No-Advice Disclaimer: This analysis is for informational purposes only and not a recommendation to buy or sell any security.

Stock Market Outlook: July 26th =
Downtrend

Author: J.Wenger ---- Published: July 26, 2026 ---- Last Updated: 2026-07-26
Disclosure: The author holds no material positions in the securities mentioned. See Editorial Policy & Disclosures for details.

The stock market outlook shifted to a downtrend last week, with two of the three indicators in bearish territory.

Oil, Energy, and Momentum outperformed; Developed Market Bonds, Consumer Discretionary, and Small Cap Growth underperformed.  Expanding conflict pushed energy prices and inflation expectations higher, as well as defensive asset allocations, ahead of this week's FOMC interest rate decision.

TREND ANALYSIS

The S&P500 ( $SPX ) fell 0.6% last week.  The index is:
  • ~1% below the 50-day moving average
  • ~6% above the 200-day moving average
Technical indicators weakened further last week, pushing two of three signals into bearish territory and triggering a trend change.
  • Average Directional Index: Bearish
    • The ADX moved into bearish territory on Friday
  • Institutional Activity: Bearish
    • Price fell back below the 50-day moving average on higher trading volume, pushing the total distribution days to 5, and moving the signal to bearish.
  • On-Balance Volume: Neutral
    • The indicator crossed the moving average on Thursday; look for confirmation this week

Technical analysis chart of $SPX showing 6 months of candlesticks with 21-day, 50-day, and 200-day moving averages, volume with EMA(50), ADX(14) with +DI and -DI, and OBV with MA(62) through 2026-03-22.

Technical Analysis – $SPX – 2026-07-26

PERFORMANCE HIGHLIGHTS & COMPARISONS

Asset Classes

Oil ( $USO ) led to the upside for the third consecutive week. Developed Market Bonds ( $BNDX ) was the worst performer.  Oil ( $USO ) reclaimed bullish bias, while U.S. Equities ( $SPY ) eased to neutral, Emerging Market Bonds ( $PCY ) fell to bearish.

NOTE: The Bias calculation is not based on technical indicators; it's an indicator in and of itself and can differ from the Trend Analysis signal when markets are transitioning from bullish and bearish ratings ( i.e. $SPX and $SPY this week ).

Performance comparison of major asset class ETFs ($USO, $IBIT, $GLD, $SPY, $VEA, $EEM, $IEF, $BNDX, $PCY, $DXY) showing 1-week, 4-week, and bias-shift returns relative to the U.S. Dollar.

Asset Class Performance vs. U.S. Dollar – 2026-07-26

S&P500 Sectors

Energy ( $XLE ) was the strongest sector again; Consumer Discretionary ( $XLY ) the weakest.  Consumer Staples ( $XLP ) eased to neutral, Materials and Utilities ( $XLB, $XLU ) rose to bullish.

Performance comparison of S&P500 sector ETFs ($XLC, $XLY, $XLP, $XLE, $XLF, $XLV, $XLI, $XLB, $XLRE, $XLK, $XLU, $SPY) showing 1-week, 4-week, and bias-shift returns.

S&P500 Sector Performance – 2026-07-26

S&P500 Investing Styles

Momentum ( $MTUM ) actually led to the upside last week.  Small Cap Growth ( $IWO ) was the worst performer, followed closely by Large Cap Growth ( $IWF ).  Small Cap and Mega Cap Growth ( $IWO & $IWF ) moved to bearish bias.

Performance comparison of investment style ETFs ($SPHB, $SPLV, $IWO, $IJH, $IWF, $OEF, $IWN, $IJJ, $IWX, $MTUM, $QUAL, $SPHD, $POWA, $SPY) showing 1-week, 4-week, and bias-shift returns.

Style Performance vs. S&P500 – 2026-07-26

COMMENTARY

Markets

Renewed hostilities in West Asia not only sent oil prices higher, but also increased inflation expectations and strengthened the U.S. dollar.  Bonds dropped as yields responded to the upside.

Energy joins Healthcare, Financials, and Industrials as the leading bullish sectors.

Macroeconomic Data and Policy

No macroeconomic news releases last week.

Geopolitics

The on again, off again West Asia conflict was on again last week, spreading to the Red Sea and sending energy prices even higher.  As of Sunday evening, the potential weekend ceasefire could put equity futures into rally mode and take back some of oils recent gains.

The U.S. implemented new Section 301 global tariffs (10% to 12.5%) on more than 60 trading partners, raising manufacturing cost concerns.

EYES ON THE HORIZON

An interest rate decision headlines this weeks event risk, following by June PCE and the first Q2 GDP estimate.
  • Monday: Durable Goods
  • Tuesday: --
  • Wednesday: FOMC Interest Rate Decision
  • Thursday: PCE, GDP
  • Friday: --

Best to Your Week!

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Content Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis (FRED), Hedgeye, StockCharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics.
Price and Volume charts provided courtesy of stockcharts.com.

Performance Methodology: All sector performance data is sourced from ThinkorSwim and reflects price‑only returns calculated using end‑of‑week closing data. Bias classifications follow a proprietary Invest Safely, LLC model and update only when trend conditions meet predefined thresholds. All calculations are consistent across every chart on this page.

Disclaimer: Invest Safely, LLC is an independent investment research and online financial media company. Use of Invest Safely, LLC and any products available through Invest‑Safely.com is subject to our Terms of Service and Privacy Policy.


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Not a recommendation to buy or sell any security.

Looking for more information on the Stock Market Outlook Signals? You'll find it here:

In the past, I reviewed market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.

For historical Elliott Wave commentary and analysis, go to ELLIOTT WAVE lives on by Tony Caldaro.

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The S&P 500 Composite Total Return Index (the "S&P") is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor's chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.

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