14 Charts Headlining This Week: A Tactical Playbook

The market is showing clear strength, but the setup now demands caution. The S&P 500 has pushed to new highs, emerging from a bullish symmetrical triangle base. This pattern suggests underlying accumulation and confirms the uptrend is intact. At the same time, market internals remain healthy, with NYSE new highs elevated and new lows minimal. This breadth supports the idea that the rally is broad-based, not just a few leaders.

Yet the momentum oscillator (PMO) is now near its top range. When the index hits new highs, this indicator naturally moves higher, and its current position signals that the optimal buying window may have passed. The chart is telling me that while the market is strong, any new purchases should be made with added caution. The best time to buy has likely come and gone.

This creates a tactical environment where the strength is real, but the risk/reward is shifting. The market is extended technically, and with rotation between sectors already underway, the path of least resistance may be sideways or choppy. For now, the longer-term indicator looks positive, but the immediate signal is one of caution.

The Catalyst Calendar: Key Data and Events

The market's recent strength now faces its first major test from the week's scheduled data and commentary. The setup hinges on a few specific events that will either confirm economic resilience or expose underlying cracks.

The week's most critical gauge is the ISM Manufacturing and Services indices, both due on Friday. These surveys are the immediate barometer for the health of the U.S. economy. A strong reading across both sectors would reinforce the narrative of durable growth, supporting the market's current momentum. A significant miss, however, could quickly shift sentiment and pressure the S&P 500's recent gains.

Central bank commentary from two key Fed officials will also be closely watched. Tom Barkin speaks on Monday morning and again later in the week, while Neel Kashkari speaks on Friday. Their remarks are a primary channel for gauging any subtle shifts in the Fed's monetary policy tone. In a market priced for a dovish stance, any hint of a more hawkish pivot or even a pause in easing could trigger volatility.

Finally, liquidity conditions will be tested by Treasury operations. The week includes 4- and 8-week bill auctions and the preliminary Treasury buyback announcement. These events serve as a direct test of market demand for government debt. Weak auction results or a smaller-than-expected buyback could signal stress in the Treasury market, a potential red flag for broader financial conditions and risk appetite.

These are the immediate catalysts that will determine if the market's bullish setup holds or breaks. The data and commentary scheduled for this week are the first concrete tests of the economic story underpinning the rally.

Sector Rotation and Tactical Implications

The market's broad strength masks a more complex reality: stocks are not moving in sync. There is a considerable amount of rotation from one sector to another, which de-emphasizes short-term trend analysis. This divergence means that a bullish chart for the S&P 500 as a whole doesn't tell you where the real action is. The rotation creates pockets of opportunity, as seen in the breakout of industrials and transports, or the convincing rotation into small caps. Yet it also increases the risk of whipsaw moves around event catalysts, as capital flows rapidly between leaders and laggards.

This environment demands active management. With the market extended technically and the PMO indicator near its top range, the setup favors caution. The current posture of being about 95% invested reflects a market that has already priced in optimism, but it also signals traders are starting to look more at opportunities to trim than to buy. This is a tactical environment where the best move may be to wait for clearer signals from the week's key data, rather than chasing the next breakout.

Risks and What to Watch

The current market strength is real, but the setup now hinges on a few specific watchpoints. The primary risk is a sharp reversal if key economic data disappoints, breaking the momentum that has carried the S&P 500 to new highs. The week's scheduled ISM Manufacturing and Services indices are the immediate barometer. A significant miss would challenge the narrative of durable growth and could quickly pressure the market's recent gains.

At the same time, watch for any hawkish tilt in central bank commentary. With the market priced for lower rates, remarks from Fed officials like Tom Barkin and Neel Kashkari that signal a more hawkish pivot or even a pause in easing could trigger volatility and pressure risk assets. The Treasury buyback announcement and a series of bill auctions also serve as a direct test of market liquidity and demand for government debt.

Finally, monitor the breadth of the market's advance. The current breakout is supported by healthy new highs and minimal new lows, but a widening gap between these two figures would signal weakening momentum. The rotation between sectors, while creating pockets of opportunity, also increases the risk of whipsaw moves. The bottom line is that the next directional move will be determined by the convergence-or divergence-of these specific data points and commentary.