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Five Charts to Watch as the Bull Market Matures into 2026
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Global equities appear poised to navigate the uncertainties of a midterm election year, building on strong gains from 2025.the S&P 500 delivered a 15%-plus return, with the broader U.S. stock market achieving nearly 20% gains on a total return basis, while international stocks-excluding the U.S.-recorded their best year since 2009 with a 32% increase. As investors look ahead to 2026, a closer examination of key market indicators reveals potential opportunities and risks. Here are five charts that offer crucial insights into the evolving landscape.
Breadth Matters: VXF/SPY ratio
Market breadth-the extent to which gains are shared across a wide range of stocks-is a critical factor in assessing the sustainability of a bull market. The ratio of the iShares MSCI USA Equal Weighted ETF (VXF) to the SPDR S&P 500 ETF Trust (SPY) has been making lower highs for years, signaling potential weakness. A break below the 0.3 level would be a negative signal, suggesting the broader market is losing momentum.
Risk Appetite: SPHB/SPLB Ratio
Despite concerns about breadth, risk appetite within the S&P 500 remains strong. The ratio of high-beta stocks to low-volatility stocks (SPHB/SPLB) has been trending upward as the second quarter of 2025, indicating a “risk-on” environment. While high-beta stocks are heavily weighted towards the technology sector (approximately 40%), the gains are not solely driven by mega-cap companies like NVIDIA or Apple.A modified equal-weighted approach ensures the ratio reflects broader market participation.As one market observer noted, “As it stands, up and to the right is the trend-an arrow in the bulls’ quiver.”
Consumer Sentiment: RSPD/RSPS Ratio
A bullish signal emerges from the consumer sector. The ratio of the S&P 500 Equal Weight Consumer Discretionary ETF (RSPD) to the S&P 500 equal Weight Consumer Staples ETF (RSPS) has outperformed considerably since June 2022-four months before the S&P 500 reached its bottom that year, making it a potential leading indicator. analysts recommend using equal-weighted ETFs to mitigate the influence of dominant players like Tesla and Amazon, whose large market capitalization skews cap-weighted indices. While consumer staples have faced headwinds due to economic pressures on lower-income consumers and tariff concerns, a potential easing of these factors in 2026 could further bolster discretionary spending.
NYSE Cumulative advance-Decline Line
Perhaps the most extensive gauge of market breadth is the NYSE cumulative advance-decline (A/D) line. This indicator tracks the difference between the number of advancing and declining stocks, providing a cumulative measure of market participation. A senior official stated, “When the NYSE cumulative A/D line notches new highs with either the NYSE Common Stock only Index or the S&P 500 also printing records, that’s Goldilocks for technical analysts.” Encouragingly, the A/D line reached a new high just before the start of the new year, suggesting broad-based market strength.
European Outlook: German DAX index
Looking across the Atlantic, European markets initially outperformed the U.S.in 2025, with Germany experiencing a period of strong growth from November 2024 through March. However, the German DAX index has lagged U.S. equities since the second quarter, entering a period of consolidation. To regain momentum, the DAX must break through its all-time high of 24,800, which could trigger a rally to near 26,800. The index’s relative strength compared to the S&P 500 appears to be stabilizing, perhaps signaling a resurgence in european leadership.
The Bottom Line
These five technical charts offer valuable clues about potential macroeconomic developments.As one analyst emphasized, “Price is always first to know.” by considering these intermarket and intramarket views, investors can gain a more nuanced understanding of the market’s trajectory and make more informed portfolio allocation decisions than simply focusing on the S&P 500.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and
