Optioneering Team Update
Market Overview: Bullish Long-Term, Choppy Short-Term
Optioneering Team Update Septmber 18, 2026
While the long-term uptrend for the broader market remains firmly intact—with the S&P 500 trading well above its 200-day moving average—the short- to intermediate-term picture continues to look murky. Over the past month, the index has drifted lower in a prolonged series of lower highs and lower lows, placing price action below the 20-day moving average, which is now acting as overhead resistance. The S&P 500 has repeatedly tested and breached the crucial 7600 level this week, an area that coincides with both mid-summer highs and the rising 50-day moving average. While we would like to see this 50-day support level hold, recent price action suggests a higher likelihood of further downside probing before we get a definitive resolution. Nevertheless, our overarching stance remains constructive: we view this period as a standard 5% to 10% pullback from recent record highs, creating a base for stocks to reaccelerate and set new high marks before year-end.
Under the surface, market internals reflect a notable loss of breadth and momentum. Currently, only about 27% of S&P 500 components are trading above their 50-day moving average, while just 52% remain above their 200-day moving average. This divergence highlights how heavily the cap-weighted index is relying on a shrinking group of mega-cap heavyweights to buoy headline performance. Capital is rotating back into these massive market-cap leaders while the broader market faces selling pressure. A stark illustration of this divide is the Equal Weight S&P 500, which has set a pronounced series of new lows and sits on the precipice of a medium-term trend change.
This market backdrop is largely being driven by macro yield pressures and geopolitical crosscurrents. The Federal Reserve’s rate hike this week validated the recent leg higher in bond yields. Combined with ongoing conflict in the Middle East and surging energy prices, rising yields represent the primary headwind facing equities; until energy backs off and yield expansion slows, market upside will be constrained. While next week’s high-stakes meeting between Donald Trump and Xi Jinping offers a potential geopolitical catalyst, the market remains highly headline-driven with third-quarter earnings season still several weeks away and mid-term elections approaching. Expect continued choppy, volatile trade in the near term. Despite the noise, we remain selectively bullish on pockets like Energy and high-conviction Technology, while tactical bearish opportunities are emerging in interest-rate-sensitive sectors.”
Chart of the Equal Weighted S&P 500 ETF RSP, showing the recent breakdown and breach of it’s 50-day moving average, clear illustration of the decline is breadth and slowing of market-wide momentum.
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Optioneering Team Update Septmber 18, 2026