April 2026 | Monthly Market Update
Back Above the Red Line
What It Means, What We’re Watching, and What We’re Doing
Between the Iran war, oil above $100, and the headlines getting louder by the day, it would
be easy to panic right now. It would also be easy to ignore everything and hope it blows over.
We don’t do either. We focus on the trend.
Here’s where things stand as of mid-April 2026 — and what it means for portfolios.
Key Takeaway: The S&P 500 broke
below the 200-day moving average last month and has since recovered. Long-term trend is back positive. Short-term trend is still negative but improving. We took precautionary action during the dip. We’re now watching for confirmation that the recovery is real.
The Market Barbell
At any given time, you can make a compelling case for optimism or pessimism. We call this
the market barbell — heavy risks on one side, heavy opportunity on the other.
The Headwinds
- Iran conflict — Oil above $100, Strait of Hormuz blockaded, defense spending surging
- US debt approaching $39 trillion — Global debt at $350-360 trillion.
Fiscal drag is real. - Global currency risk — Japanese interest rates rising, yen carry trade
threatening to unwind, potential for systemic shockwaves
If you wanted to focus on this side of the barbell every day, you could make yourself sick.
The financial media certainly does.
The Tailwinds
- Corporate earnings at record highs — Productivity continues to grow.
Stock prices have stalled while earnings rose, which means PEs are compressing. The textbook says that’s the ideal time to invest. - AI boom accelerating — Google just reported over $100
billion in net income. That’s after paying rent, people, electricity, and taxes. Google could buy a major corporation every year with just their cash flow. - Economic expansion with a more accommodative Fed — New Fed chairman
coming in May, expected to be more accommodative with liquidity. And if there’s one thing we know: markets love liquidity.
You can make a strong case for either side. We don’t invest based on either narrative. We invest based on the trend.
The Long-Term View: Markets Are Rigged in Our Favor
Even though we manage risk actively, we want to remind you: generally speaking,
markets go up over time. If for no other reason than global central banks continuously devalue fiat currency, inflating the assets those currencies can buy.
That long-term uptrend is real and it’s powerful.
But within that long-term uptrend, the market can lose half its value — and it does so somewhat regularly.
The dot-com bubble. Devastating. When it unwinds, it unwinds fast.
The financial crisis. A torture chamber over a year and a half. The market lost more thanhalf its value.
If you’re approaching retirement or in retirement, you need a plan to not lose half your money in the next downturn. If you’re 25 with a high income, you can focus on the 50-year mountain chart. But if you’re relying on your portfolio for income, you need to be able to shift between the optimistic and pessimistic side of the barbell based on what the trend is telling you.
The Red Line: Where We Are Now
A couple of weeks ago, the S&P 500 broke below the 200-day moving average — what we
call the red line. This is our primary signal for whether we’re in an uptrend or a downtrend. When
the market breaks below it, that’s where the most amount of risk lives.
When this happens, you have to take action. You can’t just ignore it and hope everything
will be okay. Because when it’s not okay, it gets ugly fast.
That said — the statistics are actually encouraging:
| Time Period | Win Rate | Avg. Return |
|---|---|---|
| 1 month later | 55% | +1.0% |
| 3 months later | 73% | +3.6% |
| 6 months later | 77% | +7.6% |
| 12 months later | 76% | +11.2% |
About 70% of the time, it just blows over. We know that. We hope it blows over. We think it’ll blow over. Statistically, it says it will blow over.
But when it doesn’t blow over — that’s where the problems are. And we’re here to have a strategy for when those problems arise.
The good news: we’re back above the red line. The S&P 500 has reclaimed the 200-day moving average. Through the worst of the pullback we took precautionary action when the signal shifted.
The 200-Week Moving Average: The Bigger Picture
Look at this chart. Every time the market comes down to the 200-week moving average — which
is essentially a four-year moving average — it looks like a great buying opportunity. And historically, it has
been.
So why doesn’t everybody just buy the dip?
Because by the time it gets down there, the drawdowns are usually 15-30%.
Most people can’t stomach that — especially retirees withdrawing income from their portfolio.
Our strategy: use the 200-day moving average as our line in the sand. When the market
breaks below it, we implement risk management — so that when the market does eventually reach the 200-week moving average, we’re in a position to capitalize on the opportunity rather than recovering from the damage.
How We’re Managing Risk: Put Contracts
We manage risk predominantly through put contracts — and this is such an
improvement over what we were doing even five or ten years ago.
Markets are moving faster than ever before. When the pessimistic side of the barbell starts
to take center stage, we need to get defensive fast. In the past, we couldn’t reduce exposure quickly enough. With
put contracts, we can:
- Define our exit points — we know exactly where we can sell
- Stay generally invested — we don’t have to sell everything and sit in
cash - Hedge more money, faster — puts let us protect large positions
quickly - Have defined levels of risk at any given time — no surprises
It pains us that the average investor isn’t doing this. It’s a way to manage risk and avoid
getting caught in massive downturns — and most people have never heard of it.
If you want to understand how this works in plain English, we wrote a short article
explaining protective puts. Read it here → Feel free to forward it to anyone who might find it
useful.
Current Trend Status
The long-term trend is back positive. The short-term momentum trend is still negative but improving — we’re getting check marks moving toward the positive side of the ledger every day.
Supporting signals:
- VIX — Was highly elevated, now back below 20
- Interest rates — Stable
- US Dollar — Pulled back, which is helpful for asset prices
M5 Momentum Picks: April 2026
Our top 5 momentum positions for April:
| Rank | Ticker | Company | Status |
|---|---|---|---|
| #1 | GOOG | Alphabet (Google) | Held from March |
| #2 | XOM | Exxon Mobil | ▲ NEW |
| #3 | JNJ | Johnson & Johnson | Held from March |
| #4 | MU | Micron Technology | Held from March |
| #5 | WMT | Walmart | ▲ NEW |
Added: Exxon Mobil (XOM) — A note of caution: momentum entering a stock due to an existential event like $100 oil can be fickle. Oil above $100 is most likely temporary. Long-term trend still looks good but we take this with a grain of salt.
Walmart (WMT) — Steady Eddie. Not surprising that a defensive, stable compounder becomes a top momentum stock in a volatile market. Acting well.
Notable: Micron (MU)
If you get a chance, go to Micron’s investor relations page and read the latest earnings
report. AI revenue growth of 300%. Gross margins on high-end memory chips guiding toward
90%. The backlog is enormous. This company continues to have one of the most favorable momentum
trends we’re tracking.
The Bottom Line
The market barbell always has weight on both sides. There’s always a reason to be scared
and always a reason to be excited.
We don’t invest based on either narrative. We invest based on the
trend.
Right now, the trend is improving. Long-term is positive. Short-term is getting there. The
VIX is down, rates are stable, the dollar has pulled back. We’re checking boxes on the right side of the ledger.
But we remain on guard. If anything changes, we’ll act — the same way we did last month
when the red line broke and accounts saw only a modest pullback while the headlines were screaming.
That’s the process. That’s what we do.
If you have questions about your portfolio or would like to discuss anything further, reach out anytime.
This content is for informational purposes only and does not constitute investment advice. All investing
involves risk, including the possible loss of principal. The mention of specific securities (GOOG, XOM, JNJ, MU, WMT)
is for informational purposes only and does not constitute a recommendation to buy or sell any security. Momentum
rankings are based on quantitative analysis and change monthly. Security analysis provieded is based on independent research and not indicative of any client accounts, holdings or performance. Past performance is not indicative of
future results. The 200-day and 200-week moving averages are technical indicators used as part of a systematic
investment process; they do not predict future market direction. Options strategies involve additional risks and are
not suitable for all investors. Consult with a qualified financial professional before making investment decisions.
Momentum Wealth Planning, LLC is a registered investment adviser. SEC registration does not imply a certain level of
skill or training. For complete disclosures, see momentumwealthplanning.com/disclosures.
Frequently Asked Questions
What happens when the S&P 500 drops
below the 200-day moving average?
Historically, about 70% of the time it recovers. One month
later, the market is higher 55% of the time with an average gain of 1%. Twelve months later, it’s higher 76% of the
time with an average gain of 11.2%. But when it doesn’t recover, losses can mount rapidly — which is why we take
precautionary action when the signal triggers rather than waiting to see what happens.
What is the market barbell?
The market barbell is a framework that recognizes there are
always heavy risks and heavy opportunities present in markets simultaneously. On any given day, you can make a compelling case for pessimism or optimism. Rather than focusing on either narrative, we focus on the trend — objective data that tells us whether conditions favor being invested or being defensive.
How do you use put contracts to manage
risk?
Put contracts allow us to define exit points on positions without selling them outright. We pay a premium for the right to sell at a specific price, which caps our downside while preserving upside participation. This lets us hedge large positions quickly when the trend shifts — getting defensive faster and protecting more capital than traditional methods like selling to cash. Read our full explanation of protective puts →
Questions about your portfolio?
We’re always happy to talk. No pressure, no obligation.