www.robertwcolby.com

Since its inception in January 2026, the Colby INNOVATION Portfolio has delivered a staggering 18.69% total return, more than doubling the performance of the NASDAQ Composite (7.29%) and tripling the S&P 500 (5.70%).

Email info@colbyassetmanagement.com to receive your onboarding kit immediately.  Or call us: 646-652-6879

Market Overview: A more selective, mixed market appears to be developing.  

Large-cap U.S. stock price indexes confirmed a strong bull market trend, but momentum and breadth show moderate deterioration for the short term. The S&P 500 (SPY) and the NASDAQ 100 (QQQ) rose to new highs last week. In contrast, the equal-weight S&P 500 (RSP), Small-Cap (IWM), and Mid-Cap (MDY) ETFs did not rise to higher highs and are underperforming.

Sector and Market Rotation

The large-cap S&P 500 ETF (SPY) outperformed the equal-weight ETF (RSP) every week for 7 weeks since the end of March, confirming that the market currently prefers mega-cap leadership. Longer term, SPY has outperformed RSP since 2015—a major trend.

The Technology ETF (XLK, 176.26) has strongly outperformed all other sectors, up 38% over the past 7 weeks since its low close price of 127.50 on 3/30/2026. Earnings reports have exceeded expectations, and fundamental analysts remain bullish. The pessimism surrounding AI from November through March has reversed, placing significant pressure on short sellers.

In contrast, the Energy Sector SPDR (XLE, 59.44) has underperformed the S&P 500 ETF (SPY) over the past 7 weeks since 3/30/2026. Last week, XLE crossed back above its 50-day SMA, now at 58.08, turning technically bullish again. However, XLE may encounter resistance near previous price peaks at 59.84 and 63.46. Although short-term momentum has turned back up again, the next major move likely depends on unpredictable geopolitical developments and global oil supply news.

Real Estate, Financial, Utilities, Retail, and Materials sectors broke down below their price lows of the past 4 weeks, offering new sell signals for the short term.  Investors are worried about rising inflation and rising interest rates, which are unfavorable for these sectors.

International equities are giving mixed signals. The Emerging Markets ETF (EEM) rose to a new all-time high on Monday 5/11/2026, confirming a major bullish trend. However, the EAFE ETF (EFA) fell further below its 2/27/2026 peak at 105.94 and continues to lag behind. EEM has outperformed EFA since June 2025, and current trends suggest EEM outperformance will continue.

The China Large-Cap ETF (FXI) is in a bearish position, falling below both 50-day and 200-day SMAs, and is underperforming EEM and EFA. FXI also has underperformed the S&P 500 for 19 years since 2007--a major long-term trend. Technical conditions continue to point to persistent underperformance by FXI, so exposure should be avoided.

Currencies, Commodities, and Fixed Income

The U.S. Dollar Index ETF (UUP, 27.77) reversed to the upside and signaled bullish momentum as price crossed above its 50-day SMA (at 27.56) and 200-day SMA (at 27.55). UUP may encounter resistance around its March high at 28.00. Longer term, the dollar has remained in a major downtrend for more than 3 years since its peak of 30.76 on 9/27/2022.

Precious and industrial metals have been choppy since the blow-off tops on 1/29/2026. Copper (CPER) reversed to the downside last week but remains in strong position above its rising 50-day and 200-day SMAs. Silver (SLV), Gold (GLD), and Gold Miners (GDX) fell toward the lower end of their 4-month trading ranges and below their 50-day SMAs. As a group, metals have continued to underperform the major stock price indexes since 1/29/2026 and clearly are not where the action is now.

Energy markets reversed to the upside and remain technically bullish. WTI Crude Oil Futures (nearby contract CLN26, 101.21) and Oil ETF (USO, 148.23) rose further above their 50-day SMAs and 200-day SMAs but are still below their April peaks. Oil uptrends may depend on unpredictable news about the global oil supply.

U.S. fixed income is bearish. On Friday, 5/15/2026, the Long Bond ETF (TLT) and the U.S. Note ETF (IEF) fell to 11-month lows, confirming bear market trends. In March and April, TLT, IEF, and the U.S. Aggregate Bond ETF (AGG) triggered "death cross" sell signals, when their 50-day SMAs crossed below their 200-day SMAs. The technical structure suggests continuing downside risk and underperformance.

Momentum and Breadth for the U.S. stock market show moderate deterioration for the short term.

Of 38 major markets we track each week:

• 63% are above their 50-day Simple Moving Averages (SMAs), down from 82% a week ago.
• 71% are above their 200-day SMAs, down from 79%.
• 74% maintain a bullish long-term configuration (50-day SMA above 200-day SMA), down from 76%.

Within the S&P 500, 44.2% of stocks trade above their 50-day SMAs, the lowest level in 5 weeks since 4/10/2026, and 52.4% are above their 200-day SMAs, the lowest level in 5 weeks since 4/7/2026.

The Cumulative Daily Advance–Decline Line (A/D Line) fell to its lowest level since 4/10/2026, confirming moderate breadth deterioration for the short term.

Net New Highs declined to -52, the lowest level since 3/31/2026. Readings below zero for new highs minus new lows are bearish.

Sentiment Indicators show less optimism.

The AAII Bulls/Bears survey indicates a fair balance of 39.3% bullish versus 36.6% bearish. The Put/Call Ratio at 0.51 is below its 10-year mean of 0.62, indicating moderate optimism. The VIX Index rose to 18.43, an unremarkable level near its 10-year mean of 18.79. The CNN Investor Sentiment Index indicates slightly optimistic Greed at 63, down from 71 on 4/20/2026. In March, it ranged from 14 to 18, placing it deep in the Extreme Fear zone, a condition that has historically been bullish. Sentiment is slightly optimistic and far from extreme levels that might justify a contrarian bearish view. Doubt remains, particularly in the perpetually pessimistic mainstream media.

See The Colby Global Markets Report (click here) for our complete analysis of global markets and specific investment rankings.

A strategy emphasizing both capital preservation and return on investment appears most rational and prudent at this time.

Every day, we measure and weigh objective technical and quantitative data in order to judge the Reward/Risk probabilities of trend continuation or reversal. Our goal is to protect your assets from major risks while capitalizing on an improving investment outlook. We always put our clients' best interests first.

Consider exploring our professional fiduciary asset management services to protect and grow your wealth. We are happy to discuss your goals and concerns and answer your questions.

For a free consultation, contact: Bill Anderson Phone: 646-652-6879
Email: anderson@colbyassetmanagement.com

This Technical Analysis is made possible by use of MetaStock software. Try it at no risk for 30 days. (Check out the new and improved version 19.) Click this link to save 7%–9% on MetaStock® software.