Thoughtful insights and approachable analysis.

• Amazon's improving technical picture is being supported by strong AI-driven cloud demand and resilient consumer spending.
• Caterpillar's strong technical trend continues to be supported by resilient industrial demand, infrastructure investment and growing AI-related power needs.
• Johnson & Johnson's improving technical picture is being reinforced by stronger earnings, a growing product pipeline and renewed investor confidence.

Quick Market Overview

Markets started the week on a positive note as a technology-led rally lifted major US indices, with the Dow Jones Industrial Average closing above 52,000 for the first time. Investors largely looked past the Supreme Court's decision to preserve the Federal Reserve's independence, while Comcast's plan to separate its media assets from its core broadband business fuelled optimism that the move could unlock shareholder value and potentially pave the way for further industry consolidation.

General Equity Market Health (SPX500)

The technical picture has become more constructive over the past week. After establishing a higher trough, the S&P 500 has staged a strong rebound that has pushed price back above both the short-term and medium-term moving averages, with the faster average now turning higher and threatening a bullish crossover. Momentum is also improving, with the RSI pushing above the neutral 50 level, suggesting bearish momentum is fading and buyers are gradually regaining control.

While the index still needs to overcome the recent swing high to confirm a new sequence of higher peaks and higher troughs, the combination of a higher trough, strengthening momentum, and improving moving average structure points to a healthier technical backdrop and increases the probability of further upside if resistance is broken.

Investors continue to be encouraged by resilient earnings expectations, particularly among companies benefiting from the ongoing artificial intelligence investment cycle, while the broader US economy has remained on solid footing despite elevated interest rates. Attention is now turning to this week's non-farm payrolls report, which is expected to provide important insight into the health of the labour market and the likely path of Federal Reserve policy. A jobs report that points to a gradual cooling in employment, without signalling a sharp economic slowdown, would likely reinforce the market's soft-landing narrative and could provide the fundamental catalyst for the S&P 500 to build on its improving technical picture.

Potential Trade Setups

While the broader market is starting to look more constructive, opportunities are emerging in different ways across individual stocks. Amazon (AMZN.us) is beginning to look like an attractive buy-the-dip candidate as its technical picture improves alongside strengthening AI and retail fundamentals. Meanwhile, Caterpillar (CAT.us) and Johnson & Johnson (JNJ.us) continue to demonstrate impressive relative strength, outperforming the broader market as supportive technical trends are reinforced by resilient business fundamentals. Together, these three stocks highlight how investors can find opportunities through both recovering growth leaders and companies already exhibiting sustained market leadership.

Amazon.com (AMZN.us)

Technical Analysis
Amazon's technical picture may be improving. After a prolonged downtrend marked by a series of lower highs and lower lows, the share price has broken above its descending trendline, suggesting bearish momentum may be beginning to fade. At the same time, the RSI has broken its own downtrend and climbed back towards the neutral 50 level, indicating improving momentum and a potential shift in buyer sentiment. Price has also reclaimed the short-term moving average and is attempting to push above the medium-term average, further strengthening the recovery.

While confirmation through follow-through buying is still needed, the combination of a trendline breakout, improving momentum, and strengthening moving average structure suggests the technical outlook has become more constructive and increases the likelihood of a broader trend reversal if resistance levels continue to give way.

Fundamental Perspective
Amazon's outlook has improved as investors regain confidence in its two largest growth engines. Amazon Web Services continues to benefit from robust demand for artificial intelligence infrastructure, with the company recently increasing prices on certain AI-related cloud offerings, highlighting the strength of enterprise spending. Meanwhile, Prime Day delivered stronger-than-expected online sales, reinforcing confidence that consumer spending remains resilient despite a challenging economic backdrop. Together, healthy cloud demand and resilient retail performance provide a supportive fundamental backdrop that complements the stock's improving technical picture and could help sustain a broader recovery if momentum continues.

Caterpillar, Inc (CAT.us)

Technical Analysis
Caterpillar remains in a strong long-term uptrend, with the recent price action reinforcing the bullish outlook. The share price continues to trade comfortably above both the short- and medium-term moving averages, which are rising steadily and confirming positive trend momentum. Following a brief consolidation, buyers have regained control and pushed the stock back towards fresh highs, indicating demand remains strong. Momentum, as measured by the RSI, has stayed predominantly above the neutral 50 level, reflecting persistent buying interest without yet reaching extreme overbought conditions.

Adding further strength to the outlook, the relative strength line versus the S&P 500 continues to trend higher, showing Caterpillar is outperforming the broader market. Overall, the combination of a strong price trend, supportive moving averages, healthy momentum, and improving relative performance suggests the path of least resistance remains to the upside, although short-term pullbacks would be normal following such a strong advance.

Fundamental Perspective
Caterpillar continues to benefit from a favourable industrial backdrop. Demand remains supported by infrastructure investment, energy and mining activity, while growing investment in AI data centres is creating additional demand for the company's power generation equipment.

Management recently reinforced confidence in the business by raising its quarterly dividend by 8%, reflecting strong cash generation despite ongoing tariff-related cost pressures. Although cyclical risks remain, the combination of resilient end-market demand, shareholder-friendly capital allocation and improving growth opportunities provides a supportive fundamental backdrop that aligns well with the stock's strong technical trend.

Johnson & Johnson (JNJ.us)

Technical Analysis
Johnson & Johnson's technical picture has strengthened considerably following a decisive breakout above the key resistance level around $252, completing a multi-month base and signalling a potential continuation of the emerging uptrend. The share price is trading well above both the short- and medium-term moving averages, with both averages sloping higher, confirming improving trend momentum.

The RSI has surged into overbought territory, reflecting strong buying pressure, although this also suggests the stock could pause or consolidate after its recent sharp advance. Encouragingly, the relative strength line versus the S&P 500 has reversed its long-term downtrend and is now making higher highs and higher lows, indicating Johnson & Johnson has begun outperforming the broader market.

Overall, the combination of a major resistance breakout, strengthening momentum, rising moving averages and improving relative performance suggests the longer-term outlook has become increasingly constructive, even if a short-term pullback would be a healthy development after such a powerful rally.

Fundamental Perspective
Johnson & Johnson's outlook has improved following a strong start to 2026. The company delivered better-than-expected first-quarter results and raised its full-year sales and earnings guidance, reflecting continued strength across both its Innovative Medicine and MedTech businesses despite ongoing headwinds from Stelara's loss of exclusivity.

Recent product launches and a deep development pipeline have reinforced confidence in the company's long-term growth prospects, while its consistent cash generation and long track record of dividend increases continue to appeal to investors.

Together, these factors provide a supportive fundamental backdrop that complements the stock's recent technical breakout.

Hot News, Cold Logic

Global equities remained near record highs, with the S&P 500 on track for its best quarter in six years, as investors looked ahead to another earnings season expected to be driven by continued artificial intelligence investment and resilient corporate profits. Falling oil prices have eased inflation concerns, supporting market sentiment, while attention is shifting to upcoming US economic data for clues on the labour market and interest rates. Meanwhile, the Japanese yen fell to its weakest level since 1986, increasing the likelihood of currency intervention by Japanese authorities.

Final Thought

Markets are ending the quarter with remarkable momentum, powered by AI optimism, resilient earnings and easing energy-market tensions. Yet with valuations rich and expectations exceptionally high, the next leg of this bull market will depend less on optimism and more on whether companies can translate today's unprecedented investment boom into tomorrow's sustainable profits.