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Introduction

There’s a uniquely frustrating feeling when you lose your key—standing outside your own door, knowing exactly where you need to be but with no way to get in. You check your pockets twice, maybe a third time, hoping it magically appears, but it never does.

That’s what this market has felt like.

After 13 straight up days for the Nasdaq, the rally hasn’t just been strong—it’s been exclusionary. Every minor pullback looked like the entry. Every pause felt like the moment to unlock exposure. And yet, price never meaningfully obliged. It simply kept grinding higher, denying latecomers any clean opportunity to get involved. For those waiting on confirmation, better levels, or a more comfortable setup, the door never opened. The market didn’t stall—it just left a large portion of participants standing outside.

Fortunately, that hasn’t been our experience.

We’ve been advocating increased exposure since the lows were put in just a few weeks ago. Our clients aren’t dealing with FOMO or chasing extended price—they’re positioned. Now it’s about managing the move: trimming into strength, staying patient, and letting the trend do the heavy lifting. That’s the advantage of a process-driven approach—you stay aligned with the market instead of reacting to it.

We highlighted weeks ago that positioning had become excessively bearish, creating the conditions for a sharp reversion on even a modest improvement in the narrative—whether justified or not. Did we expect that reversion to accelerate straight into new highs? No. And more importantly, that’s not the game we play. We don’t attempt to predict ultimate magnitude—we focus on identifying inflection points and aligning with the trend as it develops.

What we do make sure of is this: we are not fighting the tape at the lows, and we are not stuck on the wrong side of a move like this. If you were, it’s worth reassessing the framework—and the voices—you rely on.

And the equity call wasn’t isolated.

In a subsequent report, we flagged a high-confidence top in oil. As of Friday, that trade delivered roughly a 32% peak-to-trough move, coming within $1 of our second downside target. That’s not luck—that’s process, precision, and execution.

We also advised rotating out of energy equities in March, at a time when consensus positioning remained heavily overweight the space. Since then, energy has become the worst-performing sector quarter-to-date, down -10.6%.

Meanwhile, the SPX has gained 4.5% this week alone, pushing to new all-time highs and bringing the total advance since the March 30 low to roughly 13%—a blistering three-week “lockout rally.”

Technology and consumer discretionary led performance this week.

Recall the weekly DeMark 9 buy signals we highlighted across the major indexes as a key reason to add exposure. Ignore these signals at your own peril—we didn’t. Since that trigger, the Nasdaq has surged roughly 18.5%.

As we move into the heart of earnings season, analysts have revised full-year estimates higher—a constructive and supportive signal for equities.

What’s notable, however, is the divergence beneath the surface. While full-year estimates are being revised higher, the ratio of companies raising versus cutting guidance is deteriorating. Already, 40 S&P 500 companies have lowered their quarterly outlooks—the highest level since Q2 2025, during the initial tariff shock, according to Bloomberg Intelligence.

Markets appear willing to look past this divergence. Even a mixed earnings season from the banks failed to deter buyers, with prices continuing to push higher. Financials (XLF) tested their 200-day moving average on Friday but began to lose momentum following an 11% rally.

But ultimately, none of this has mattered for index-level performance—the primary driver remains big tech.

The Mag 7 Index—widely labeled “dead money” in 1Q—has come roaring back, rallying 20% in just the past few weeks after a 17% drawdown from its October peak. According to Bloomberg, more than half of the SPX’s recent advance has been driven by this cohort alone.

This is the definition of a pain trade. Just two weeks ago, hedge funds were aggressively dumping U.S. tech stocks at the fastest pace in over five years, per Goldman Sachs’ prime brokerage data. Nearly every tech sub-sector saw net outflows, led by software, which accounted for roughly 60% of total selling—largely driven by short positioning.

Ironically, that forced liquidation helped reset valuations—something we highlighted as a key reason to lean bullish. The Mag 7 (ex-Tesla) is now trading at ~24x forward earnings, down from ~29x at the end of October.

With the bulk of the Mag 7 set to report in the coming weeks, we’ll soon see whether the recent re-rating is justified by fundamentals—or simply a function of positioning and sentiment.

Of course, each passing weekend seems to introduce a new set of headlines. The ceasefire narrative that helped fuel last week’s rally already appears fragile, with reports of renewed escalation. How the market responds in the face of this uncertainty will be telling.

That said, we don’t trade the news—we interpret its potential impact on price and map out scenarios accordingly. Our focus remains on price action and the underlying drivers behind it. That’s where the signal is. Overweighting headlines is how investors miss major repricing events—exactly what just played out.

Don’t miss the next move.

Now, let’s turn to the charts.