CAPITAL SEASONS

WEEKLY MARKET LETTER

20 September 2026  ·  capitalseasons.co.za

Prices said Spring. Underneath, it hadn’t turned yet.

What happened

The S&P 500 and Nasdaq both climbed back above their 50-day averages this week, and volatility eased to its calmest level in a month. On the surface, that’s a season change — from Autumn back to Spring.

Why it happened

Breadth held up well — measured across the full US market, roughly 7% more stocks are net bullish than bearish, and that number actually improved slightly from last week. So the advance isn’t just a few giant names carrying the index. But look one layer down and the picture splits: the average return across all the major industry groups over the past month is still negative. Prices have turned before the broader market has confirmed it.

What it means for your portfolio

This is an early-cycle signal, not a green light. History tells us Spring calls that arrive with soft underlying momentum can prove premature — worth respecting the shift, not chasing it.

What to watch next

Whether the rest of the market catches up to the index leaders over the next two or three weeks. If it doesn’t, this Spring reading may need revisiting.

Global Context

Estimates for third-quarter company earnings in the US are running close to 29% growth year-on-year — a genuinely strong number, and one that’s been revised up, not down, over the quarter. Forward valuations sit close to their five-year average, so the market isn’t pricing in euphoria — it’s pricing in continued delivery. Labour data stayed constructive: initial claims eased to 196,000, a healthy print, and August’s jobs report beat expectations comfortably. Oil climbed through the week to just over $103 a barrel, worth watching for any pass-through to inflation expectations.

South Africa

The rand has continued strengthening against the dollar — up around 4% over the past three months and roughly 6.7% over the past year. Worth restating the mechanics here, because it’s easy to get backwards: a stronger rand is good news for imported goods and local inflation, but it works against you if you’re holding US-dollar assets, because those dollars buy fewer rands when you convert. If you’ve been feeling like your offshore holdings haven’t kept pace with how the US market’s performed in dollar terms, this is a meaningful part of the answer.

United States

Both the S&P 500 and Nasdaq are back above their short-term trend lines. Volatility is calm. But under that calm, most individual industry groups are still down over the past month — a genuine tension between what the index says and what most stocks are doing. That gap is this week’s central story.

Global Markets

Two clear rotations this week. Gold and silver miners had a strong month — up 8 to 9% — alongside Brazilian equities. On the other side, defence and aerospace names saw a sharp pullback, down 12 to 17% over the month after a long run higher. That reads more like profit-taking in a crowded trade than a change in the underlying story for that sector — but it’s a big enough move to flag.

Guidance

Nothing here changes the discipline: stick to your own plan, don’t chase the index number without checking what’s underneath it, and treat this week’s Spring call as early, not confirmed. As always — this is a read of the data, not a personal recommendation; what you do with it depends on your own situation and goals.

Weather Map

Season: Spring (upgraded from Autumn this week) — but call it a fresh one, not an established one. Two of our three pressure readings flipped decisively bullish: volatility eased to its calmest level in a month, and market breadth stayed healthy. The third — momentum — hasn’t caught up. It’s still reading well below the other two, because the average return across most industry groups over the past month is still negative.

Input	Value	Score
Fear (VIX, 4-week average)	14.90	8.49
Breadth (market breadth spread)	+7.3%	7.81
Momentum (avg. sector, 1-month)	-2.1%	4.14

That gap matters. In our experience, when momentum lags this far behind the other two readings, one of two things happens within a few weeks: either the broader market catches up and confirms the season, or it doesn’t and the label gets revised. So this week’s Spring call is real by the letter of the framework — both major indices are back above their short-term trend lines and volatility is genuinely low — but treat it as a first read, not a confirmed one. The distinction is between “the weather has turned” and “the weather has turned and stayed turned for a while.” We’re only at the first stage.

Underneath the headline: large and mega-cap sentiment across our screens improved again this week; small-cap sentiment is still marginally negative, though off its lows. One number worth watching — the share of small caps carrying our weakest ratings ticked up again, closing in on a level we treat as an early caution flag. Not there yet, but close enough to note.

Sector-Sensei

The standout theme this week is precious metals — gold and silver miners have had a genuinely strong month, alongside a pickup in Brazilian equities. The clearest laggard is defence and aerospace, which gave back a meaningful chunk of a long run higher. Read this as rotation and profit-taking within a strong group, not a broken thesis.

Silicon Season

Chip and hardware names remain a bright spot in the book this week, with several portfolio holdings in this space continuing to screen well on quality. The broader AI infrastructure story is still the single biggest driver of both earnings growth and earnings uncertainty in the US market right now — heavy capital spending by the largest tech companies is lifting reported growth for chipmakers while simultaneously compressing near-term margins for the companies doing the spending. Two sides of the same coin, worth remembering when you see either story reported in isolation.

Portfolio Gardener — Summary

One position dropped below our quality floor this week and moves to Weed. A handful of others are sitting just above that line and go on the watch list — nothing actionable there yet, just closer attention. The book as a whole continues to screen healthy.

JUST STARTING OUT This week the market told us two different things at once. Prices — the S&P and Nasdaq — climbed back above their short-term averages, which is normally a “Spring” signal. But under the surface, most industry groups are still down over the past month. That’s not a contradiction; it’s just the market moving in stages. Big, well-known companies often turn first, and the rest of the market catches up later — or doesn’t. The lesson isn’t to chase the headline number. It’s to notice when the surface story and the underlying story disagree, and to wait for them to agree before getting more confident either way.

Capital Seasons  ·  capitalseasons.co.za  ·  Educational content, not personalised financial advice.