To start issue 4-of-5 this week, I wanted to point out something positive I’ve been noticing in the market this past few days.
Despite all the bad news, potential troops on the ground, a longer conflict than expected, and more… the market has been opening week and closing stronger on more days than not, and this is a good sign.
On the other hand, if the market starts opening strong and closing weak, that would be a piece of negative evidence to add to the bearish side of the T-chart.
I thought about re-creating a similar chart, but my good friend Andrew Thrasher put together something beautifully robust, so I thought I’d just share his. By the way, if you want to check out his SubStack page, his letter is a worthwhile subscribe.
Anyway, to put the chart below in Andrew’s words, “The S&P 500 has gone nowhere for the start of 2026, and the recent short-term weakness has sent the 3-month return negative. Despite this minor weakness, most stocks have held up rather well. In fact, just over half of large cap stocks are up more than 5% during the same period and 38% are up double digits.
This bifurcation in the market, with a weak Index but strong individual stocks is not an environment we’ve seen since approaching the Dot Com peak and during that bear market, as shown by the blue dots. These dots show when SPX is negative over 3-months but more than 50% of stocks are up 5% or more.”
So to add my own color and an analogy, the market currently looks like a run down strip mall, but inside lies a 4-star steakhouse. It might be ugly on the outside, but inside, things actually look pretty good… and by the way, prices aren’t so bad right now either!
Speaking of things not looking all-that-bad after all…
Below is SentimenTrader’s sentiment risk on / risk off indicator, which I keep in one of my browser tabs 24/7/365. It’s a combination of several sentiment indicators, so it’s robust.
The S&P500 is in the top pane and I ran it back one year. As you can see, we’re still in the caution zone from a sentiment standpoint at 46% (and change), but no where near the panic levels seen more than a year ago during the Tariff Crash.
So again, more positive evidence here - or at least, “not negative.”
I’m closing out today’s issue with a similar chart to one I shared back during the Ukraine invasion.
What you’re looking at (below) is a chart from FSinsight (via Tom Lee) that plots different times in history when an invasion took place, and the subsequent market action that followed.
As counterintuitive as it might seem - as (perhaps) uncomfortable as it might feel to consider an invasion to be even remotely a positive thing in any way, shape, or form, the data speaks for itself.
If you’ve been reading my articles, watching our screencasts, or subscribed to our podcast (The Retirement Fiduciary) for any period of time, then you know that I like to look at the market through the lens of anti-news, anti-noise objectivity.
Markets tend to bottom on bad news, and many big drawdowns are news-driven in nature, so if we are to become efficient stewards of our hard-earned life savings, then we have to learn to discern between real, actionable data and “entertainment.”
So if you let the charts below soak in, then I hope you’d agree that the idea of buying a dip like this - especially given the politically charged nature of the situation - well… as Mark Twain once said, “History doesn’t repeat itself, but it sure does rhyme.”
Shared content and posted charts are intended to be used for informational and educational purposes only. CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. CMT Association does not accept liability for any financial loss or damage our audience may incur.
