Long-Term Uptrend. Short-Term Warning Signs | Katie Stockton on What Charts Say About What's Next

Episode Summary

Executive Summary: Katie Stockton argued that U.S. equities remain in a long-term uptrend into 2026, but the slope is likely to be less steep and more volatile after Q4 momentum loss. Near term, she is cautious on the NASDAQ 100 and mega-cap tech, sees value/defensive sectors gaining relative strength, and favors a systematic, confirmation-based approach across equities, metals, FX, and Bitcoin.

Main Topics: 2026 U.S. equity outlook: bullish long term, choppier short term (Priority: 5/5): Stockton sees the S&P 500 and broader U.S. market still in an uptrend, but expects a slower, less linear rally with more corrective phases and volatility. NASDAQ 100 consolidation and leadership loss (Priority: 5/5): The NASDAQ 100 is in a triangle consolidation with narrowing volatility. Stockton views the short-term setup as cautious to bearish, with downside breakdowns more likely than breakouts until momentum improves. Technical toolkit: clouds, MACD, stochastics, and DeMark signals (Priority: 4/5): She explained how Ichimoku clouds define trend and support/resistance, while MACD, stochastics, and DeMark indicators help confirm or reject entries and exits rather than predict moves. Mega-cap tech divergence and sector rotation (Priority: 5/5): Leadership among the Mag 7 has become more dispersed, with Alphabet stronger and Microsoft/Meta weaker. Stockton sees tech’s relative momentum fading while communication services, healthcare, and financials show better setups. Broadening opportunities: value, small caps, and sector turnarounds (Priority: 4/5): She noted some stabilization in small-cap relative strength and expects value to outperform growth in the near term, even though growth remains the stronger long-term trend. Alternative assets and macro cross-currents (Priority: 4/5): Gold, silver, Bitcoin, and the dollar are all discussed as technically significant. Gold remains strong, silver is higher-beta and more volatile, Bitcoin is still in a secular uptrend but with long-term momentum deterioration, and the dollar may be rebounding from oversold conditions. Systematic strategy and the TAC ETF (Priority: 4/5): Fairlead’s TAC ETF uses monthly technical signals to rotate among sectors and hold risk-off assets when warranted, aiming to capture leadership while limiting drawdowns.

Key Arguments: Stockton does not publish predictive year-end targets; she emphasizes identifying prevailing trend, risk, and confirmation levels. The U.S. equity market still has a valid long-term uptrend, but Q4 showed distinct momentum loss that argues for a choppier advance rather than a steep rally. Monthly DeMark sell signals exist, but without confirmation she does not treat them as actionable. The short-term setup on the NASDAQ 100 is more vulnerable to a breakdown than a breakout because of weakening intermediate-term momentum. Ichimoku cloud models are useful because they provide trend, support/resistance, and a forward-looking gauge that complements oscillators. Mega-cap tech is no longer moving as one basket; investors appear to be judging names individually, which may indicate a market shift toward more active stock selection. Communication services remains strong; healthcare, financials, industrials, and materials are showing turnaround characteristics; tech is still held in TAC because long-term trend remains positive. Energy is still weak in relative terms, but some oil services names suggest an early turnaround if crude prices improve. Real estate and utilities may benefit if Treasury yields continue to trend lower in the first half of the year. Gold is a strong long-term holding and silver is more volatile but still in an uptrend; Bitcoin has positive short/intermediate momentum but weakening long-term indicators. The dollar’s pullback may be an oversold reset within a larger secular uptrend, implying some near-term strength. TAC is designed as a hedged-equity, systematic allocation tool that shifts among sectors and risk-off assets based on monthly technical signals rather than forecast-driven views.

Data Points: NASDAQ 100 upside triangle level: around 25,700 - Upper boundary of the near-term triangle formation Stockton cited NASDAQ 100 downside triangle level: around 25,000 - Lower boundary of the near-term triangle formation Stockton cited Small-cap benchmark: Russell 2000 vs. S&P 500 200-day moving average ticked up - She cited improving but still tentative relative strength for small caps Sentiment threshold: below 25% - CNN Fear & Greed index level she described as usually positive but not sufficient alone for entry Overbought threshold: around 75% - CNN Fear & Greed index level where a downturn could imply a retest TAC equity exposure: 75% - Current approximate equity exposure in the Fairlead Tactical Sector ETF after model-driven reduction TAC sector holdings: 6 sector positions - Number of sectors currently held by the TAC ETF Risk-off sleeve: 25% exposure - Alternative assets used for drawdown control in TAC Average turnover: about 100% - Historical turnover for TAC’s systematic strategy

Pivotal Quotes: "We think that there is not enough evidence yet to suggest that we have an intermediate term entry point at hand." — Katie Stockton: On whether the recent correction in major indices has ended "Triangles are indeed neutral formations, but they show a market that's gotten less and less volatile, but it tends to precede a pretty big spike in that volatility either to the upside or downside." — Katie Stockton: Explaining the NASDAQ 100 consolidation pattern "We are big believers in long-term investing. If you can be a long-term investor, it is good to maybe ignore some of these corrective moves and just hold through those as long as you don't see that long-term deterioration." — Katie Stockton: On reconciling short-term caution with long-term bullishness

Implications: Investors should expect more dispersion, more sector rotation, and a need for confirmation rather than anticipation. The favored playbook is to stay aligned with long-term uptrends while waiting for better technical entry points in tech, using relative strength and risk controls to rotate into sectors and assets showing new leadership.