Higher for Longer
RLT Newsletter 4.29.26
Wednesday was a huge day for the markets. META, MSFT, GOOGL, and AMZN all reported earnings, Jerome Powell held his final press conference, and Donald Trump extended the naval blockade on Iran.
After one of the most aggressive bull runs in recent history, we still haven’t even touched the 10 EMA on SPY or QQQ. Given how extended we were into earnings, you might expect some consolidation or weakness here, but so far that hasn’t shown up.
This market continues to reward strength and punish weakness. GOOGL and AMZN have been ripping into new all-time highs and are both gapping higher again. AMZN is continuing to track the 2019–2020 analog I shared in mid-April, which highlighted the strong similarities between those periods and pointed to significantly higher price targets. Because of that analog, I started adding back into an AMZN position after selling too early in this rally.
AMZN Daily Chart with 2019-2020 Analog
Meanwhile, META and MSFT remain well below their highs. META is getting hit hard on earnings, while MSFT is mostly flat and still lagging. From a broader perspective, any selling we do get would be healthy as long as key supports hold.
At the same time, the macro backdrop is starting to get more complicated. Oil pushed to $108 on Wednesday and is approaching its April highs. If oil breaks out to new highs, that’s likely to put pressure on equities, especially after the rally we’ve just seen. It’s worth noting that the equity breakout we have seen over the past several weeks coincided with a bearish move lower in oil. If oil starts to make new highs once again, equities could struggle to push much higher.
At the same time, yields are moving higher. The 10-year and 20-year are both pushing up, with the 20-year back above 5%. That’s the bond market pricing in renewed inflation pressure, likely tied to rising energy costs.
Crude Daily Chart
A simple way to gain exposure to the move in oil, if you’re not trading futures, is through XLE or its top holdings like XOM, CVX, and COP.
All three report earnings this week and are setting up for a potential move higher, even if that move ultimately results in a lower high.
XOM Daily Chart
The two primary analogs I’m tracking continue to point toward a similar immediate path forward: some kind of pullback or consolidation, followed by at least one more push higher. This also aligns with what my SOXX analog is suggesting.
The main analog I’ve been focused on for weeks is the 1999 October setup, which continues to track well. That scenario calls for some choppiness over the next couple of weeks, but with only shallow pullbacks that get bought up quickly. From there, it points to a push toward the $730 level on SPY before any real volatility enters the picture. After that, we would expect a more meaningful correction, followed by another bullish leg higher into late summer or early fall.
In this scenario, QQQ should continue to outperform in a more aggressive, AI-driven move. For that to play out, leadership from big tech will need to remain firmly intact.
SPY 1999 Analog
The second analog, which I found this week, is from 1990. The setup is surprisingly similar to our current price action. After a strong rally in 1989, the market spent roughly 170 days chopping sideways before breaking below the 200-day SMA. It then reclaimed that level in a vertical move and pushed to new all-time highs. After it pushed to new all time highs it double topped and then dropped 20% to a new low.
SPX 1990 Daily Chart
Our current price action has a lot of similarities to that 1990 structure. We rallied hard for a year in 2025, consolidated for around 160 days, broke below the 200-day, then reclaimed it and pushed vertically to new highs.
If that analog continues to play out, the next step would be a pullback, potentially retesting prior all time highs, the 100-day SMA, or even filling the gap around $686 on SPY. From there, we could see one final push to new highs. If the analog holds, that would then be followed by a sharper decline that takes price back below the March 30th low.
SPY Daily Chart with 1990 Analog
I’m not sharing this because I am bearish or to spread fear. It’s simply to show what’s possible based on historical precedent. Too often, traders get locked into a single narrative and ignore alternative paths.
For me, the key takeaway is that even in a more bearish scenario, after a move with this much strength, we likely get at least one retest and one more push higher. If the dip continues to dip, the line in the sand remains the longer-term moving averages. I’m bullish until the market proves otherwise and starts closing below the 100-day and 200-day SMAs.
Fighting a trend this strong is a losing game, but assuming it will continue indefinitely is just as dangerous.
Right now, price action is clear. Strength is being rewarded, and weakness is being sold. I’m listening to that, and I’ll continue buying strong names on pullbacks until the broader picture on SPY and QQQ tells me something has changed.