Near-term US Equity trends are positive but nearing overbought levels as SPX and QQQ push higher following their move to new all-time highs, while IWM, Equal-weighted SPX, and DJIA have lagged.  The US Dollar looks to be kicking off its fourth week of declines, while WTI Crude Oil managed to achieve a minor bounce on Monday as part of an ongoing selloff.  Market breadth has lifted to near short-term overbought levels in recent weeks, but Technology is the only of the 11 Equal-weighted ETFs that has pushed back to new all-time highs.  Overall, there remains no evidence thus far of US Equities beginning to consolidate the recent rally. Furthermore, Crude oil looks to be on the verge of a larger decline.  Given that weakness in Crude has directly correlated with rising Equity prices, it still looks early to bet on any Equity selloff getting underway just yet.   Similar to last week’s thinking, it’s right to be long Financials, Technology, and Industrials as sectors overweight, while expecting the Defensive sectors might lag performance. Bottom line, I expect the recent sharp move will likely require consolidation in May.  However, at present, it’s prudent to watch for evidence of trend deterioration before attempting to sell into this rally.  Pullbacks in the next month should be seen as dip-buying opportunities.

Tuesday’s minor consolidation was largely unconvincing that any selloff is starting to get underway.  The late-day gains in WTI Crude oil as the ceasefire window was nearing conclusion should prove short-lived as it’s expected that a unified proposal is in the works.

As shown below, until/unless the short-term uptrend starts to give way, there remains no proof that the next 50-100 points have to be lower.  It’s proper to keep a close eye on market breadth, which should give some evidence of waning prior to any selloff.   Key levels for ^SPX-0.73%  on a closing basis lie near 6993, and a break of this would violate both the uptrend and some minor Ichimoku-based support.

While momentum has begun to slide a bit in the last 24 hours, no trend weakness has occurred, and the sector strength today in Technology, combined with sector weakness in Utilities and Consumer Staples, is thought to still be positive for the risk-on rally to continue.

My expectation is that WTI Crude strength fails to get above $96 before starting to weaken sharply as part of a larger decline. Thus, early weakness in ^SPX-0.73%  on Wednesday is not expected to break the current uptrend before this starts to push back higher.

Technically, one can make a solid case for “one more” move to new highs starting Wednesday, which might allow DeMark-based indicators to line up to show exhaustion to this rally.  For now, these are not in place.

S&P 500 Index

Crude oil’s technical pattern is suggestive of a coming decline, which might line up with a more credible peace proposal

The pattern for WTI Crude shows Tuesday’s bounce is not likely to have much more upside before starting to turn down in a more forceful “Wave C, or Wave 3” type decline back to new lows.

My expectation is that the area near $96.50 should limit gains in WTI Crude (the chart below is a two-hour chart of the WTI Crude front-month futures contract).

Thereafter, a selloff down to undercut the most recent lows in the high $70’s likely gets underway.

While downside projections are difficult to make without having a clear picture of how high this minor bounce can carry, my expectation is that $58 for WTI wouldn’t be an unreasonable downside target if/when $96.50 holds on Tuesday’s bounce attempt.

If/when Crude starts to turn down sharply, it’s likely that the Energy sector will start to show more pronounced weakness into May. This likely should prove short-lived but ultimately will represent an attractive risk/reward for WTI Crude.

Light Crude Oil Futures

Energy’s underperformance likely will persist as Crude oil drops further into May

One of the more dramatic sector About-face movements that has occurred in 2026 has been seen understandably in Energy.

The former 30% return in the Energy sector has now been trimmed to 24.7% (Equal-weighted Energy ETF (RSPG1.66% ) through 4/20/26 as Energy has been “hands-down” the worst performing sector out of all 11, given Crude’s big selloff.

As seen below, the early-year breakout in Energy, which caused the outperformance in this ratio chart of Energy vs. ^SPX-0.73%  (both in Equal-weighted terms), has largely been cut in half over the past month, but still could face further weakness to test this former downtrend if/when WTI Crude oil pulls back more on a more durable Iranian cease-fire proposal.

My expectation is for further near-term weakness in Energy before it begins to show much strength, and one has to be ultra-selective on what to own given this recent volatility.

RSPG/RSP

OIH looks to outperform XOP given the possibility of further Crude oil weakness

Taking a look at the ratio of OIH2.49%  to XOP2.60%  (VanEck Oil Services ETF (OIH2.49% ) vs. the State Street SPDR S&P Oil and Gas Exploration & Production ETF (XOP2.60% ) it’s clear that OIH2.49%  looks to be turning sharply higher vs. XOP2.60%  in ratio form and should be favored for relative outperformance in the months ahead.

Given my expectation of Crude oil dropping down to potentially $58/barrel, Exploration and Production stocks might face greater deterioration and show underperformance in the near-term.

This ratio has rallied to the highest levels in roughly five years.  Thus, OIH2.49%  should be favored for outperformance, and despite the possibility of Energy falling further in performance on an absolute and relative basis, OIH looks like a relative leader compared to XOP2.60% .

OIH/XOP

XLE has broken uptrends vs OIH, which should result in additional underperformance from Integrated Oil names

One fascinating ratio chart I always utilize within Energy concerns the ratio of the SPDR S&P Select Energy ETF (XLE1.51% ) vs. VanEck Oil Services ETF (OIH2.49% ) for a gauge as to what sub-sectors might be starting to show outperformance or underperformance within Energy.

As shown below, XLE1.51%  has been a steady underperformer and has just broken the uptrend vs. OIH2.49% , with this ratio falling to the lowest levels since 2024.

While the ratio did move fractionally higher following the initial start of the Iran war, it has since plummeted back to new multi-month lows in the last few weeks.

The decline does not look complete, given the recent break of this lengthy uptrend, coupled with a lack of DeMark-based exhaustion signals, which might give a clue as to a possible turn in this ratio.

Thus, Oil Service stocks based on the first ratio of OIH2.49%  vs. XOP2.60% , along with the second ratio of XLE1.51%  vs OIH2.49% , look to be preferred for those looking for a way to play Energy.

While I do expect Energy to weaken further into May, OIH2.49%  should be the sub-sector that might show better relative strength.

XLE/OIH