This website’s prior blog illustrated internal bullish momentum for the U.S. stock market. The current blog shows the sectors where some of the internal momentum is coming from.
The first chart courtesy of Trading View shows the action of the Health Care (XLV) sector since February 2026.
During the week of 10/12/26 to 10/16/26 while the S&P 500 (SPX) trended down, XLV went up and made a new all-time high. Please note the significant bearish RSI divergence on 10/16/26 and the gap up on 10/15/26. It’s possible this move to new highs was a climatic peak. If during the week of 10/19/26 to 10/23/26 – XLV goes below its 10/13/26 bottom it could be the start of at least a multi-week decline.
The next chart examines the Energy (XLE) sector.
At its peak on 10/16/26 XLE had a double bearish RSI divergence vs. its August reading. Please note that only a small increase in price could erase the RSI bearish divergences.
The reason XLE is climbing is because Crude Oil continues to rise. If Crude Oil continues its upward move, it very likely will increase the U.S. inflation rate, which could cause additional upward pressure on U.S interest rates.
A continuing rise of U.S. interest rates could have an adverse effect on the U.S. economy and most U.S. stocks.
The next chart looks at the action of the Technology (XLK) sector.
For most of 2026- XLK was the main force behind the U.S. stock bull market.
From late March to October XLK gained 60%.
From July to October XLE gained 29%.
From late April to October XLV gained 26%.
If the U.S. stock market can resume its bull market it most likely will need XLK to provide much of the strength.
Note that on 10/16/26 XLK – RSI was at its lowest level since its peak made in early June. A case could be made that XLK is near an important bottom and ready for a bull run. Regardless of what happens to XLE and XLV next week, the most significant signal could come from XLK.
Even though two U.S. stock market sectors are making new highs most U.S. stocks are in bear trends.
Technology has been the leader in 2026 and is likely to lead the next bull phase.
The action XLK takes in the next trading week could provide important signals.
