What Does The S&P 500's Tightest Range In 50 Years Mean For Stocks and Your Portfolio?

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Despite plenty of news around earnings season, geopolitics, and the economy, the S&P 500 has had the tightest YTD range in over 50 years.

However, as we discussed in last week’s Market Outlook, the individual stocks and sectors have been unusually volatile, and there’s reason to believe this volatility and the active investing opportunities it provides will continue in 2026.

In fact, the MarketGauge framework for identifying the best trends has done a great job of identifying which stocks and sectors are likely to have persistent trends versus those that are likely to change course.

The tight range in the S&P 500 and the choppy correction in the QQQ have resulted from AI-related tech stocks faltering as other sectors and themes rallied.

As a result, measuring the health of the sectors will help anticipate whether the market will break higher or lower in the future.

A Quick Way To Follow What’s Happening In The Market

On Big View’s Sector Summary page, you’ll find the table below. This table shows the performance of the major sectors with several important measures in addition to the day’s price change.

1. Percent Change over five time frames. (%Chg, 5Dy, 3Mo, 6Mo., YTD)
2. Phase – measures the strength of the trend based on s50 and 200-day moving averages
3. TSI – MarketGauge’s Trend Strength Indicator, which is a measure of trend strength that considers many different time frames.
4. RM50 – MarketGauge’s Real Motion indicator that measures long-term momentum based on 50 and 200-day time frames.
5. RM50 – MarketGauge’s Real Motion indicator that measures intermediate-term momentum based on 10 and 500-day time frames.
6. TP-P – MarketGauge’s Triple Play Price Leadership Trend measure, which measures the strength of price performance relative to the market to identify leading sectors.
7. TP-V – MarketGauge’s Triple Play Volume Trend, which measures the volume trend over time to show if there is institutional accumulation or selling pressure.

All the indicators (highlighted in red boxes) other than the Percent Price Change measure the trend's health from different perspectives.

The table represents a quick way to see what areas are bullish in terms of

• Price Trend
• Momentum
• Leadership
• Volume Trend

If the background is colored, then it just moved into the current condition. For example, Transportation has a green background just moved into a bullish RM10 condition on this day.

The MarketGauge Framework For Anticipating Market Trends.

A shortcut for identifying sectors that are becoming more bullish is to look at the sectors that have the most “Bull” or Warn” indicators. For bearish trends, look at the indicators that have the most “Bear” or “Dist.”

For simplicity, I put a green box on the XLI row to highlight a sector that is bullish on every indicator.

Below is the XLI chart with the indicators on the chart with explanations of why they are “bullish.”

A simple rule of thumb is Real Motion is bullish when there is a green dot, and more bullish when the fast MA is over the slow MA.

For Triple Play Price and Volume Trend, the fast line should be over the slow line (red over blue).

As you can see at the black dashed arrow on the chart, when XLI started to move over the months of consolidation, all of the indicators were turning more bullish. This typically indicates a strong trend. Breakouts without bullish RM and TP are more likely to fail.

You’ll find these charts for all the sectors on the sector summary page. If the market starts to break its range up or down, use these indicators to identify the best trends to anticipate that will follow through.

If all or most of the indicators are bullish, then that is a stock or a sector trend that is likely to continue even if the market isn’t cooperating. XLI is a good example of this.

It’s hard to predict when the market will break out of its range, but there are a lot of opportunities in sectors and individual stocks.

The Sector Summary page has everything you need to be one step ahead of the market’s action and sector rotation.

Use this page to see how powerful the MarketGauge framework can be on sectors, and it works just as well on individual stocks.

Want Better Tools, Trading Systems and Market Insight?

If you'd like access to the MarketGauge indicators, strategies, automated trading models, and more, contact us.

• For individual traders or those who want access to professional-grade models: www.marketgauge.com/call, and ask Rob how to join our Active Investing Edge program
• If you’re an asset manager or RIAs seeking algorithmic systems: email Ben at [email protected]
•  Follow me on Linked In,

Best wishes for your trading,
Geoff Bysshe

 

 

Every week we review the big picture of the market's technical condition as seen through the lens of our Big View data charts. The bullets provide a quick summary organized by conditions we see as being risk-on, risk-off, or neutral.  The video analysis dives deeper.

 

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Summary: All major indexes finished the week higher, with the S&P reclaiming its bull phase and market internals, sector breadth, value leadership, and strong performance in semiconductors and emerging markets confirming broadly positive price action. However, elevated volatility, strength in defensive assets like metals, utilities, gold, and oil, a risk-off reading from the risk gauge, and weaker seasonality suggest underlying caution despite the bullish tone.

Risk On

• All indexes were positive on the week with the S&P regaining its bull phase, closing above its 50-Day Moving Average, though momentum has weakened. On a weekly basis, all indexes look positive on both price and momentum. (+)
• All sectors were up on the week, with the exception of consumer staples (traditionally a risk-off sector). (+)
• Market internals held up positive and improved marginally on the week, confirming overall positive price action. (+) 
• New high new low ratio improved on the week and looks positive. (+)
• Value is still leading, though showing some recent compression. Growth reclaimed its 200-Day Moving Average. (+)
• The modern family is strong with bull phases across the board and most are leading vs the S&P benchmark. Semiconductors looks poised to take out its January highs. (+)
• Emerging markets exploded to new all-time highs with emerging and developed markets outperforming the S&P and in accelerated bull phases.They are not currently overbought. (+)

Neutral

• Metals dominated the 5-day market leaders, possibly due to geopolitical stress and lower rates. (=)
• Volume patterns improved to an overall neutral reading. (=)
• The color charts (moving average of stocks above key moving averages) are mostly mixed with IWM being the weakest. (=)
• Volatility dropped off a bit from the highs in the prior week, though remains elevated above its average for the last 50 and 200 days. (=)
• Aggs just broke out of several months of consolidation. (=)
• Rates showed a flag pattern after the breakout indicating lower rates. (=)

Risk Off

• Risk gauge remains in risk-off territory due to strong relative strength in metals and utilities. (-)
• Gold and oil broke out from recent corrective modes, likely due to potential geopolitical stress. (-)
• Seasonally, we are headed into one of the weaker periods of the year for equities. (-)

 

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