5/4/2026
By Charles Payne, CEO & Principal Analyst

The market keeps on moving higher despite all the hand-wringing about geopolitics, valuations, the Iran Conflict, crude oil, and inflation. It's not an irrational exuberance, according to the American Association of Individual Investors (AAII) Sentiment Survey, which saw a spike in bearish sentiment last week.

Last week, we had lots of large green squares and rectangles offset, so there is broad market participation—an interesting bifurcation among “Mag Seven,” with an odd weakness in Nvidia (NVDA) amid changes in light of hyperscaler spending.

• Advancers on the New York Stock Exchange (NYSE) and NASDAQ were slightly higher than decliners.
• The up volume was slightly greater than the down volume.
• There was a major distinction between new highs and lows, reflecting the propensity to chase performance in this environment.

Small Caps Rule

If earnings estimates are right, the small-cap rally has much more upside room.

Earnings continue to crush the estimates, and there is no end in sight for double-digit year-over-year gains.

Anatomy of a Rally

The 2022 leg of the rally reached a 100% move, but history suggests there is a lot more room to the upside. The only caveat is that this rally did not begin during a recession and has already surpassed all other non-recession rallies. Recession rebounds speak to being oversold; the engine for this move is growth, not catching up.

The current driver of this rally is the move in the building blocks of the artificial intelligence (AI) buildout.

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Charles Payne
Wall Street Strategies