CAPITAL SEASONS
WEEKLY MARKET COMMENTARY
Week Ending 9 May 2026
Invest with the seasons. Not the noise. | capitalseasons.co.za
Grounded in the investment principles outlined in Dr Bart DiLiddo’s book — the three forces that drive all stock prices: earnings, inflation, and interest rates. The Capital Seasons framework builds on these principles in its own way.
📊 THIS WEEK AT A GLANCE
| MPI | 1.60 | Spring | Late Spring/Watch |
| VIX 17.19 | SPY vs 50D +7.1% | QQQ vs 50D +12.3% | Season Spring ✓ |
GLOBAL CONTEXT OVERVIEW
Markets staged a powerful recovery this week, and the numbers confirm it. SPY closed at $737.62, up +11.0% for the month and sitting +7.1% above its 50-day moving average and +8.7% above its 200-day moving average. QQQ was even stronger — up +18.1% for the month, standing +12.3% above its 50-day SMA.
The Dow (DIA) added +6.4% for the month, while the Russell 2000 (IWM) came in at +11.6% — a healthy signal that the recovery is not confined to mega-cap names only.
Volatility has retreated meaningfully. The VIX closed at 17.19, down over 20% on the month and more than 33% year-on-year. A VIX under 18 is consistent with a functioning Spring market — risk appetite has returned.
Gold (GLD) at $433.77 is essentially flat for the month, having pulled back slightly below its 50-day SMA, though it remains well supported on a 1-year basis (+38.9%). The precious metals thesis — central bank buying, dollar weakness, geopolitical complexity — remains intact beneath the surface.
The US dollar (UUP) continues to soften — down 1.2% for the month and sitting 0.5% below its 50-day SMA. A structurally weaker dollar is broadly supportive for global equity markets, commodities, and emerging market assets.
SOUTH AFRICA
The JSE is showing meaningful strength: +13.2% above its 50-day SMA and a remarkable +44.3% above its 200-day SMA. South Africa has quietly had a very good run, supported by commodity tailwinds, a stabilising fiscal outlook, and improved sentiment toward emerging markets.
The ZAR has strengthened marginally against the dollar (+0.31% this month). For South African investors holding USD-denominated assets, a slightly firmer rand means the rand value of those holdings is marginally reduced on conversion — a small headwind, not yet material. ZAR stability is a positive signal for imported inflation and SARB policy flexibility. With inflation trending lower, the door remains open for rate relief later in 2026.
UNITED STATES — THREE FORCES
This is where the story is most compelling this week. Three forces — and all three are cooperating.
Force 1: Earnings
89% of S&P 500 companies have now reported Q1 2026 results. 84% beat EPS estimates — above the 5-year average of 78% and the 10-year average of 76%. Aggregate earnings came in 18.2% above estimates — if this holds, it will be the highest positive surprise margin since Q1 2021. The blended earnings growth rate is tracking near 19%+ year-on-year. Analysts are now calling full-year 2026 growth of approximately 21%. The 50-day moving average of earnings is pointing upward. This is the earnings environment DiLiddo’s framework associates with sustained bull conditions.
Force 2: Inflation
The dollar is weakening without triggering inflation alarm bells — a delicate balance the Fed has managed carefully. Credit markets (HYG) are essentially flat for the month and sitting right at their 50-day SMA. Investment grade bonds (LQD) are similarly range-bound. This is consistent with a market that believes inflation is manageable and rate risk is contained.
Force 3: Interest Rates
The Federal Reserve held rates steady at its May meeting. With the earnings cycle strengthening, the Fed has room to wait. The long bond (TLT) is down 1.1% for the month — the bond market is not signalling imminent rate cuts, but it is also not in distress. Rate stability at current levels is a net positive for equities.
GLOBAL MARKETS
International developed markets (EFA) are up +4.6% for the month, reflecting a broader global recovery and a weaker dollar making non-US assets more attractive. Emerging markets (EEM) are up a notable +16.2% for the month, benefiting from the dollar tailwind, commodity strength, and improved risk sentiment. Copper ETFs (COPX, COPP) are up 7–8% for the month, signalling improving global industrial demand expectations.
THREE FORCES SUMMARY
| Region | Earnings | Inflation / Rates |
| South Africa | Improving | Stabilising | Easing path intact |
| United States | Strongly improving | Manageable | Stable / patient |
| Global | Improving | Under watch | Divergent, generally easing |
GUIDANCE FOR INVESTORS
- Stay planted in Spring. Both SPY and QQQ are above their 50-day moving averages. VIX is below 18. This is not the time to be pulling up roots prematurely.
- Earnings are the foundation. A blended Q1 growth rate approaching 19% year-on-year, with 84% of companies beating estimates, is exactly the earnings environment DiLiddo associates with sustained bull conditions. Trust the fundamentals, not the headlines.
- Breadth is healthy — eight of eleven major sectors are above their 50-day moving averages. Leadership is concentrated in tech and AI-adjacent names, but industrials, consumer discretionary, real estate, and materials are all participating. Broad participation is a sign of a healthy Spring.
- Energy and utilities are lagging — no need to chase. Energy ETFs are down 6–7% for the month. These are not Spring leaders. Patience here is more appropriate than action.
- Gold and precious metals: consolidation is not a crisis. GLD pulled back slightly below its 50-day SMA. The structural case — central bank demand, dollar weakness, geopolitical complexity — has not changed.
- For SA investors: the ZAR is holding its ground. USD-denominated assets are growing in dollar terms. Do not confuse short-term rand stability with a reason to reduce offshore exposure.
CAPITAL SEASONS WEATHER MAP
| SEASON Spring — Deepening | SIGNAL Clear Conditions | POSTURE Planted & Growing |
Spring was first confirmed the prior week, and this week’s data deepens the picture. Both SPY and QQQ remain comfortably above their 50-day moving averages (+7.1% and +12.3% respectively). VIX at 17.19 sits firmly in Spring territory. The MPI registers 1.60 — placing us in the Late Spring/Watch band. A constructive signal that the market has moved from early recovery into something more substantive, while flagging that we should watch carefully as momentum builds.
Sector participation is broad: eight of eleven major sectors are above their 50-day SMAs. Tech and semiconductors are leading, pulling AI, robotics, and battery-related themes with them. Credit markets are calm. The dollar is softening gently — a tailwind for global assets and commodities.
This is a Spring market that is maturing. The discipline now is to stay in position, tend the garden you have planted, and resist the temptation to over-trade what is working.
SECTOR SENSEI — ROTATION SNAPSHOT
Leading Sectors — Spring Front-Runners
| Rank | Theme | ETF | 1M Perf | Signal |
| 1 | Semiconductors (small-cap) | XSD | +53.7% | Extended — watch for pause |
| 2 | Semiconductors (broad) | SMH / SOXX / PSI | +41.1% | Strong leader |
| 3 | AI Infrastructure | WTAI / SHOC / CHAT | +32–34% | Sustained momentum |
| 4 | Lithium / Battery Tech | LITP / LIT | +32.9% | Spring re-awakening |
| 5 | Technology (broad) | XLK / IYW / FTEC | +22.9% | Core Spring holding |
| 6 | Robotics & Automation | ROBO / FBOT | +20.9% | Healthy participation |
| 7 | Nuclear Energy | NLR / URA | +14.0% | Steady and strong |
| 8 | Infrastructure & Construction | PAVE / SLX | +12.1% | Industrials breadth |
| 9 | Consumer Discretionary | XLY | +11.2% | Consumer confidence present |
Participating Sectors — Solid but Not Leading
| Sector | ETF | 1M Perf | Note |
| Real Estate | XLRE | +6.4% | Benefiting from rate stability |
| Industrials | XLI | +5.9% | Broad market health |
| Comm Services | XLC | +5.0% | Participation, not leadership |
| Consumer Staples | XLP | +3.4% | Defensive, holding its own |
| Financials | XLF | +3.3% | Quiet — below Spring expectations |
| Materials | XLB | +2.6% | Modest — watching copper cycle |
Lagging Sectors — Not Spring Leaders
| Sector | ETF | 1M Perf | Note |
| Healthcare | XLV | -1.3% | Structural headwinds persist |
| Utilities | XLU | -2.5% | Normal underperformance in Spring |
| Energy | XLE / XOP | -6.9% | Oil softness — no rush to buy |
Sensei’s read: The semiconductor and AI infrastructure complex is the engine this Spring. Small-cap semis (XSD) up over 50% in a month is extraordinary — extended moves like this tend to consolidate before continuing. New positions in that space carry timing risk right now. The broader tech and automation theme is where the durability lives. The laggards — energy, utilities, healthcare — are not opportunities yet. Spring rewards patience with the leaders, not speculation in the stragglers.
MPI TRACKER — PASTE-READY ROW
| Date | VIX | Fear | Breadth% | Breadth Score | Avg 1M% | Momentum | MPI | Level | Season |
| 09 May 2026 | 17.19 | 1.6 | 72.7% | 1.6 | +4.6% | 1.6 | 1.60 | Late Spring/Watch | Spring ✓ |
HYG vs 50D: -0.09% | UUP vs 50D: -0.47% | SPY vs 50D: +7.1% | QQQ vs 50D: +12.3%
Note: Compare to prior week’s MPI to confirm direction. Two consecutive weeks in same direction = confirmed trend.
WEBSITE WEATHER COMMENTARY
For capitalseasons.co.za — descriptive, no directives
Spring conditions continue to hold this week. Both major US indices are trading above their 50-day moving averages, and the VIX remains below 18. Market breadth is positive, with the majority of sectors participating in the recovery. Technology and semiconductor-related themes are currently providing the clearest direction. Credit markets are calm, and the dollar continues to ease. Overall conditions remain consistent with a functioning Spring environment.
Capital Seasons | Invest with the seasons. Not the noise. | capitalseasons.co.zaDisclaimer: Capital Seasons is an educational platform. Content does not constitute personal financial advice or a solicitation to buy or sell any security. Always consult a licensed financial advisor before making inv
Planted and Growing: Your Weekly Market Weather Report