April 13, 2026

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Deal or No Deal?

Markets may remain unsettled until the conflict with Iran is finally resolved. A temporary ceasefire is not a permanent solution and, unfortunately, the demands on both sides appear far apart. It may take an extraordinary Art of the Deal to reach a lasting agreement.  

Sentiment Indicators

Market sentiment rose substantially after giving contrarian buy signals in March. The VIX Index fell to a near-average level of 19.23, down from a peak of 31.65 on March 27—a level more than two standard deviations above its 10-year mean of 18.79. The AAII Bulls/Bears survey recorded 36% bullish versus 43% bearish, reflecting significantly less pessimism than in March. The Put/Call Ratio plunged to 0.51, down from a peak of 0.90 in March, indicating a  marked shift from pessimism to optimism. The CNN Investor Sentiment Index indicates greatly diminished Fear at 38, its highest level since the war started. In March, it ranged from 14 to 18, placing it deep into the Extreme Fear zone—a historically bullish condition.

Momentum and Breadth

Long-term momentum remains positive and has gained strength across short- and intermediate-term time frames. Of 38 major markets we track each week:

• 58% are above their 50-day Simple Moving Averages (SMAs), up from 16% a week ago.
• 76% are above their 200-day SMAs, up from 63% a week ago.
• 76% maintain a bullish long-term configuration (50-day SMA above 200-day SMA), down slightly from 79% a week ago.

Within the S&P 500, 43.6% of stocks trade above their 50-day SMAs, up from 30.8% a week ago, and 54.2% are above their 200-day SMAs, up from 49.4%.

The Cumulative Daily Advance–Decline Line (A/D Line) rebounded to its highest level since March 5 and crossed above its trailing 50-day SMA. The A/D Line has held above its 200-day SMA, and the 50-day SMA remains well above the 200-day SMA, thereby preserving a bullish long-term relationship.

Net New Highs reversed to the upside, rising to +37 from -46 the prior week; readings above zero for new highs minus new lows are bullish.

Sector and Market Rotation

The large-cap S&P 500 ETF (SPY) outperformed the equal-weight ETF (RSP) since March 31, reversing a period of underperformance that began October 29. The SPY/RSP ratio crossed above both the 20- and 50-day SMAs, suggesting the market currently prefers mega-cap leadership.

The Energy stocks succumbed to profit-taking following a steep three-month uptrend. The S&P 500 Energy Sector SPDR (XLE, 56.94) fell from 62.56 two weeks ago and broke down below its 20-day SMA last week. On Friday, XLE tested and held its 200-day SMA now standing at 56.52—a breakdown below that level would be a bearish technical signal that could lead to further downside risk.

The Technology ETF (XLK, 142.62) outperformed since February 5. XLK crossed above both its 50-day SMA and 200-day SMA last week, a sign of strength. Both SMAs now stand at 138.94, marking a key support level. The pessimism about AI from November to February appears to have been overextended.

International equities outperformed US stocks last week, after underperforming in March.  Foreign companies are more dependent on Middle East oil than American firms, so hopes for opening the Strait of Hormuz provided a boost. The Emerging Markets ETF (EEM) and EAFE ETF (EFA) both crossed above 50- and 100-day SMAs and have held above 200-day SMAs. The 50-day SMAs have remained above the 200-day SMAs, which is bullish. Although EFA staged a bigger oversold bounce last week, the more important longer-term trends show EFA underperforming EEM.

The China Large-Cap ETF (FXI) has underperformed the S&P 500 for 19 years since 2007. It fell to its lowest price level since May 2025 on March 27, confirming the "death cross" on March 11, 2026, when the 50-day SMA crossed below the 200-day SMA. Technical conditions indicate continuing underperformance; exposure should be avoided.

Currencies, Commodities, and Fixed Income

The U.S. Dollar Index ETF (UUP, 27.44) broke down below its 200-day SMA and now appears bearish in the short term. Elevated volatility is likely to persist until geopolitical uncertainty is finally resolved.

Precious and industrial metals remain sensitive to conflict news, and so prices rose last week after the ceasefire. Gold Miners (GDX) and, Copper (CPER) crossed above their 50-day SMAs, turning bullish. Gold (GLD) and Silver (SLV) underperformed and remain below their 50-day SMAs, which have rolled over and are now declining, an unfavorable sign. 

Energy markets reversed to the downside on ceasefire news. WTI Crude Oil (CLK26, 96.57) fell from a peak of 117.63 on April 7, while the Oil ETF (USO, 124.82) fell from a peak of 143.98. While long term technical trends remain bullish, short-term performance is tethered to ceasefire negotiations.

U.S. fixed income prices have remained in bearish trends since the conflict began. The Long Bond ETF (TLT), U.S. Note ETF (IEF), Aggregate Bond (AGG), High-Yield Corporate (HYG), and TIPS (TIP) all broke down below their 50-day and 200-day SMAs in March. The technical structure remains short-term bearish.

11-Year Outperformance by the
Top 10 Exchange Traded Funds
Weekly Rankings of Major Trend Relative Strength
My weekly Top 10 ETFs ranked by the Major Trend Relative Strength outperformed the S&P 500 by over an 11-year period of real-time weekly tests. Click here for a graph of simulated performance.
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See The Colby Global Markets Report (click here).

My book was named one of the top investment books by Stock Trader's Almanac. This book also received an excellent review in Futures Magazine.

My ETF Rankings are not investment advice. Rather, they are an objective ongoing research study.

Analysis of market forces may offer a sense of probabilities. But the many variables that can impact market prices are notoriously difficult to predict. And, market analysis is something less than an exact science. So, sound trading tactics are always recommended. See my Money Management Rules.

According to CFTC Rule 4.41, hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.

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Robert W. Colby, CMT,
is a consultant to institutional and private investors and traders, providing regular analytical reports, custom research services, and trading systems tailored to clients' objectives. Clients include the most successful traders and investors in the world. Robert is the author of The Encyclopedia of Technical Market Indicators, which is the standard reference for indicator and trading systems design. Previously, at several large Wall Street firms, Robert worked as a proprietary trader, technical analyst, and fundamental analyst. He also was adjunct professor at New York University and New York Institute of Finance, where he developed new courses on technical analysis and market timing.

Robert W. Colby is a Chartered Market Technician (CMT), an accreditation granted to members by the CMT Association (https://cmtassociation.org/) after demonstrating professional competence and ethics over a period of many years. Robert has been a member since 1980, and he strongly supports the CMT Association's high standards. He also supports the The Technical Analysis Educational Foundation (https://www.taeducation.org/about/), which works to have technical analysis included in the curriculum of major business schools. "The CMT Association is the national organization of investment analysts, stock market analysis professionals, and certified market technicians in the United States."

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