In the May edition of the CAPIS Monthly Research Briefing, Katie Stockton, Founder and Managing Partner of Fairlead Strategies, returns to provide a deep dive into key technical indicators shaping the current equity landscape. While 2025 may be a digestion year, Stockton sees potential setups for a stronger 2026.
0:00 – Introduction: CAPIS’ Ed O’Dowd opens the session and introduces Katie Stockton of Fairlead Strategies, who specializes in technical analysis. Stockton previews the discussion: a top-down read on market momentum, sector leadership, breadth, and long-term positioning.
2:00 – S&P 500 Trends: Stockton presents the monthly S&P 500 chart, flagging cyclical sell signals amid an ongoing secular bull market. Using DeMark indicators and momentum metrics like MACD, she anticipates 2025 will serve as a digestion year within a longer-term uptrend resuming in 2026.
5:45 – Downside Risk: Stockton warns of continued volatility and encourages risk management while watching for signs of downside exhaustion.
7:15 – Short-Term Signals: April Bounce and May Cooling: Recent short-term sell signals (Demark + VIX momentum shifts) suggest potential lower highs. Stockton expects short-term support around 5,500 to be tested.
8:10 – Small vs. Large Caps: The Russell 2000 remains rangebound, showing long-term underperformance in small caps vs. large caps. While this year may be more balanced, large caps still show relative strength.
9:40 – Market Breadth Analysis: Stockton views recent breadth thrusts as reflections of sentiment rather than bullish catalysts. Momentum looks set to contract for a few months despite the April rally.
10:40 – Credit Spreads and Macro Sentiment: A potential double bottom in credit spreads hints at macro risk. Stockton notes these periods often coincide with equity weakness.
11:40 – VIX Report: A recent momentum shift in the VIX supports a cautious near-term outlook for equities, especially in an environment of complacency.
12:35 – Growth vs. Value Rotation: Long-term trends still favor growth over value, but Stockton expects a near-term shift toward more balanced performance across both large and small caps.
14:00 – U.S. vs. International Equities: A notable momentum shift favors international equities, especially in developed markets. Stockton sees 2025 as a potentially stronger year for ex-U.S. assets, though not necessarily signaling a long-term secular shift.
15:40 – Spotlight on Global Benchmarks: Germany’s DAX shows one of the strongest long-term uptrends. Japan’s Nikkei mirrors the U.S. with choppy consolidations. China (FXI, KWEB) is forming a base and offers long-term opportunity pending short-term catalysts.
18:40 – Sector Outlook: Utilities, REITs, and consumer staples – defensive sectors – show improving technicals, while technology is weakening. Stockton downgraded tech and upgraded materials to equal weight due to oversold conditions. Discretionary and communications sectors are neutral to modestly constructive.
23:25 – Crude Oil and Energy & Gold and Precious Metals: Stockton remains cautious on energy and natural gas, despite short-term outperformance, citing weakening momentum. Gold remains in a strong secular uptrend despite short-term consolidation. Stockton sees potential in platinum, which recently broke out of a multi-year triangle pattern. Cocoa and other commodities also look attractive technically.
27:30 – U.S. Dollar and Treasury Yields: The U.S. dollar has broken below the cloud, favoring a longer-term bearish outlook. 10-year Treasury yields remain rangebound, while a breakout in 30-year yields above 5.14% would signal a meaningful macro shift.
29:50 – Bitcoin: Bitcoin hit a new all-time high, but Stockton urges patience and warns against chasing strength before confirmation of a breakout. A short-term DeMark sell signal could invalidate the breakout if prices drop below $108K.
33:45 – Q&A Session: Ed takes a few questions from the audience on the U.S. bond market and midcap performance.
If you are interested in viewing the recording and getting all the insights, reach out to your CAPIS sales representative or [email protected].
