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This Week's Featured Story
Is There a Buying Opportunity in the SPY ETF?Written by Thomas Hughes. Article Posted: 4/6/2026. 
Key Points
- SPY ETF investors face an opportunity in April that is no joke: valuations are historically low, and chart signals are bullish.
- NVIDIA and AI underpin the outlook, which centers on earnings growth, acceleration, and improving forecasts.
- Oil is the biggest risk, with prices high and inflationary pressure coursing through the economy.
- Special Report: Elon Musk’s $1 Quadrillion AI IPO
Despite risks and headwinds, the evidence points to a solid entry opportunity for SPDR S&P ETF Trust (NYSEARCA: SPY) investors. The critical factor is that SPY tracks the S&P 500 Index, so what drives the index drives the ETF. In this case, a robust earnings outlook underpinned by AI, generational-quality valuations in leading stocks, and the potential for clearer conditions later this year are the main drivers. SPY Technicals Align With Trend-Following OpportunityThe SPY technicals look very bullish. The picture starts with the weekly chart: trading volume is elevated on a trailing 12-month basis compared with the prior 12 months, with volume spiking as price action declined in Q1. Price action in the first week of Q2 shows buying, producing a peak in the MACD that converges with the uptrend. The takeaway is that the March 2026 ETF price correction was shallower than the previous correction, and volume rose in support of the market. The stochastic indicator also sends a strong signal: the short-term %D line formed a double bottom, crossed over %K, and %K has rebounded.
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The bottom line is that several technical signals have aligned to produce a strong trend-following signal for technical traders. One notable caveat: the market remains below its 150-day EMA, indicating resistance from longer-term holders — though that resistance could fade quickly if other factors continue to support the rally. Earnings Growth and Outlook Underpin S&P 500 and SPY Price OutlookEarnings are the single most important factor for the S&P 500 and SPY uptrend. When earnings grow, the index and ETF tend to trend higher, and those uptrends are stronger when growth and growth forecasts are improving. Currently, the consensus forecast for S&P 500 earnings growth this year is nearly 17.5%. That 17.5% represents a sequential acceleration from 2025, and the pace of upward revisions has also increased. Data reported by FactSet show improvement across all four quarters this year, with growth expected to accelerate from Q1 through Q3, peaking at over 20%, and then remaining near 20% in Q4. This provides a strong tailwind for market sentiment — and there is another catalyst at work. The market has tended to underestimate S&P 500 earnings potential, and that margin of error widened last year. Market participants have structurally underestimated the strength of AI-related spending each quarter and are likely to continue doing so in 2026. That dynamic sets the index up to outperform consensus forecasts, raising the chance of a melt-up as the year progresses. NVIDIA (and Tech) Is the Likely Catalyst for a Broad Market RallyThere are numerous catalysts this year, but the most impactful is likely NVIDIA (NASDAQ: NVDA). It accounts for more than 7% of the index and is central to AI adoption. The company is expected to keep growing at a rapid pace, beat estimates, and issue guidance that sustains current trends. After several quarters of consolidation, profit-taking, and rotation, the stock's valuation appears unusually low. Trading at just under 22X its current-year earnings forecasts in early April, the market is effectively placing little premium on NVIDIA — the first time in about a decade this has happened. In that scenario, NVIDIA’s near-term upside could be roughly 50%, with potential for multiple-hundred-percent gains over the long term. Blue-chip tech, including NVIDIA, typically trades at 30X–35X earnings at the peak of a cycle. With NVIDIA at about 22X current-year earnings and just over 7X its long-term forecast, a solid, outlook-affirming report could unlock substantial upside — perhaps 50% near term and as much as several hundred percent over time as the company grows into its forecast. Oil Is the Biggest Risk and It Fuels InflationThe largest risk for the market is oil. Oil prices are up significantly from their lows and are contributing to price pressures across the economy. Because oil is unlikely to fall substantially in the near term, investors should anticipate another inflation shock. The risk is that the FOMC will not only pause its rate-reduction plans but revert to a hawkish stance, increasing the probability of additional rate hikes and a recession. |
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