Last week, we laid out how we would begin to make a bear case if we were inclined to do so. We aren’t, because the data does not support it. Still, it is a helpful exercise to understand where the cracks may be developing.
The simple fact of the matter is that the market is strong, and that strength is broad.
S&P 500 and NYSE Advance/Decline Line
Yes, the sideways consolidation that we highlighted last week remains in place, but it remains nothing more than a pause. The S&P 500 sits comfortably above its rising 60-week moving average and within striking distance of new highs.
At the same time, the NYSE Advance/Decline Line remains close to all-time highs.
Source: Optuma
NYSE New Highs and New Lows
New highs on the NYSE have been expanding all year, and that remains the case as we move into the second half of 2026.
New lows have had moments where they attempted to build, but those moments have proven fleeting. You cannot have sustained weakness without a sustained expansion in new lows.
Source: Optuma
International Stocks
The iShares MSCI ACWI ex U.S. Index Fund (ACWX) is also trading near record highs. The fund is consolidating strong gains, but the trend remains firmly with the bulls.
More importantly, this demonstrates that equity strength is not simply a U.S. AI story. It is a story with global participation. As an added bonus, the fund is outperforming the S&P 500 year to date.
Source: Optuma
High Yield Credit
On a total return basis, the iShares iBoxx High Yield Corporate Bond ETF (HYG) is trading near record highs above its rising 40-week moving average. The steady uptrend has been in place since November 2023 following a breakout from a consolidation range.
On a relative basis, HYG is also at record highs versus the iShares Core U.S. Aggregate Bond ETF (AGG).
Translation: Investors continue to prefer the riskier side of the fixed-income market.
Source: Optuma
Volatility
All of the above is taking place while the S&P 500 Volatility Index (VIX) sits in the mid-teens. Not too complacent. Not too fearful.
Historically, the low-to-mid teens has been an ideal range for equity bulls.
Source: Optuma
Final Thoughts
As the back half of the year gets underway, we see a market that is strong and broad. Whole discretionary investors argue about bubbles and AI spend; the market data continues to support a bullish stance.
