Ned Davis Research expects the S&P 500 to face a volatile summer before the bull market resumes at yearend. The firm's chief US strategist, Ed Clissold, laid out four technical signals shaping the second half of 2026, with the index down less than 1% from its June peak.
Ned Davis Research expects the S&P 500 to ride out a stretch of volatility before its bull market resumes at the end of 2026. In a note to clients on Monday, the firm's chief US strategist Ed Clissold said several signals now flashing in markets outline where equities head in the second half.
Clissold said stocks already look to be consolidating after a monthslong rally driven by strong earnings and a cooling of US-Iran tensions since April. The index has pulled back less than 1% from its June peak, yet still sits around 8% above its 200-day moving average — a key technical support level that suggests the uptrend holds.
Seasonal patterns point to weakness
The S&P 500 Cycle Composite, a framework built on historical one-year, four-year presidential, and 10-year decennial patterns, suggests the market is headed for a period of weakness. According to the model, volatility could continue through mid-August before an early-October pullback sets the stage for the bull market to continue, Clissold said. He called it a plausible roadmap absent another news event, referring to the Iran war as an exogenous shock earlier in the year.
Allocation model still favors stocks
The firm's US Asset Allocation Model tells a more constructive story. At the end of June, it suggested a 70% allocation to equities — around its highest level in four years. The model also recommended a 25% allocation to bonds and around a 5% allocation to cash.
Momentum and breadth send mixed signals
Clissold pointed to NDR's Fab Five model, which slipped into its bearish zone at the end of June. Even so, he noted several of its inputs — momentum, breadth, and sentiment — sat in neutral territory.
Market breadth added to the caution after hitting a record high in early July, which Clissold flagged as a potential negative because a peak in breadth "often leads cyclical peaks." Still, he said over seven in 10 sub-industries were trending higher, which keeps any seasonal weakness within the frame of an ongoing cyclical bull market.
Source: Business Insider
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