🌤 Season Status: Spring is Deepening
Both SPY and QQQ remain well above their 50-day moving averages. VIX sits at 16.7 — elevated for Spring but still in the manageable zone. The garden is growing. This week the MPI holds at 1.50, comfortably within the Spring band, and breadth across the main sectors remains healthy at 9 of 11 above the 50-day line.
| FEAR SCORE 1.60 | BREADTH SCORE 1.60 | MOMENTUM SCORE 1.30 | MPI TOTAL 1.50 |
| VIX: 16.70 | 9/11 sectors above 50D | Avg 1M sector: +2.0% | Spring (1.3–1.6) |
Week-on-week, the MPI has edged slightly lower from 1.50 (16 May) — momentum has softened compared to the exuberant readings of early May (MPI 1.87). That is normal Spring behaviour: the initial surge of energy settles into steadier, more selective growth. Breadth remains solid. Fear is contained.
📡 Market Weather Signals
| SIGNAL | READING | WHAT IT MEANS |
| SPY vs 50D SMA | +6.9% ▲ | Well above — Spring confirmed |
| QQQ vs 50D SMA | +11.7% ▲ | Strong — tech leading |
| SPY vs 200D SMA | +9.5% ▲ | Healthy long-term trend |
| VIX (Fear) | 16.70 | Calm, slight elevation — watch |
| HYG vs 50D SMA | +0.07% ▲ | Credit market stable |
| UUP (USD) | +0.54% ▲ | Dollar slightly firming |
| ZAR/USD | 0.0607 ▲ | Rand slightly stronger — watch for SA investors |
| GLD (Gold) | -2.9% ▼ | Pulling back from highs — miners under pressure |
| WTI Crude Oil | ~$96/bbl | Elevated; Iran/Hormuz uncertainty |
| Jobless Claims | 209,000 | Labour market remains robust |
🔄 Sector Sensei: Where the Growth Is
The rotation picture this week is striking in its clarity. Technology and semiconductors are dominating in a way that signals genuine Spring momentum — not a single outlier, but a whole cluster of related themes all moving together. Meanwhile, defensives are flat to slightly negative, and gold miners are pulling back from elevated levels. This is textbook Spring sector behaviour.
LEADING SECTORS (1-month momentum)
| ETF | 1M PERF | NOTES |
| XSD Semiconductors (small cap) | +33.8% | ▲ +35.7% vs 50D |
| FTXL Semiconductors (large cap) | +26.7% | ▲ +27.6% vs 50D |
| SOXX Semiconductors (broad) | +24.7% | ▲ +26.4% vs 50D |
| PSI Semiconductors (dynamic) | +23.4% | ▲ +26.3% vs 50D |
| SMH Semiconductor Equipment & Materials | +22.2% | ▲ +22.3% vs 50D |
| WTAI AI & Technology | +22.0% | ▲ +23.0% vs 50D |
| SHOC AI Infrastructure & Data Centres | +19.4% | ▲ +21.0% vs 50D |
| TAN Solar Energy | +18.6% | ▲ +12.5% vs 50D |
| CHAT Generative AI Companies | +17.2% | ▲ +20.4% vs 50D |
| QTUM Quantum Computing & AI | +16.6% | ▲ +19.4% vs 50D |
| IXN Global Technology | +15.7% | ▲ +17.0% vs 50D |
LAGGING / DEFENSIVE SECTORS
| ETF | 1M PERF | NOTES |
| XLB Materials | -3.4% | ▼ -1.2% vs 50D |
| XLF Financials | -1.1% | ▲ +1.9% vs 50D |
| XLU Utilities | +0.1% | ▼ -1.7% vs 50D |
| XLI Industrials | -0.5% | ▲ +0.8% vs 50D |
| GDX Gold Miners (large cap) | -7.5% | ▼ -6.2% vs 50D |
| GDXJ Gold Miners (junior) | -8.4% | ▼ -7.0% vs 50D |
| URA Uranium Miners | -9.1% | ▼ -5.7% vs 50D |
| SPRING WATCH: ENERGY Energy is quietly building. OIH (oilfield services) posted +8.9% for the month, IEZ (oil equipment) +9.3%. XLE (broad energy) returned +5.8%. All remain above their 50-day averages. WTI crude at ~$96 — elevated, driven by Iran/Hormuz uncertainty. This is geopolitically sensitive, not demand-driven, so energy positions should be sized with that context in mind. | GOLD MINERS: STILL PROTECTED GDX and GDXJ are down 7–8% on the month, pulling back after a strong run earlier in 2026. Quant ratings (4.15–4.18) remain intact. As Winter-protected assets in the portfolio, short-term momentum pullbacks are not action signals. Physical gold (GLD) is also -2.9% for the month but remains above its 200-day SMA. The thesis is unchanged. |
📊 The Earnings Pillar: Strongest Season in Years
One of the three forces driving stock prices is corporate earnings — and right now, earnings are doing the heavy lifting. With 94% of S&P 500 companies having reported for Q1 2026:
| 84% beat EPS estimates vs 78% avg (5yr) | 81% beat revenue estimates highest since 2022 | +28.4% blended earnings growth year-on-year, Q1 2026 |
If the 28.4% earnings growth rate holds, it will be the highest reported by the S&P 500 since FactSet began tracking the metric in this format. Net profit margins for Q1 2026 hit 14.8% — a record high, and above both the prior quarter (13.2%) and a year ago (12.8%). Technology and Communication Services led the margin expansion.
What this means for Capital Seasons: The earnings pillar is firmly supportive of Spring. Corporate health is not the concern right now. The watch points are the other two forces — inflation (still elevated, CPI forecast ~3.7% for April) and interest rates (Fed on hold; market not pricing cuts soon). The garden has good soil. Watering conditions are the variable.
🌡 Inflation & Interest Rates: The Remaining Uncertainty
| Inflation Watch FactSet’s April 2026 CPI forecast sits at 3.7%. That is above the Fed’s 2% target, and it has not come down cleanly. The HYG credit ETF is holding just above its 50-day SMA — a marginal signal, but not a red flag yet. LQD (investment grade bonds) is below its 50-day SMA, reflecting ongoing rate pressure on longer duration. | Fed & Rates The Fed is on hold. Jobless claims at 209,000 confirm the labour market remains resilient — which removes urgency for rate cuts. This is why the MPI momentum score reads 1.3 rather than higher: the market is growing, but the rate environment has not turned overtly supportive yet. Spring, not Summer. |
🌿 Portfolio Gardener: Spring Posture
In Spring, the priority is watering what is growing and being selective about new seeds. The sector rotation data this week makes the Spring playbook clear:
| 💧 WATER | Semiconductor, AI/tech, and energy positions with strong momentum and Quant ratings above 4.0. These are the plants with deep roots and upward growth. |
| 🌱 KEEP | Energy services (OIH, IEZ), solar (TAN), quantum/robotics themes. Growing steadily, above their 50-day lines, Quant intact. |
| ✂️ TRIM | Positions in materials (XLB), utilities (XLU), or industrials (XLI) that are lagging and below their 50-day SMA, unless held for specific income or diversification reasons. |
| 🛡 PROTECT | Gold miners (KGC, NEM, SSRM, CDE, GDX, GDXJ) — Winter-protected assets. The pullback this month does not change the thesis. Their role is insurance, not momentum. Hold. |
🇿🇦 SA Investor Perspective
The ZAR/USD exchange rate sits at 0.0607 — the rand has strengthened slightly over the past month (+0.03%). For South African investors holding USD-denominated assets, a stronger rand means you receive fewer rands when converting your returns back. It does not reduce the value of your investment in USD terms, but it does moderate the rand-denominated gain.
The JSE All Share (JSEJF) pulled back 14.2% over the past month and sits below its 50-day SMA. Platinum and precious metals remain a watch area — IMPUY (Impala Platinum) on the future radar for precious metals diversification. The domestic picture is more mixed than the US market right now, which is why offshore exposure via the Beginner Starter Portfolio remains relevant.
🌱 Beginner Starter Portfolio: Spring Conditions
Our three-ETF starter track (for TFSA and RA holders on EasyEquities) continues to benefit from the Spring environment. These funds give broad exposure to the themes currently leading the market:
| ETF | WHAT IT TRACKS | SPRING RELEVANCE |
| CSP500 | S&P 500 — 500 largest US companies | Broad Spring exposure — SPY up +5.5% this month |
| STXNDQ | Nasdaq 100 — tech, AI, semiconductors | QQQ up +10.9% this month — leading sector |
| STXCAP | SA mid/small cap — local diversification | Monitor JSE conditions — currently below 50D SMA |
📝 This Week’s Takeaway
| Spring is not uniform — and that is fine. The market is giving us a clear message this week. Technology and semiconductors are growing with force and conviction. Energy is building steadily. Defensives are resting. Gold miners are pulling back from strong levels but remain structurally intact as protection. An MPI of 1.50 is healthy Spring. It is not the euphoric 1.87 of early May, and that is actually reassuring — breathless markets overshoot, and sustainable growth tends to pulse, not sprint without pause. The earnings picture is genuinely impressive. The inflation and rate picture remains cautious but stable. The labour market is holding. In Spring, stay invested in what is growing. Don’t reach for yield in defensive corners that the season has not yet warmed. And keep your winter plants — they’ll matter again. |
This newsletter is grounded in the investment principles outlined in Dr. Bart DiLiddo’s book — specifically 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.
Capital Seasons is an educational platform. Nothing in this newsletter constitutes financial advice. All investment decisions remain your own. Past season patterns do not guarantee future results.
Spring, Deepening