The first half of 2026 is in the books, and what a ride it was for the stock market. Things went according to script in January and February, as the artificial intelligence (AI) trade stalled, while “Mag Seven” remained adrift after peaking last October.

Then came the Iran Conflict, and for a moment, it looked like curtains for the market, even though crude oil never spiked with the kind of geopolitical risks that would have suggested a never-ending conflict. Perhaps on that note, the AI and tech trade will resume, but with renewed vigor that still has a jaw-dropping effect.

The experts are still second-guessing, spending too much time on tops and bubbles.

Full Steam Ahead

Yesterday, Technology (XLK) led the way, offsetting the fact that only 40% of the index rallied, and marking the seventh consecutive session with a mismatch between market outcomes and market breadth. In my opinion, the market has been in a good place for a long time and still has room and time to grow.  

Factors

Momentum is back in charge, but I’m seeing signs of life in quality as Financials (XLF), Consumer Discretionary (XLY), and Health Care (XLV) names have begun to move higher.

Chips Ahoy!

It's still about second-in-command names, joined by power players in AI, including Vertiv Holdings (VRT) and GE Vernova (GEV).

Best Quarter Ever

The Semiconductor Index (SOX) just enjoyed its best quarter on record. There is no reason for it to stop, and in those rare periods of weakness, buyers quickly pounced.

Retail investors are loading up on stocks, which worries me about an engineered pullback. Of course, it’s harder to trip the market up when shares are being held by strong hands.