Technology's turn in the rotation.

Stock Market Outlook for August 28, 2026

Technology’s turn in the rotation.

Real Time Economic Calendar provided by Investing.com.

*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.

Stocks Entering Period of Seasonal Strength Today:

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PDD Holdings Inc. (NASD:PDD) Seasonal Chart

Elevance Health, Inc. (NYSE:ELV) Seasonal Chart

The Acquirers ETF (AMEX:ZIG) Seasonal Chart

Disclaimer: Comments and opinions offered in this report are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered is believed to be accurate, but is not guaranteed.

Super Simple Seasonal Portfolio

*For a more detailed breakdown of how to allocate your seasonal portfolio, please refer to the model provided on the last page of our monthly report: https://charts.equityclock.com/featured/august-2026-monthly-outlook-portfolio

Summary

Key Takeaways

1. The S&P 500 remains technically bullish

The S&P 500 rebounded strongly, gaining 0.72%, and confirmed the former 7,620 resistance level as support.
A short-term bull-flag pattern remains intact, suggesting potential for further upside.
The index is also holding above its 20-day moving average, reinforcing the bullish technical backdrop.
Despite approaching September—a historically more volatile period—we are maintaining an elevated equity exposure and bullish near-term stance, with greater caution expected from mid-September onward.

2. Technology is rotating back into leadership

Technology was the strongest area of the market, with XLK and IYW bouncing from the August 4 upside gap, confirming support.
Bull-flag patterns imply theoretical upside targets of approximately:
- XLK: $245
- IYW: $325
We argue that the usual September weakness in technology may be less significant this year because the sector has already spent much of the summer consolidating rather than surging.

3. NVIDIA and Salesforce earnings helped reignite AI-related stocks

Strong reactions to NVIDIA (NVDA) and Salesforce (CRM) earnings fueled major gains in semiconductors and software.
The Software ETF (IGV) surged nearly 8% and broke above $105 resistance, creating a bullish technical setup targeting a potential return to all-time highs above $118.
SMH is showing signs of a potential short-term bottoming pattern, with a possible move back toward its June highs around $672.
Bottom line: We continue to favor technology, semiconductors and software as Accumulate candidates, supported by the ongoing AI infrastructure buildout.

4. Manufacturing strength continues to support the economy

The manufacturing rebound is helping drive a sharp improvement in labor-market data.
Initial jobless claims fell to 203,000, while the unadjusted figure reached its lowest August level since 1969.
We interpret this as evidence that factories are reopening and production activity is accelerating after the normal summer shutdown/retooling period.
This backdrop continues to favor cyclical sectors such as Energy, Materials and Industrials.

5. The economy remains bifurcated: manufacturing strong, consumers cautious

The central economic theme remains a two-sided economy:

Strength:

Manufacturing
AI-related capital spending
Commercial and industrial activity
Core cyclical sectors

Weakness:

Consumer spending trends
Housing activity
Real estate lending
Consumer loan growth

A sustained rise in interest rates could eventually hurt both sides of the economy.

6. Housing remains a major source of economic risk

Despite the strength in major equity sectors, the housing market remains weak.
Existing and new home sales are sluggish, while housing prices show increasingly uneven regional trends.
Major business hubs—including Chicago, Cleveland, Boston, New York and Detroit—are showing relatively stronger home-price performance.
Other regions—including Florida, Arizona, Colorado, Oregon, Nevada and Texas—are experiencing more strained housing trends.
Weakening home prices could threaten the consumer through a negative wealth effect, increasing recession risks.

7. Real estate and consumer lending are losing momentum

Real estate loans are growing more slowly than normal, rising only 1.2% year-to-date versus a typical 1.9% gain.
Aggregate Consumer loans are essentially flat.
Meanwhile, commercial and industrial lending remains stronger, largely supported by the manufacturing and AI investment cycle.
This divergence is another sign that economic strength is concentrated in business investment rather than the consumer.

Overall Market View

Near-term: Bullish

S&P 500 technical support remains intact.
Technology leadership is re-emerging.
AI spending continues to support semiconductors and software.
Manufacturing and labor-market data remain strong.

Intermediate risk: Increasing

September seasonality could bring greater volatility.
Rising interest rates remain the biggest macro threat.
Housing and consumer activity continue to deteriorate.
AI investment is increasingly being scrutinized because of the growing debt required to fund data-center expansion.

The Markets

A rally in the technology sector was good to fuel a recovery in the S&P 500 Index on Thursday. The large-cap benchmark gained just over seven-tenths of one percent, confirming previous resistance as support at the upper limit of the prior consolidation span between 7250 and 7620 that the benchmark broke out from at the start of August. A short-term bull-flag pattern continues to be charted, suggesting further upside to be expected. The benchmark can be seen curling higher from short-term support at its 20-day moving average (7701), keeping the ball in the bulls court heading towards the month of September. The market is showing a lot of respect to levels of support, warranting a bullish tilt heading into what is often a volatile period for equity performance in the month of September. Daily momentum indicators have started to curl higher around their middle lines, retaining characteristics of a bullish trend. In the Seasonal Advantage Portfolio that we manage for clients at CastleMoore, we continue to hold an elevated exposure to stocks, aligning with the optimism that the manufacturing economy is expressing. The period of volatility in the equity market through the weeks ahead could start to impose some erratic results, but there is some leeway on the calendar before the peak period of weakness rolls around starting in the middle of September. Subscribers can view what we are targeting in our list of market segments to either Accumulate or Avoid.

Today, in our Market Outlook to subscribers, we discuss the following:

Rotation into Technology

Software and Semiconductor stocks and the upside targets

Weekly Jobless Claims and the health of the labor market

Case-Shiller Home Price Index and the bifurcation in the trajectory of home prices across the country

Consumer and Real Estate Loans

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