Bears Siphon Off Energy

Hey trader,

The S&P 500 hit new all-time highs last week.

The Nasdaq and Dow were nowhere to be found.

Thursday’s close of 7,798.99 marked the 27th record close of 2026 for the S&P 500.

The Dow finished the week in the red. The Nasdaq Composite eked out a fractional gain.

Momentum is taking a breather. The undercurrents keep moving.

Last week the bears showed they were down and not out.

If they can hold their ground this week, I may even turn more sympathetic to their case.

Here is what you’ll walk away with: the sector data that explains this split tape, the macro cracks the bears are leaning on, and the one thing bulls have to deliver before month-end.

A New Wall of Worry?

Tech wasn’t the top-performing sector last week. It still outperformed the S&P 500.

The real winner was energy, which closed at its second-highest weekly level in history. The sector ran nearly 6% through Thursday’s close.

Oil stocks did better than the price of oil itself. That detail matters more than the headline number.

Equity buyers pay up for producers when they expect the commodity to stay firm, not when they think a spike is about to fade. Crude then rose again on Friday, which reinforced the message rather than contradicting it.

Technology is only holding on as the 30-day leader right now. On a year-to-date and 1-year basis, it has become a neck-and-neck race between tech and energy.

The window for tech to deal a decisive blow is closing. We’re just a few weeks into a rally that followed the correction into July’s low.

A New Wall Of Worry

The bears finally have material to work with, and it isn’t coming from price.

August consumer sentiment dropped to 51.0 from 55.2 in July. One-year inflation expectations climbed to 4.3% from 4.2%. Retail sales posted their largest decline in more than a year.

Layer the calendar on top of that. August through October is historically the weakest three-month stretch of the year for the S&P 500 according to Bank of America.

FOMC minutes land this week. Jackson Hole runs from the 27th through the 29th. Nvidia reports on the 26th.

Every one of those items gives sellers an excuse to press. None of them has broken the trend yet.

Weak sentiment surveys during a record-setting tape are a familiar combination. Investors who wait for consumers to feel good about the economy before buying stocks tend to buy near the end of the move instead of the middle of it.

The bearish argument only earns respect if it starts showing up in price. So far the index has stacked three consecutive weekly gains and sits up roughly 13% on the year.

What Bulls Need To Do Now

Growth has to step forward into month-end. That’s the decisive blow.

It doesn’t even necessarily have to be tech. Any other growth sector would suffice to confirm the risk-on environment, whether that comes from consumer discretionary leadership, a bid returning to communications, or small caps pushing back toward the record the Russell 2000 touched last week.

Bulls right now would welcome weakness in oil prices to help divert flows into tech instead. Cheaper crude cools the inflation narrative. It also frees up capital that has been parked in energy since the summer.

Let me put it plainly. If growth fails to deliver a thrust into month-end, the waters could get a lot more choppy going into the midterms in November.

That would not end the bull market. Election-year autumns have a long history of shaking out weak hands before the next leg higher begins.

It would change how much room you give a position. Here is how I’m handling the next two weeks.

I’m keeping core long exposure intact while energy holds its leadership. My hedges get more aggressive if the S&P 500 loses Thursday’s breakout level without growth stepping up.

The Trinity Terminal is still flagging setups on the long side. That keeps me leaning bullish until the tape tells me otherwise.

Watch what leads on the next down day. Leadership on weakness reveals far more about the coming month than leadership on strength.

Take Care,
Gianni Di Poce