Cooling Equities, Hot Energy: What the Data Is Telling Us
Hi everyone,
This week’s update from Quantmatix highlights a subtle but important shift in market momentum — while the medium-term equity outlook remains intact, we’re seeing signs of short-term hesitation. Meanwhile, the energy sector is surging, validating one of our strongest recent thematic calls.
Let’s break it down.
🧭 Market Signals: A Short-Term Pause
Our daily and weekly signal models for the US and Europe picked up a cluster of negative reversals this week. It’s the first time since April that we’ve seen more medium-term negative than positive signals across global equities.
This doesn’t mean the rally is over. But it does mean we’re entering a period of short-term consolidation — potentially healthy digestion before the next move higher.
US Equities
Short-term daily support is just 0.78% below Friday’s close.
Weekly support sits 2.33% below — still within a healthy range.
The weekly score is still rising, and prices remain well within the upper trend channel.
If the S&P holds support and consolidates here, it could set up for a breakout above 6080 in the coming sessions.
European Equities
The Stoxx 50 posted a short-term negative reversal Friday.
The index is now below both daily and weekly support levels.
We're closely watching the SMA50 (-1.33%) and weekly support (-3.18%) for signs that the medium-term trend can hold.
At this point, the outlook for Europe is more fragile than the US.
⚡ Thematic Focus: Energy Leading the Charge
We’ve been flagging energy as a high-potential theme over the past two weeks — and that view is now playing out.
The XLE ETF jumped 5.6% last week, and it’s +6.04% relative to the S&P.
95% of XLE components are now advancing.
Yet only 19% currently have positive scores, meaning we’re likely still early in this rotation.
We're also seeing a rising number of medium-term positive reversals, including in names like Hess Corp, which was recently featured in our Top Ideas.
While we haven’t yet seen a medium-term relative reversal versus the S&P, the price action suggests that might not be far off.