The Word from Main Street
Market Update for the Week of May 11th, 2026
ClearBridge Investments suggests investors could use volatility as an opportunity to invest cash, while modestly favoring the stronger earnings revisions and more reasonable valuations available in non-U.S. stocks. Below is a summary of the most recent Recession Indicators report:
Key Takeaways: According to Jeff Schulze, CFA, Head of Economics & Market Strategy with ClearBridge Investments:
~ Although we saw a geopolitical dip in March, it once again proved to be a good opportunity to invest cash with the S&P 500 rallying to all-time highs in a matter of weeks.
~ The ClearBridge U.S. Recession Dashboard continues to show an overall green signal. The housing permits indicator is now again available following a lapse due to the government shutdown and has improved to a green signal.
~ ClearBridge Investments continues to believe economic impacts of the Middle East conflict remain manageable and further pullbacks are likely to represent buying opportunities; modestly favoring the positive earnings revisions and less demanding valuations of non-U.S. stocks.
U.S. Recession Risk Dashboard
Source: ClearBridge Investments
In Wednesday’s trading, the S&P 500 (SPX) hit a record high for the 16th time this year. As investors, we’re generally happy to see the market hitting new records. However, if you have money sitting on the sideline watching the market push relentlessly higher while you’re not fully invested can be nerve-racking. We’ve been trained “buy the dip”, “buy low, sell high”, so putting money into the market when it’s trading at all-time highs can feel like a bit of a sucker’s bet. After all, a better buying opportunity will surely come along before too long, right?
There is a lot of “common wisdom” in this business, some of it good, some of it not so good, and until you start doing some analysis, it can be hard to tell which is which. So, what about the notion that we shouldn’t buy into a market that’s trading at an all-time high? In order to test this idea, Nasdaq Dorsey Wright (NDW) looked at every trading day since the beginning of 1980 and divided them into two categories – days the market hit a new all-time high (based on intraday high) and days that it didn’t. NDW then calculated the one-, three-, five-, and 10-year forward returns for each day and averaged them. The results are shown below.
Source: Nasdaq Dorsey Wright
As you can see, the results of the study show that over the intermediate-to-long-term, buying all-time highs isn’t detrimental to overall returns. In fact, buying on days the market hit a new all-time high outperformed the average for all other days over the one-, three-, and five-year periods. Over the 10-year period, buying all-time high days underperformed buying all other days, but the difference was relatively modest at 130% vs. 149% .
Of course, some will still wonder, why would you buy the market at all-time highs when the 10-year average return is better for all other days? But what this argument overlooks is that the time in the market that is sacrificed, especially if waiting for a meaningful pullback. The S&P 500 hit its first all-time high after the Q1 slide on 4/15/26, and since then, it’s gained an additional 4.9% through Wednesday’s (5/6/26) close. Two weeks ago, we discussed the merits of going all-in versus averaging into positions and found that, generally, it’s better to go all-in instead of hedging your bets by averaging into exposure. There is a common theme between this study and that one – time in the market typically works in your favor, even if you’re entering at a time when the common wisdom says the market is “expensive”.
One of the major (perceived) pitfalls or criticisms of momentum strategies is that they often buy assets that are trading at or near record highs. The results of this study are also a clear counterpoint to that criticism as over the last 45+ years, buying the S&P 500 when it’s trading near all-time highs has produced strong returns over the intermediate- and long-term.
The current reading for the PR4050 is: Money Market = 2.82% & U.S. Equity Core = 97.18%. For the PR4050 indicator to trigger and alert us when we should consider moving to cash, Money Market must be 50% or above and U.S. Equity Core must be 40% or below.
Source: Nasdaq Dorsey Wright
Below is the most recent D.A.L.I. (Dynamic Asset Level Investing) Indicator showing International Equities and Domestic Equities in the top two spots, while both maintain a commanding lead over Cash and Fixed Income.
Source: Nasdaq Dorsey Wright
P.S. If you believe this information would be of benefit to anyone you know, please share this communication with them. Also, if you, or someone you know, would like to be added to the weekly market update, please click here to provide us with the e-mail address.
Main Street Wealth Advisors
33801 1st Way South, Suite 271
Federal Way, WA 98003
Office: (253) 944-1047
Fax: (253) 944-1075
www.mainstreetwa.com
ART-1105630
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
These views are those of the author, not of the broker-dealer or its affiliates. This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. All investments involve risk, including loss of principal. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. All indices are unmanaged and may not be invested into directly.
Technical analysis is based on the study of historical price movements and past trend patterns. There is no assurance that these movements or trends can or will be duplicated in the future. Nasdaq Dorsey Wright developed the indicators described above. They have been prepared without regard to any particular investor's investment objectives, financial situation, and needs. Accordingly, investors should not act on any recommendation (express or implied) or information in this report without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions.
Nasdaq Dorsey Wright’s “DALI" employs relative strength-based analysis to rank macro asset classes based on developing leadership trends within the global capital markets. The objective guidance within DALI provides the tools necessary to properly allocate portfolios across all major asset classes in an effort to emphasize strength wherever it exists. Domestic Equities, International Equities, Commodities, Currencies, Fixed Income and Cash are evaluated daily to identify dynamic developments across investment genres, as well as within them. This tool provides the tactical precision that allows investors to adapt as the market leadership changes.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index.
The S&P 500® Index: A free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500® are those of large publicly held companies that trade on either of the two largest American stock market exchanges: the New York Stock Exchange and the NASDAQ.
MSCI World Index: A broad global equity index that represents large and mid-cap equity performance across 23 developed markets countries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.