CAPITAL SEASONS
Weekly Market Commentary
Week Ending 24 July 2026
Global Context Overview
Markets held their ground this week without giving up much more of it — a second straight week of Winter conditions, but a stalled one rather than a worsening one. The S&P 500 (SPY) closed at $738.93, sitting just 0.8% below its 50-day average while remaining comfortably above its 200-day trend at +5.8%. The Nasdaq-tracking QQQ told a rougher story, closing at $684.23 and sitting 4.7% below its 50-day — confirmation that this month’s pressure is concentrated in technology, not the broader market.
Volatility drifted slightly higher rather than spiking. The VIX closed at 18.58, and its four-week average edged up to 17.05 from 17.0 the week before — a slow grind, not a shock. Gold gave back some short-term ground, down 4.7% against its own 50-day even as it remains up close to 20% over the past year, a sign that safe-haven flows rotated elsewhere this week. The dollar firmed modestly (UUP +1.6% vs its 50-day) — a headwind that shows up directly in how the rand behaved.
South Africa
The rand told two different stories this week, depending on which window you look through. Over the past month, ZAR/USD slipped 1.6% — the rand weakening against the dollar, which works in favour of South African investors already holding US-dollar assets, since those dollars convert back to more rand than they did four weeks ago. Zoom out to the full year, though, and the rand has actually strengthened 4.7% against the dollar — a reminder that a month’s move and a year’s trend can point in opposite directions, and why it matters which window is doing the talking.
Locally, the SARB’s Monetary Policy Committee held the repo rate at 7% on Thursday, in a 4-2 vote, even as June’s CPI print accelerated to 5.0% — the highest reading in roughly two years, up from 4.5% in May. Governor Kganyago pointed to the same story driving oil markets globally: escalation in the Middle East has pushed fuel prices higher and is feeding directly into the inflation number, while domestic growth stays subdued. The SARB chose to hold rather than chase a supply-side shock with a hike — a measured stance, but one that leaves less room to manoeuvre if oil-driven inflation proves stickier than expected.
A note on the JSE read this week: our current JSE proxy instrument is thinly traded and shows a striking +43% gain against its 200-day average against a -9.5% pullback on the 50-day. Given how narrow that instrument is, we’d treat the direction — a pullback after a strong run — as indicative rather than definitive, and lean on the broader SA Sentiment System read for confirmation.
United States — The Three Forces
Dr Bart DiLiddo’s foundational insight is that three forces — earnings, inflation, and interest rates — drive stock prices more than any headline or forecast. Capital Seasons was built on that same discipline: read the three forces honestly each week, and let the season follow the data rather than a story. This week, all three are worth a look in turn.
Earnings
The U.S. reporting season is a little over a quarter of the way through (27% of S&P 500 companies so far), and the numbers are genuinely strong — 86% of reporters have beaten EPS estimates and 80% have beaten on revenue, both comfortably above their five- and ten-year averages. One outsized gain from a single large technology name is inflating the aggregate headline growth figure considerably; strip that one name out and underlying earnings growth is still comfortably above 25% year-on-year — a robust number by any historical standard, not a manufactured one.
Inflation & Rates
The Fed is in its pre-meeting blackout period ahead of the 28–29 July decision, so there’s little fresh signal from Washington this week. The labour market keeps sending the same message, though — initial jobless claims fell sharply to 187,000 against 212,000 expected, reinforcing a still-tight backdrop that gives the Fed room to hold rather than react.
This Week in Four Questions
What happened?
Winter held for a second week — both SPY and QQQ stayed below their 50-day averages, QQQ considerably more so, while volatility drifted slightly higher rather than spiking.
Why did it happen?
Sector leadership split three ways at once — defensive Health Care, event-driven Energy, and early-cycle Financials were all firm together — semiconductors extended their pullback despite very strong underlying earnings, and a geopolitically-driven oil spike is filtering into inflation data on both sides of the Atlantic.
What does it mean for my portfolio?
Nothing urgent — this is a stay-the-course week, not a take-action week. The one area worth genuine attention is the small-cap tier, where the Strong Sell share has climbed to 8.7% and is approaching the 10% level we treat as an early warning.
What should I watch next?
Whether small-cap deterioration continues toward that 10% threshold, whether oil holds its recent pullback or reignites on further Middle East escalation, and whether next week’s heavy earnings docket (177 S&P 500 companies reporting) broadens strength beyond the handful of names currently carrying the headline growth number.
Sector-Sensei — Rotation Snapshot
Leadership this month has a clear defensive tilt: Energy (+11.3%), Health Care (+6.0%), and Financials (+4.8%) are carrying the market’s one-month return, while Technology (-3.9%) and Consumer Discretionary (-4.9%) are the clearest laggards. Underneath the Technology headline, semiconductors are doing most of the damage — down 9–12% over the month even as the sector posts some of its strongest earnings in years (more on that below).
The cap-tier gradient remains the number worth watching most closely. Each tier’s sentiment reading weighs the share of buy-rated names (Strong Buy + Buy) against sell-rated names (Sell + Strong Sell) — and that balance thins out steadily as you move down in size. Mega leads at +15.6% sentiment, Large follows at +11.6%, Mid at +8.3%, and Small has narrowed to just +1.7%. Within Small Cap specifically, the more severe Strong Sell slice on its own has climbed to 8.7% — closing in on, but not yet through, the 10% level that marks a genuine early-warning signal.
The Silicon Season — An AI Infrastructure Watch
This month delivered one of the clearest “buy the rumour, sell the news” episodes we’ve seen from the AI infrastructure theme. TSMC and ASML — the two companies that between them make and equip the machines behind almost every advanced AI chip — both reported genuinely strong quarters, with TSMC posting record profit growth and both firms raising their 2026 guidance. The market’s reaction was still to sell the stocks: the semiconductor ETFs we track (SMH, SOXX, SOXQ) are all down 9–12% over the past month despite that backdrop.
The read here isn’t that AI demand is weakening — every earnings call says the opposite. It’s that a sector priced for perfection leaves very little room for anything short of flawless, and even record results plus raised guidance aren’t enough on their own to hold multiples where they were. Whether leadership eventually broadens out to the second-order beneficiaries of this spending — power, cooling, construction, packaging — or the concentration in a handful of mega-cap names simply continues, is exactly the question this feature exists to keep watching.
Capital Seasons Weather Map
This week’s Capital Seasons Weather Map registers Winter, holding, with Mixed Conditions and a Defensive posture.
- Trend: Both major U.S. indices remain below their 50-day averages, QQQ markedly so — the trend hasn’t deteriorated further this week, but it hasn’t turned either.
- Participation & rotation: Leadership remains narrow and defensively tilted; small caps are the tier to watch as breadth thins from the bottom up.
- Volatility & stress: VIX sits at 18.58, four-week average 17.05 — elevated versus a month ago, but not stressed.
- Liquidity backdrop: The dollar firmed modestly this week, a mild headwind for risk assets and emerging-market currencies alike.
Tactical discipline: this is a week for patience, not adjustment — let the season, not the noise, set the pace.
Global & Currency Lens
Worth sitting with this week: the rand weakened against the dollar over the past month (-1.6%) even as it remains stronger over the full year (+4.7%). For a South African investor holding US-dollar assets, the monthly move is the more immediately useful one — those dollar holdings are worth more in rand terms today than they were four weeks ago. But the yearly trend is the one that matters for anyone deciding whether to add new dollar exposure at current levels; a currency that’s up nearly 5% over twelve months isn’t obviously cheap simply because it slipped over the last four weeks.
Guidance for Investors
- Hold the current course. Winter conditions persist, but nothing this week signals the need for defensive action beyond what’s already in place.
- Watch the small-cap tier. A Strong Sell share of 8.7% isn’t a trigger yet, but it’s the one number worth checking again next week before any other.
- Resist chasing the semiconductor pullback or the semiconductor strength. Strong earnings and falling prices can coexist for a while in a richly-valued sector — patience serves better than a reaction either way.
- Keep currency decisions on separate timeframes. A weaker rand this month doesn’t undo a stronger rand this year — match the decision to the horizon it’s actually about.
- Stay earnings-led, not headline-led. The reporting season backdrop is genuinely strong; let that inform conviction more than any single day’s price move.
| Website Weather Commentary (for capitalseasons.co.za) Winter conditions persisted this week, with major indices holding below their 50-day trend and volatility drifting modestly higher. Defensive sectors led, while technology and small caps showed the clearest signs of strain. Currency and commodity markets stayed active, shaped largely by ongoing geopolitical developments. Conditions remain watchful rather than alarming. |
| Just Starting Out — Why does “the market” sometimes mean different things? You’ll often hear “the market is up” and “the market is down” in the same week — and both can be true. That’s because different indices measure different slices of the market. The S&P 500 (SPY) tracks 500 large U.S. companies across every industry. The Nasdaq (QQQ) leans heavily toward technology. So when tech is under pressure but everything else is holding steady, QQQ can fall while SPY barely moves — exactly what happened this week. The lesson: before reacting to “the market,” it’s worth asking which market, and whether it actually touches what you own. |
Capital Seasons | Invest with the seasons. Not the noise.
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Disclaimer: 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 investment decisions.
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