April 18, 2026

Stocks had a bullish but nervous week of trading, with the twists and turns of the fledgling Middle East peace process leading to multiple sudden shifts in investor sentiment. Despite mixed catalysts, buyers dominated the week across most sectors, with the Nasdaq extending its winning streak to 14 days and leading a move to new record highs. Judging by the bank sector’s results, the first-quarter earnings season could be another record-setting one, as most mega-cap banks posted record results. However, several tech names showed weakness post-earnings, which is something to watch in the coming weeks.

Compared to the past couple of weeks, the economy showed surprising strength, with several of the week’s most-anticipated indicators beating expectations, despite last month’s surge in energy prices. That said, industrial production came in below the consensus estimate, while the housing market showed weakness, with the NAHB Housing Market Index and existing home sales both missing expectations. The weekly number of new jobless, the Philly Fed Index, the Fed’s economic Beige Book, and crude oil inventory data all made bulls smile, but that was not enough to stop this week’s selloff in Troy yields and the dollar.

The technical picture further improved amid this week’s broad-based advance, and despite the Dow's continued relative weakness, an important technical breakout might already be underway on Wall Street. The Dow, the Nasdaq, and the S&P 500 are all above their 50-day moving averages, and the benchmarks are now well clear of their 200-day moving averages. Small-caps experienced a strong rally, with the Russell 2000 performing in line with the large-cap benchmarks, and the index finished the week with a new record high, closing well above both its moving averages. The Volatility Index (VIX) dropped to its lowest level since mid-February on Friday. Despite improving market conditions, the "fear gauge" is now showing a slight bearish divergence relative to the major indices.

Market internals improved thanks to this week’s strong advance, with key breadth measures approaching their year-to-date highs despite last month’s deep pullback. The Advance-Decline line hit a new bull market high, as advancing issues outnumbered decliners by a 9-to-1 ratio on the NYSE and a 10-to-1 ratio on the Nasdaq. The average number of new 52-week highs increased on both exchanges, jumping to 101 on the NYSE and 132 on the Nasdaq. The number of new lows crashed in the meantime, falling to 5 on the NYSE and 23 on the Nasdaq. The percentage of stocks above their 200-day moving average jumped back well above the 50% level this week, leaving behind its year-to-date low from March, but the measure still has plenty of room for healing following last month’s correction.

Short interest collapsed in nearly all main sectors this week, with even the battered software industry experiencing a short squeeze, and the most-shorted issues performed in line with the broader market. Sphere Entertainment (SPHR), continued to push higher, eking out new record highs, and the stock’s short interest of 24% suggests that the squeeze is not over yet. Vertiv Holdings (VRT) also approached new highs this week, and despite its lack of short-term bullish momentum, the stock looks primed for a technical breakout, given its days-to-cover (DTC) ratio of 7. Current GorillaPick, MGM Resorts (MGM), also sports a high DTC ratio of 6. After consolidating for several months, the stock could be gearing up for a short squeeze amid the improving conditions in the consumer economy.

We are in for a relatively quiet week of economic releases. Still earnings season will continue with a slew of key reports, and the Middle East peace process is likely to remain the center of attention following this week's progress. Retail sales and pending home sales are scheduled for Tuesday, together with future Fed Chair Kevin Warsh’s Congressional hearing. The S&P Global manufacturing and services PMIs will highlight Thursday’s session, while the week will end with the revised Michigan consumer sentiment number and inflation expectations. As for technicals, the major indices' fresh all-time highs will likely be in focus, and bulls hope that the Dow will join the tech-heavy benchmarks’ technical breakout. Stay tuned!

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