March 20, 2026

Another see-saw week began with investors on the offensive as a two-day relief rally was fueled by hopes that tankers would soon be passing through the Strait of Hormuz. The NASDAQ led the bounce jumping 374.17-points (+1.7%) on gains in semiconductors. A hotter-than-expected inflation report and higher oil prices snuffed out the rally on Wednesday however, as the major averages dropped to new lows for the year. February PPI jumped +0.7% vs. +0.3% estimated and +3.4% YoY, while core-PPI rose +0.5% vs. +0.3% expected and +3.9% YoY. Equities took a second leg lower in the afternoon after Fed Chair Powell followed the FOMC's decision to leave rates unchanged with hawkish comments that the committee projected only one rate cut this year and one in 2027. Every sector traded lower leaving the DJIA down 768.11-points (-1.63%) and the NASDAQ had all but erased the early week's gains. The major averages tumbled at the open again on Thursday as yields jumped higher, but the different indexes were able to trim the losses in the afternoon on remarks from the Israel PM on the extent of damage to the Iranian regime. Renewed attacks on Gulf energy sites and inflation worries on Friday sent yields higher and stocks lower again as the rate on the 10-year Treasury hit 4.393% and the two-year 3.904%, their highest level since August 2025. The higher yields continue to weigh on the housing market as the rate on a 30-year mortgage climbed to 6.6% with the US Home Construction ETF (ITB) down -5.3% for the period and -22% since its February high. Brent crude oil jumped 10% on the period closing at $112.21 a barrel on Friday. Nine of the 11 sectors finished the week lower with Energy (XLE) the strongest market group jumping +2.79% as Chevron (CVX), Exxon Mobil (XOM), Valero Energy (VLO), Haliburton (HAL) and others hit new highs. Utilities (XLU), Materials (XLB), Consumer Staples (XLP) and REITs (XLRE) were the weakest sectors. The major averages went into the weekend on a four-week losing streak and levels last seen in September with the S&P 500 and NASDAQ in correction territory. According to Lipper, US equity funds saw $28.78 billion in net outflows on the week as investors moved to the sidelines on fears the Iran conflict could escalate further. Expect more volatile trading in the coming week as global markets trade off headlines surrounding the war and oil prices.

For the period, the DJIA lost 981.00 points (-2.1%) and settled at 45577.47. The S&P 500 slipped 125.71 points (-1.9%) and closed at 6506.48. The NASDAQ fell 457.75 points (-2.1%) finishing at 21,647.61. The small cap Russell 2000 dropped 41.60 points (-1.7%) and settled at 2438.45.

Market Outlook: The technical condition of the market continued to deteriorate this week as the major averages extended their selloff for a fourth consecutive week. The DJIA, S&P 500 and NASDAQ all closed below their respective 200-day MA and remain in clear patterns of lower highs and lower lows with each bounce stalling below prior highs. Trend indicators, including the MACD, confirm the bearish downtrend. Momentum, as measured by the 14-day RSI, continues to slow and is negative.  Looking at weekly charts the DJIA, S&P 500 and NASDAQ found support at their respective 50-week MA. Most of the different indexes are oversold by several measures with Stochastics for the major averages ending the week in the low single digits. In addition, the Market Edge/ S&P Short Range Oscillator (SRO) finished the period at -7.00% which has historically brought institutional investors in, which could lead to a Monday bounce if the Iran war doesn't escalate over the weekend. The percentage of stocks trading above their 200-day MA has fallen to 47% and also confirms a bearish bias and oversold market. So far, however, the selloff has been quite orderly as the major averages work their way lower. Unfortunately, market bottoms don't typically occur in this type of selloff. Usually, there is a capitulation where a shock causes a steep selloff that ends with the indexes erasing the loss and close positive on big volume. That capitulation occurs as the selloff in stocks gets overdone and investors finally rush in to scoop up beaten down shares. The VIX, which has been grinding higher as traders become more anxious, will see a spike higher and a reversal back to at least 25 over a few days and will provide some confirmation that the market has bottomed. One positive is that the secondary indexes, which include the DJ Transportation Index and Philadelphia Semiconductor Index continue to outperform with both indexes closing higher on the week. Finally, downside targets for the major averages were exceeded this week and new targets will be determined by whether the Iran conflict extends beyond the next week or two, or boots hit the ground.
 
A chart of these indicators can be found by going to the Market Edge Home page and clicking on Market Recap, which is on the right-hand side of the page just below the Second Opinion Status numbers.

Cyclical Trend Index (CTI): The underlying premise of the CTI is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves. There are five identifiable cycles, each with different time durations at work in the market at all times. 

Currently, the CTI is Negative at -6, unchanged from the previous week. Cycles C and D are bullish, while Cycles A, B and E are bearish. The CTI is projected to remain in a negative configuration through March.

Momentum Index (MI): The markets momentum is measured by comparing the strength or weakness of several broad market indexes to the DJIA. Readings of -4 and lower are regarded as bearish since it is an indication that a majority of the broader based market indexes are weaker than the DJIA on a percentage basis. Conversely, readings of +4 or higher are regarded as bullish. 

The Momentum Index is Neutral at -2, unchanged from the previous week. Breadth was negative at the NYSE as the Advance/Decline line lost 1963 units while the number of new 52-week lows exceeded the number of new highs on five sessions. Breadth was also negative at the NASDAQ as the A/D line dropped 2991 units while the number of new lows out did the new highs on each day. Finally, the percentage of stocks above their 50-day moving average fell to 22.6% vs. 25.1% the previous week, while those above their 200-day moving average slipped to 47.0% vs. 50.4% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

Underlying market breadth is negative with the NYSE and NASDAQ Advance/Decline Lines, leading indicators of market direction, pushing lower. The A/D lines generally will top out a few weeks before a market top and the NYSE A/D line hit its high the last week of February, while the NASDAQ A/D line topped out in November shortly after the index notched a record high. The NASDAQ recorded more new 52-lows than highs for a third consecutive week with the number of new lows expanding daily. The NYSE new lows also expanded and outdid the new lows for a second straight week.

Sentiment Index (SI): Measuring the marketís Bullish or Bearish sentiment is important when attempting to determine the marketís future direction. Market Edge tracks thirteen technical indicators listed below that measure excessive bullish or bearish sentiment conditions prevalent in the market. The Sentiment Index is Neutral at +1, up a notch from the previous week. 

Investor sentiment is neutral with both retail and professional investors shifting to the bear camp. The American Association of Individual Investors (AAII) saw an increase in bears for a fifth consecutive week rising to 52.0%, the most since the first week of May 2025. The National Association of Active Investment Managers (NAAIM) Exposure Index dropped another 7-points to a neutral 60.0%. That is the lowest exposure to equities for money managers also since the first week of May 2025. The Percentage of Bullish Investment Advisors fell to a neutral 42.6%, while the Percentage of Bearish Investment Advisors rose to 24.1%, the most since June 2025. The numbers reflect bearish sentiment is rapidly increasing, but don't signal that the stock market is attempting to bottom. When looking at sentiment indicators it's best to wait until they reach extreme levels of bearishness or bullishness when they work well as contrarian indicators.

Market Posture: Based on the status of the Market Edge, market timing models, the ëMarket Postureí is Bearish as of the week ending 02/27/2026 (DJIA ñ 48977.92). For a closer look at the technical indicators and studies that make up the market timing models, check out the tables located below.

Industry Group Rankings: What's Hot (17) - What's Not (13): The following are the strongest and weakest Industry Groups for the period ending 3/19/26. Strongest: Agricultural, Energy, Integrated Oil & Gas and Chemicals. Weakest: Paper & Forest Products, Technology Services, Financial Services and Insurance. To review all the Industry Group rankings in the Market Edge universe, click on the Industry Group tab.

ETF Center: The top performing ETF categories for the week ending 3/19/26 were: Sector-Energy (+3.16%), Specialty Technology (+1.87%), Sector-Alternative Energy (+1.42%), Growth-Mid Cap (+1.22%) and Commodity-Agriculture (+0.84%). The weakest categories were: Commodity-Precious Metals (-9.81%), Sector-Basic Materials (-8.33%), Commodity-Base Metals (-6.47%). Specialty Natural Resources (-3.27%), Sector-Consumer Staples (-2.29%) and Specialty Retail (-1.57%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT