Bull Market Reloaded? $SPX Strength Meets High Expectations

Weekly S&P500 ChartStorm

Learnings and conclusions from this week’s charts:

• The S&P500 gained +10.4% in April (+5.3% YTD).

• A good (>5%) April bodes well for the rest of the year.

• Micro Cap stocks are making a big move (good sign for all stocks).

• There has been a big pivot in preference from cash-flow to capex.

• Value investing might(?) be dead, but don’t ignore valuations altogether.

Overall, the “healthy correction” thesis is playing out near to textbook, and unless some new bad news or shocks show up, that means the path of least resistance is probably onwards and upwards…

$S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2606(ESmain)$ $NASDAQ 100(NDX)$ $Dow Jones(.DJI)$ $iShares Russell 2000 ETF(IWM)$ $Invesco QQQ(QQQ)$

1. Happy New Month! 

the S&P500 climbed a scorching +10.4% in April, placing it up +5.3% YTD, and back above its 10-month moving average (which is a loose proxy for up vs down trend).

2. Big April: 

one good thing about the big bounce in April is that historically returns above 5% in April bode well for the rest of the year (albeit there is a bit of variation e.g. contrast 1978, 83, and 2001 which were flat-to-negative vs 1997, 2003/09/20 which did more than 20% during the rest of the year).

3. Big Move for Micro-Caps: 

one clue for a bright rest-of-2026 is the way several key risk-sentiment barometer markets like micro-caps (along with emerging markets, industrial metals, tech, and Bitcoin) have put in some very promising technicals (e.g. as shown below: micro caps successfully retesting their breakout from a large rounding base).

4. Healthy Correction: 

meanwhile the sentiment and positioning data all continue to point to the Q1 cleanout as being basically a “healthy correction” — a turning back of the clock on the cycle without any permanent damage being done to overall market psychology (and without the type of fundamental damage that would jeopardize the uptrend in stocks).

5. Unhealthy Obsession: 

having said that, there is a large amount of trust and weight being placed on the AI theme to drive earnings and stock prices higher (with the extreme optimism in long-term earnings growth displayed by Wall Street analysts being a key quantitative example).

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