April 6, 2026

Preview from my weekly report*

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A deadly game of chicken in the Middle East

Markets may remain unsettled until the conflict is resolved. Trump has made Iran an offer it can’t refuse, negotiate on his terms or risk a catastrophic outcome. But Iran clings to hope that Trump’s falling approval ratings may force him to blink first.

Sentiment Indicators

Market sentiment has deteriorated to levels consistent with prior contrarian buy signals. The VIX Index fell to 23.87, down from 31.65 on March 27, which was more than two standard deviations above its 10-year mean of 18.79. The AAII Bulls/Bears survey recorded 34% bullish versus 51% bearish, reflecting sustained pessimism. The CNN Investor Sentiment Index declined from 66 on January 28 to a range of 14--18, where it has remained since March 18, placing it deep into the Extreme Fear zone—a historically bullish condition.

Momentum and Breadth

Long-term momentum remains positive; however, downside momentum is evident across short- and intermediate-term time frames. Of 38 major tracked markets:

• Only 16% are above their 50-day Simple Moving Averages (SMAs).
• 63% are above their 200-day SMAs.
• 79% maintain a bullish long-term configuration (50-day SMA above 200-day SMA).

Within the S&P 500, 30.8% of stocks trade above their 50-day SMAs, up from 20.4% a week ago. And, 49.4% are above their 200-day SMAs, up from 44.0%.

The cumulative Advance–Decline Line (A/D Line) rebounded to its highest level since March 17 and crossed above its trailing 20-day SMA. The A/D Line remains below its 50-day SMA, reflecting the March downside correction. Still, 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 improved to –46 from –142 the prior week. Readings moderately below zero for new highs minus new lows suggest limited weakness compared to the April 2025 trough of –1,161, which indicated a significant downside correction.

Sector and Market Rotation

The Energy stock sector fell to profit-taking following its very steep three-month uptrend. The S&P 500 Energy Sector SPDR (XLE, 59.25) fell from 62.56 a week ago but held above rising 20-, 50-, and 200-day SMAs. The larger weekly and monthly trends remain bullish for XLE.

The Technology ETF (XLK, 135.99) outperformed last week and also since February 5. The pessimism about AI from November to February may have been overdone.

International equities underperformed in both relative and absolute terms since the war broke out on February 28, and short-term trends remain negative. The Emerging Markets ETF (EEM) remains above its 200-day SMA but remains below both the 50- and 100-day SMAs. The EAFE ETF (EFA) rebounded back above its 200-day SMA but remains below both the 50- and 100-day SMAs. EFA staged a bigger oversold bounce last week--but still underperformed EEM for over the past two years.

The China Large-Cap ETF (FXI) declined to its lowest level since May 2025 on March 27, confirming the previous "death cross" on March 11, 2026, when the 50-day SMA crossed below the 200-day SMA. Technical conditions indicate continued weakness; exposure should be avoided.

Currencies, Commodities, and Fixed Income

The U.S. Dollar Index ETF (UUP, 27.86) is above major SMAs and remains in a two-month uptrend. Elevated volatility is likely to persist amid geopolitical uncertainty.

Precious and industrial metals recovered somewhat last week but may still be vulnerable to additional downside risk. Gold Miners (GDX), Gold (GLD), Copper (CPER), and Silver (SLV) all remain below their 50-day SMAs, which have rolled over and are now declining. Hedging this exposure is advisable.

Energy markets rose again and remain in confirmed uptrends. WTI Crude Oil (CLK26, 111.54) closed at its highest level since June 2022, while the Oil ETF (USO) reached a multi-year high dating back to October 2018. Price action remains bullish.

U.S. fixed income prices rebounded slightly last week but have remained in bearish trends since the war started. 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.
Please note that my ETF rankings are available by subscription--NOW WITH A NO-RISK FREE TRIAL.
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.

Trading and investing involve risk of significant loss. Your use of this site means that you have read, understood, and accepted my Disclaimer.            

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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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Ranking ETFs
"Robert Colby has evolved a system that, while hardly foolproof, is pretty clever," wrote Daniel Fisher, "Surfin' ETFs", Forbes, Investment Guide, Special Issue, June 4, 2007.
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INTERVIEW of Robert W. Colby in Technical Analysis of STOCKS & COMMODITIES magazine, December 2006 issue.
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"Gold's next move: History, logic, and intermarket relationships. See if testing gold's relationship to different markets over a 32-year period provides possible trade signals for the yellow metal."
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"Which gold indicators are best? Divining gold's next move."
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"Applying the Relative Strength strategy to ETFs."
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"PUTTING CANDLES TO THE TEST, How Profitable Are They Really?" by Robert W. Colby, CMT. Published in SFO, STOCKS, FUTURES AND OPTIONS MAGAZINE, Volume 5. No. 8. August 2006, pages 91-94. Please click here to buy this article. (Scroll to bottom of linked page.)

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