrant, with clean uptrends (particularly CIEN, which has held its 50 SMA on all pullbacks for many months). Lumentum (LITE) has fallen from the Leading to Weakening quadrant, but has been trending nicely for 10 months, holding its 50 SMA on all pullbacks.

Fabrinet (FN) Chart

Coherent (COHR) Chart

Ciena (CIEN) Chart

Lumentum (LITE) Chart

NVIDIA and Broadcom - only keeping pace

NVIDIA (NVDA) and Broadcom (AVGO) barely scrape into the Improving quadrant. But are worth watching because if they tighten up here under their all-time highs, may provide a fresh entry on a breakout.

NVIDIA (NVDA) Chart

Broadcom (AVGO) Chart

Power and grid - sharply split

The market is clearly differentiating within this layer. Data-centre-specific power and cooling names are Leading versus SMH. Broader utilities and generators are Lagging.

Bloom Energy (BE) is Leading versus SMH, up 141% year-to-date. Fuel cells for data-centre power.

Bloom Energy (BE)

Vertiv (VRT) is Leading, up 85% year-to-date.

Vertiv (VRT) Chart

On the other side, Constellation Energy (CEG) is Lagging versus SMH - down nearly 20% year-to-date. The nuclear-for-data-centres narrative has stalled. Vistra (VST) and NRG are also Lagging.

Specialty foundries are outperforming TSMC

TSMC (TSM) is Lagging versus SMH.

Tower Semiconductor (TSEM) is Leading - up over 86% year-to-date. It’s a specialty foundry focused on analog, RF, power management, and silicon photonics. GlobalFoundries (GFS) is also Leading - up 65% year-to-date, after experiencing a large decline during 2024-25.

Tower Semiconductor (TSEM) Chart

AI doesn’t just need cutting-edge 3nm GPU dies. It also needs the analog, power, and photonic chips that make the whole system work, and those are manufactured on different process nodes by different foundries.

One thing worth noting - GlobalFoundries filed a patent lawsuit against Tower Semiconductor in late March 2026. Both stocks are performing well despite that, but it’s a headline risk worth being aware of.

The crypto-miner pivot is real

Several former Bitcoin miners are repurposing their data-centre infrastructure - power contracts, sites, cooling - to sell GPU compute to AI companies.

Hut 8 (HUT) has the highest RS-Momentum in the group and is up 65% year-to-date. It’s approaching its November 2021 all-time high. If it can consolidate here for a while, a breakout could provide a fresh entry.

Hut 8 (HUT) Chart

TeraWulf (WULF) is Leading with a 75% year-to-date gain and recently broke out of a 6-month or so consolidation.

TeraWulf (WULF) Chart

Systems integration - quietly leading

Celestica (CLS), Dell (DELL), and Jabil (JBL) - the companies that turn chips into deployable racks and clusters - are all Leading versus SMH. They’re outperforming the chipmakers themselves.

CLS is extended here but worth watching for a retest of the breakout zone or if it can start trending cleanly above its 20 and 50 day SMAs again.

Celestica (CLS) Chart

Semi equipment is decelerating

Lam Research (LRCX), Applied Materials (AMAT), KLA (KLAC), and Teradyne (TER) are all in the Weakening quadrant. High RS-Trend but fading momentum.

Software is absent

Almost every software and applications name in the watchlist is Lagging versus SMH. Palantir, Snowflake, Salesforce, ServiceNow, Adobe, IBM - all underperformers. The market is rewarding the infrastructure buildout, not the companies consuming it.

The takeaway

The strength is concentrated in interconnect, specialty foundries, data-centre-specific power and cooling, the miner-to-AI pivot, and systems integration. Nothing is really actionable now, as almost everything showing leadership is extended. This is a good shopping list though. Be mindful that most of these stocks have very high ATRs, so position size and set stops accordingly on any entries.

Stay open minded to all possibilities and manage risk tightly.

Cheers,

Marcus Grant, CFTe

Subscribe now

Market Temperature at 6.9 - One Tick From Surge

Marcus Grant, CFTe — Mon, 20 Apr 2026 12:34:36 GMT

Last week was a big week across the board. The S&P 500 (SPY) gained a little over 4.5%, the Nasdaq 100 (QQQ) surged just over 6%, and FANG+ (FNGS) led the way with a little over 7% move. Small caps weren’t left behind either - the Russell 2000 (IWM) was up a little over 5.5%. This was a broad, participation-driven rally, and the underlying data confirms it.

Let’s get into it.

The Market Temperature, which I introduced in detail in this post (link here) hit 6.9 out of 10 - firmly in the Strong zone (measured on Friday April 17th close) . That’s up from 6.2 last week and the highest reading since early December, before the correction. Every pillar except Sentiment improved.

At 6.9, we’re knocking on the door of the Surge zone (7+). To put that in context - Surge is rare. In my 10-year backtest, the temperature only spent about 7% of weeks there, and it was almost entirely concentrated in the 2020 COVID recovery, when the market was bouncing hard off a 30%+ crash with VIX still elevated. What we’ve just come through was a much shallower pullback - about 8-9% peak to trough. Getting this close to Surge off a relatively shallow correction is interesting, but I’d want to see at least a week or two actually in Surge territory (and see the SMAs align bullishly with the 20 SMA>50 SMA) before reading it as the all-clear.

So what’s behind the 6.9?

The Tape pillar is the strongest contributor. Participation is confirming the price move, and that matters a lot. Around 69% of US stocks are now trading above their 50-day moving average, up sharply from recent lows, and the weekly RSI on SPY has swung from 45.9 to 63.0 in just two weeks.

On the Monetary side, financial conditions are supportive. Bond market volatility (the MOVE Index) is low. Credit stress is easing. The US dollar is flat to weak.

The Regime pillar had the biggest week-over-week jump. Consumer Discretionary is decisively outperforming Consumer Staples. High-beta stocks continue to lead low-volatility stocks. And the Growth vs Value ratio flipped from a strong Value signal to neutral - removing what had been a significant headwind. In the model it was the single largest indicator swing of the week.

The one area that didn’t improve was Sentiment. The VIX at 17.48 is now below the model’s neutral zone, which shifts the Sentiment score slightly negative. Nothing alarming, but worth noting as the only pillar that moved in the wrong direction last week.

The six US indices we track are all in what I’d call a Recovering Uptrend - price is above all key moving averages, but the moving averages themselves haven’t sorted into the proper bullish sequence yet. The 20-day was dragged down by the recent correction and needs a bit more time to cross above the 50-day. If price holds around these levels, we could see that happen within a week or two.

Here’s a chart of the SPY. The black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

Now let’s talk about where the money is flowing.

I track 121 ETFs against the S&P 500, measuring their trend and momentum relative to SPY. Each ETF sits in one of four quadrants: Leading (outperforming and accelerating), Weakening (outperforming but losing steam), Improving (underperforming but turning around), or Lagging (underperforming and getting worse).

At the GICS sector level, only Technology is in the Leading quadrant. Three sectors are Weakening - Energy, Materials, and Industrials. Consumer Discretionary and Real Estate are Improving. Five sectors are Lagging - Comms Services, Utilities, Financials, Consumer Staples, and Healthcare.

The AI and semiconductor complex is the dominant leadership theme right now. Eight of the top fifteen ETFs in our 121-ETF universe are AI or semiconductor-related, all outperforming SPY and accelerating.

SMH and XSD (the equal-weight semiconductor ETF) are both in the Leading quadrant, along with digital infrastructure names like IDGT and DTCR. The equal-weight semis are outperforming the cap-weighted version, which suggests broad-based strength across the sector rather than just the heavyweights carrying the index.

SMH Chart

The black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

XSD Chart

The black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

Pretty much everything in the AI stack is participating - semiconductors, data centres, AI infrastructure, generative AI ETFs. The one exception is the software layer, which is still lagging (more on that below).

Most leading names are extended after the recent big move. But AI names are where the strongest momentum in the market lives, and these are the names I want on my shopping list for pullbacks into the SMAs, or if they base out and the moving averages catch up. I will post an AI deep-dive with specific names later this week.

IGV (the Software ETF) gained 13.94% and has just crossed into the Improving quadrant - but only barely. The gap between hardware and software in relative strength terms remains extreme - around 40 points. If I plot IGV relative to SMH, it’s still in a clear downtrend and has barely moved on this bounce. One week doesn’t change a trend. This is one to watch for confirmation over the coming weeks, not to act on prematurely. Lets see.

IGV/SMH Ratio Chart

South Korea (EWY) deserves a mention. It has the highest relative strength trend reading in the entire 121-ETF universe. That’s not entirely surprising given its heavy semiconductor exposure (Samsung, SK Hynix), but it’s worth noting as an alternative way to play the global chip cycle.

EWY Chart

In the mining and metals space, there’s a clear split. Lithium (LIT), rare earths (REMX), and uranium (URA) are all in the Leading quadrant. Gold miners (GDX), silver miners (SIL), copper (COPX), and broad metals (XME) are all Weakening - still outperforming on a longer-term trend basis, but the momentum is fading. The precious metals have had a massive run and look like they’re taking a breather. The lithium and rare earth names are being driven by a different set of factors altogether.

LIT Chart

Energy is where the rotation is clearly moving away from. XLE was down 3.37% in a week where SPY gained over 4.5%. XOP dropped 5.21% and USO fell 7.03%. The momentum picture across the energy complex has weakened sharply. The longer-term trend is still positive, but the gap between energy and the rest of the market widened significantly last week.

Worth noting - oil futures are higher today on Strait of Hormuz headlines. This is a fast-moving situation and could change the energy picture quickly. That’s the kind of thing that makes you stay open minded rather than getting married to a view.

XLE Chart

WGMI (the crypto miners ETF) is in the Leading quadrant, but when I drill into the 23 components, the strength is really coming from the names that have pivoted their data centre capacity toward AI compute workloads - HUT (Hut 8) and WULF (TeraWulf) in particular. HUT is the strongest component in the Leading quadrant, and WULF has one of the highest relative strength trend readings in the entire ETF at +76% year to date. Meanwhile the traditional crypto miners - RIOT, MARA, CLSK, HIVE - are mostly Improving or Lagging. So WGMI’s leadership seems as much an AI infrastructure story as it is a crypto story at this point.

On the speculative side, there were some eye-catching moves. ARKK gained 14.35%, ARKG was up 15.4%, and the IPO ETF gained 10.48%. QTUM (the quantum computing and AI ETF) was up 9.6%. These are right on the edge of the Leading quadrant and could cross over with another strong week - a very different situation from software, which only just scraped into Improving from much further back.

One more thing that I think is important context. The “avoid” list is paper-thin. Only three ETFs meet the strict criteria for deep laggards. That in itself is valuable information. In a weak or transitional market, you’d expect to see twenty or thirty ETFs in the danger zone. Narrow weakness is consistent with a strong temperature reading.

I’ll be sharing this rotation and temperature analysis each week going forward. The goal is to give you a clear, data-driven read on what the market environment looks like and where the strongest themes are.

As always, I am open to all possibilities. Stay open minded and manage risk tightly.

Hope everyone has a great week!

Cheers,

Marcus Grant, CFTe

Thanks for reading TheChartEdge! This post is public so feel free to share it.

The Market Temperature Model

Marcus Grant, CFTe — Mon, 20 Apr 2026 10:20:48 GMT

Every week, before I look at any individual chart or trade setup, I check the temperature of the market.

Not the actual temperature obviously, but a model I’ve built that takes a bunch of different market data and boils them down to a single number between 0 and 10. Think of it like a thermometer for the overall market environment.

The short version: A reading of 5 or above is broadly favourable for risk-taking. The 5-6 range is actually the strongest zone empirically. Below 5, proceed with caution. Below 4 is the danger zone - the only temperature range that produces negative average returns. I publish this number at the start of my weekly analysis so you can see the overall environment before we get into individual charts.

The real value isn’t any single reading - it’s having a systematic framework that keeps me grounded in what the data is actually saying, rather than getting swept up in narratives and emotions. I still use it alongside chart analysis and judgment - it just forms part of my process, not the whole of it.

If you just want to know what the number means each week, check out the “At a glance - how to read the temperature” section below.

How direction affects the reading

The model doesn’t just look at the number - it also tracks whether the temperature is rising, falling, or roughly flat compared to last week. This matters because a temperature of 4.5 that’s been rising from 3.5 tells a very different story than a 4.5 that’s falling from 5.5. The first is moving out of the danger zone. The second is heading toward it.

At two zones (4-5 and 6-7), direction matters enough that it changes the zone label itself. A reading of 4.5 that’s rising is called “Improving” - conditions are strengthening, worth testing the waters. The same 4.5 that’s sideways or falling is called “Cautious” - mixed or weakening. Similarly, a 6.5 that’s rising is “Strong” while a 6.5 that’s flat or falling is “Stable.”

At a glance - how to read the temperature:

7+ / Surge - Rare and exceptionally favourable - aggressive positioning, especially when coming out of a crash or big bear market.

6-7 Rising / Strong - Favourable and accelerating - aggressive positioning.

6-7 Sideways or Falling / Stable - Constructive but not accelerating - maintain exposure.

5-6 / Goldilocks Zone - The strongest zone empirically - normal to aggressive positioning, especially when rising.

4-5 Rising / Improving - Conditions strengthening - testing the waters, selective and not full size yet.

4-5 Sideways or Falling / Cautious - Mixed or weakening - very selective, tighten stops.

3-4 / High Risk - The true danger zone - very limited or no exposure, possibly some shorts.

0-3 / Extreme Stress - Rare. Capital preservation mode - no exposure, but watch for possible contrarian bounces.

The zone matters more than the precise decimal. And single-week readings in the middle zones should be treated with healthy skepticism until they persist - a reading that sustains for two or three weeks points to a genuine regime. The extremes are a bit different - a Surge reading coming out of a crash can be meaningful even if it only lasts a week or two, as we’ll see below.

Context matters at the extremes. A Surge reading coming out of a bear market or crash - like the 2020 COVID recovery - typically signals a genuine all-clear, because it means conditions are very good, while fear is still elevated. That’s a powerful combination. A Surge reading at the end of a long, low-volatility uptrend - like early 2018 - can signal something closer to a blow-off top.

So how does it work?

The model looks at 12 indicators across four pillars. Each pillar captures a different dimension of market health, and I weight them based on how much information I think they carry.

The idea isn’t original. Hedge funds and institutional research shops have been building composite condition indicators like this for decades. However, I wanted something I could build myself, understand completely, tune to my own trading style, and share the readings with you each week.

The first pillar is what I call Tape and Trend. This gets the most weight - 40% of the total score - because price and participation are the most direct measures of what the market is actually doing.

In here I’ve got the trend structure of SPY and QQQ (are they in confirmed uptrends, downtrends, or something messy in between?), a couple of breadth indicators showing how many stocks are actually participating in the move, and a momentum reading that tells me whether the market’s push is accelerating or fading.

When most stocks are going up and the trend is healthy, this pillar scores high. When breadth starts declining and the trend is breaking down, it scores low.

The second pillar is Sentiment at 20%. This one is interesting because it works as a contrarian signal. I use the VIX here - without going into exactly how it’s scored, the key insight is that very low VIX readings tend to signal complacency (slightly bearish), while very high VIX readings tend to signal the kind of extreme fear that historically precedes recoveries (slightly bullish). This isn’t a timing tool - it’s a condition gauge.

The third pillar is Monetary and Macro at 20%. This captures the financial plumbing - credit stress, bond market volatility, and US dollar strength.

When credit spreads are tight, bond volatility is low, and the dollar is stable or declining, it’s a friendlier environment for equities. When these start flashing warning signs, the environment can get more challenging. These are the kind of signals that can deteriorate well before the stock market reacts, which is what makes them valuable.

The fourth pillar is Regime at 20%. This is about what’s happening under the surface - are investors rotating into growth sectors or defensive ones? Is the market rewarding risk-taking or punishing it?

These internal rotation patterns often shift before the headline index does, so they serve as early warning indicators.

All 12 indicators score on a scale from -1 (most bearish) to +1 (most bullish). Within each pillar, the individual scores get averaged, then mapped to the pillar’s point allocation. The four pillars add up to give the 0-10 temperature reading.

The output looks something like this: “Market Temperature: 6.2 / 10 (Stable).” I publish this at the start of my weekly analysis so you can see the overall environment before we get into individual charts.

A few things this model is not.

It’s not a trading signal. A high temperature doesn’t mean “buy everything” and a low temperature doesn’t mean “sell everything.” It’s a condition gauge that informs position sizing and how aggressive or defensive I want to be.

If the temperature is 7+ (Surge), I’m more willing to hold positions through pullbacks and add to winners. Below 5, I’m tightening stops and reducing size - with how aggressively depending on whether conditions are improving or clearly deteriorating. At 3 or below (Extreme Stress territory), I’m in capital preservation mode.

It’s not a crystal ball. Statistically, this week’s temperature tells you almost nothing about what SPY will do next week - the forward correlation is essentially zero. The temperature and SPY’s weekly performance tend to rise and fall together in real time (concurrent correlation of 0.37), but the model isn’t forecasting the future.

That said, the components that drive the temperature - breadth, sector rotation, credit conditions - tend to change direction before headline price does at major turning points. That’s why the temperature peaked before SPY at every major top in the 10-year in-sample period (2016-2026). The model doesn’t predict the market, but it does give you an early read on whether the environment is shifting - and I use that to adjust my positioning.

It’s not perfect. No model is. It uses historical data to calibrate what “normal” looks like, and markets can behave in ways that break historical patterns. I treat it as one input alongside chart analysis, not as the final word.

The model was designed before it was tested.

I want to flag this because I think it matters. The model architecture - the four pillars, the 12 indicators, the weightings, the scoring logic - was designed and frozen before the full backtests were run. Several indicators were actually removed during the design process because they turned out to be noise or even wrong-signed (meaning they were actively making the model worse). I’d rather have 12 indicators that work than 17 that include dead weight.

Two backtests were then run in sequence. First, a 10-year in-sample backtest (2016-2026) to validate the model against the period it was designed around. Then, an 8+ year out-of-sample backtest (2007-2016) to test whether the model held up on data it had never seen. In both cases, I didn’t go back and tweak weights or swap indicators to make the numbers look better. The findings you’ll see below were all discovered in those backtests, not targeted by them.

What the 10-year in-sample backtest showed (2016-2026)

The model has been through a rigorous empirical audit against 10 years of weekly data - 522 weeks from April 2016 through April 2026, covering the 2018 corrections, the COVID crash and recovery, the 2022 bear, the 2025 tariff selloff, and the March 2026 pullback. All 522 weekly readings were independently cross-validated by a second system to make sure the calculations are correct.

The first finding is where I think the model earns its keep: giving you a heads-up when conditions are changing beneath the surface, before that change shows up in headline price.

At market tops, breadth typically narrows and sector leadership rotates weeks before the index itself rolls over. The temperature picks that up. Across the six major SPY drawdowns of 8% or more in the 10-year sample, the temperature peaked before SPY peaked in every case. In four of the six, the lead time was around 2-4 weeks. In two cases (the 2022 bear and the 2026 pullback), it was closer to 8 weeks.

A few concrete examples. Before the COVID crash, the temperature peaked at 6.92 on January 17, 2020. It first dropped below 5.0 on January 31 - nearly three weeks before SPY peaked on February 19. It briefly bounced back above 5.0 for a couple of weeks, but by February 28 it was below 5.0 for good and stayed there through the crash.

Before the 2025 tariff selloff, the temperature peaked at 6.66 on January 24, 2025. SPY peaked on February 19, nearly four weeks later. By February 28, the temperature was already below 5.

Going into the pullback we’ve just come through (March 2026), the temperature peaked at 6.98 on December 5, 2025 - nearly eight weeks before SPY made its closing high on January 27, 2026.

The pattern at bottoms is similar but usually with less lead time. During the 2022 bear, the temperature hit its absolute low of 2.42 (Extreme Stress) on September 23. SPY didn’t reach its low until October 13 - about three weeks later. By that point, the temperature had already climbed back to the 3.0-3.5 range. The model’s internals had started stabilising while price was still making new lows.

The 2025 tariff bottom showed a similar pattern but messier. The temperature hit its low of 3.24 on March 14 with SPY at 562, but SPY continued falling to around 482 (intraday) on April 7 - three weeks later. Even at the SPY bottom, the temperature held above its own low (just). But it wasn’t a clean, steady improvement - the temperature wobbled back toward its low that week rather than rising smoothly.

These are small samples and I’d caveat heavily against treating them as general rules. But they’re consistent with what the model is designed to measure.

The other finding is about conditions versus returns.

Over the 10-year sample, a strategy that held SPY only when the temperature was 5.0 or higher would have captured about 90% of SPY’s total return while only being invested 68% of the time. Maximum drawdown was cut from -32% to -14%.

During the weeks the model said conditions were favourable (5.0 or higher), the environment was genuinely better. The Sharpe ratio for those invested weeks was 1.32 vs 0.78 for buy-and-hold. The Sortino ratio - which focuses on downside volatility, which I actually find more meaningful since upside volatility isn’t what hurts you - was 1.95 vs 1.12. Even on the most conservative basis, treating out-of-market weeks as earning zero (when in practice you’d be earning something on your cash), the Sharpe ratio still improved to 1.09 and the Sortino to 1.61.

I’m not suggesting anyone use this as a mechanical in-out trading system - that’s not how I use it, and past performance is past performance. But the numbers are what convinced me that the model is worth taking seriously, and worth sharing publicly.

Does it hold up on data it was never built on?

A natural concern with any backtest is overfitting.

To test this, I ran the model on a separate period it was never designed on: August 2007 through April 2016 - over 450 weeks that include the Global Financial Crisis, the 2010 Flash Crash, the 2011 US debt downgrade, the European debt crisis, and the 2015 China Yuan devaluation. Same weights, same scoring logic, same thresholds. One indicator wasn’t available for the first few years of the earlier period, so its pillar ran on two inputs instead of three until the data became available - but no substitutions or adjustments were made.

The results held up. The concurrent correlation between the temperature and SPY’s weekly performance was virtually identical across both periods (0.380 out-of-sample vs 0.373 in-sample). The Goldilocks Zone (5-6) produced almost the same risk-adjusted returns out-of-sample as in-sample.

The model correctly dropped below 5.0 during the GFC and stayed there for most of the bear market. And on the exact week the market bottomed in March 2009 - after a 56% drawdown - the temperature jumped from High Risk (3.6) straight to Goldilocks (5.0). This was the eighth time during the bear that the model had crossed back above 5.0. The first seven lasted 1-8 weeks and all failed. The eighth one sustained for 47 weeks and reached Surge.

That persistence pattern is the key practical insight. Short-lived crossings above 5.0 during a bear market are traps. The genuine recovery sustains.

At major tops, the temperature peaked before SPY in five of six drawdowns - the only exception being the very start of the GFC in October 2007, where they peaked in the same week.

Across the combined 18 years and all twelve major drawdowns, the temperature peaked before SPY’s price peak in eleven of twelve cases.

Not everything generalised perfectly - a couple of individual indicators carried weaker signals in the earlier period, and the model’s behaviour when the temperature was above 5.0 but falling was more dangerous in the GFC era. Both of those findings improved my understanding of where the model is strongest and where I need to apply extra judgment. But the core mechanism - breadth, momentum, and trend as condition indicators - proved genuinely robust across two very different market regimes.

What about head fakes?

Across both the 10-year in-sample period (2016-2026) and the 8+ year out-of-sample period (2007-2016), the model dropped below 5.0 during every major drawdown.

During the 2022 bear, the model crossed above 5.0 on five separate bear market rallies - none lasted more than three weeks before the temperature dropped back.

The GFC was messier - which you’d expect from a 56% drawdown. There were seven false crossings above 5.0 during bear market rallies. Five of those lasted just one or two weeks - similar to the 2022 pattern. But two lasted longer (five and eight weeks), which is the kind of extended head fake you’d expect during a more severe, drawn-out bear. Even in that extreme, the model always dropped back below 5.0 before the worst damage hit.

So it can give brief readings above 5.0 during a bear market rally that don’t stick. But it doesn’t give a sustained all-clear while the market is falling apart. That distinction matters.

What about head fakes in the other direction? Yes, occasionally. The temperature can drop below 4.0 (into High Risk) and the market then absorbs the shock and recovers without a major drawdown.

A useful rule came out of the in-sample analysis: if the temperature drops below 4.0 and is still there two weeks later, it’s a genuine drawdown warning about 91% of the time. If it bounces back above 4.0 on the next weekly reading, the market usually shakes it off.

The out-of-sample period showed a similar pattern, though the discrimination was somewhat weaker during the GFC because even genuine warnings sometimes bounced briefly before conditions deteriorated further.

The broader principle holds across both periods: a reading that sustains for two or three weeks tells you far more than any single week’s number.

Following along

I’ll be sharing the weekly temperature reading as a regular feature going forward. Over time, you’ll get a feel for what the different levels mean and how they relate to actual market conditions. That in itself is valuable information.

Beyond the weekly readings, I’ll also be publishing deeper dives here on TheChartEdge - breakdowns of specific indicators, case studies from real trade decisions, and explorations of how the model behaves in different market regimes.

If you want the weekly readings and the thinking behind them, subscribe - it’s free.

As always, I am open to all possibilities. Stay open minded and manage risk tightly.

Cheers!

Marcus Grant, CFTe

Subscribe now

Thanks for reading TheChartEdge! This post is public so feel free to share it.