May 29, 2026

The major averages leaned on strong tech earnings, mixed economic data and hopes of a peace deal this week to close out the month of May at new all-time highs. Gains in semiconductors, AI-related and software companies had the NASDAQ on an eight-day win streak and the S&P 500 on a seven-day win streak of its own going into the weekend, but the gains were limited to a narrow group of stocks. A +19.54% spike in Micron Technologies (MU) on a raised price target by UBS sent the Philadelphia Semiconductor Index up +5.53% to start the week and strong earnings from Marvell Technologies (MRVL), Snowflake (SNOW) and Dell Technologies (DELL) sent the Technology (XLK) sector further into record territory jumping +5.89% for the period. Consumer stocks also outperformed led by Best Buy (BBY), Kohl's (KSS) and Dollar Tree (DLTR) after beating earnings estimates. Economic data was mixed with inflation numbers showing April PCE, the Fed's preferred inflation gauge, jumping +3.5% YoY and core-PCE rising +3.3% YoY, while Consumer Confidence dipped to 93.8 as higher gas prices dented consumer optimism. Crude oil prices nudged lower during the period on hopes of a US-Iran peace deal closing at $87.92 a barrel, down -23% from its high the first of April. Yields erased a jump after the inflation report but finished the week lower on easing tension between the US and Iran. The rate on the 10-year T-Bill settled at 4.443%. The market sectors were mixed with Technology (XLK), Materials (XLB) and Consumer Discretionary (XLY) leading the advance, while Energy (XLE) slipped -5.038% followed by defensive and rate sensitive sectors Utilities (XLU), Consumer Staples (XLP) and REITs (XLRE). The major averages closed the week higher for a second-straight week, and the S&P 500 extending its weekly win streak to nine! Next up, investors will get a look at key jobs data for May and manufacturing data as we get a look at whether the US/Iran clash has slowed the US economy as we head into the summer months.

For the period, the DJIA was higher by 452.76 points (+0.9%) and settled at 51032.46. The S&P 500 gained 106.59 points (+1.4%) and closed at 7580.06. The NASDAQ jumped 628.65 points (+2.4%), finishing at 26972.62. The small cap Russell 2000 added 49.98 points (+1.7%) and settled at 2919.34.

Market Outlook: The technical condition of the market remains positive, as the major averages continue to notch new record highs. The technical indicators are positive with MACD-a short-term trend gauge-crossing into bullish ground, while Momentum, as measured by the 14-day RSI, strong but crossing into overbought territory for the S&P 500 and NASDAQ. Stochastics in the low 90's also signals an overbought condition. The 50-day moving average continues to slope upward for the major averages, confirming the intermediate trend. The advance in equities was accompanied by low volatility, with the VIX, often referred to as the market's fear gauge, falling below 16 during the week for the first time since January 22 as traders take off some downside protection from the US/Iran war. Key secondary indexes, including the Philadelphia Semiconductor Index (SOX), DJ transportation Index and small cap Russell 2000 mostly outperformed the broader market which bodes well for the market going forward. There remains however, mixed signals that warrant a degree of caution. Despite the different indexes notching new highs, only the Technology (XLK) sector has been able to make a new high. In addition, only five of 11 sectors closed the period higher this week highlighting the narrow rally. The lagging market groups are oil and rate sensitive but the lack of sectors joining the indexes at all-time highs confirms that we have yet to see a broadening out of the market. This negative divergence needs to be watched and could be a warning that tech's parabolic rally could be susceptible to a correction as the summer heats up.

A chart of these indicators can be found by going to the Market Edge Home page and clicking on Market Recap, which is on the right-hand side of the page just below the Second Opinion Status numbers.

Cyclical Trend Index (CTI): The underlying premise of the CTI is that the market, as measured by the Dow Jones Industrial Average (DJIA), tends to move in cycles that often resemble sine waves. There are five identifiable cycles, each with different time durations at work in the market at all times.

Currently, the CTI is Negative at -3, unchanged from the previous week. Cycles A and B are bullish, while Cycles C, D and E are bearish. The negative CTI configuration is projected to remain in place into the summer months.

Momentum Index (MI): The markets momentum is measured by comparing the strength or weakness of several broad market indexes to the DJIA. Readings of -4 and lower are regarded as bearish since it is an indication that a majority of the broader based market indexes are weaker than the DJIA on a percentage basis. Conversely, readings of +4 or higher are regarded as bullish.

The Momentum Index is Neutral at +0, up six notches from the previous week. Breadth was positive at the NYSE as the Advance/Decline line gained 1082 units while the number of new 52-week highs exceeded the number of new lows on each session. Breadth was also positive at the NASDAQ as the A/D line added 2620 units while the number of new highs out did the new lows on all four days. Finally, the percentage of stocks above their 50-day moving average jumped to 65.5% vs. 59.5% the previous week, while those above their 200-day moving average rose to 59.7% vs. 56.0% prior. Readings above 70.0% denote an overbought condition, while below 20% is bullish.

Underlying market breadth is positive with the NYSE Advance/Decline Line, a leading indicator of market direction, close to a new high. New 52-week highs continue to outnumber the new lows but remain anemic on the NYSE, but new lows are keeping pace in the 30-range. The number of new highs in the NASDAQ expanded this week hitting 559 on Tuesday, the highest since the first week of May. New lows in the tech heavy index contracted during the period.

Sentiment Index (SI): Measuring the market's Bullish or Bearish sentiment is important when attempting to determine the market's future direction. Market Edge tracks thirteen technical indicators listed below that measure excessive bullish or bearish sentiment conditions prevalent in the market. The Sentiment Index is Negative at -1, unchanged from the previous week.

Investor sentiment is mixed with retail bulls below their historical average while the professionals jumped 'all in' this week. The American Association of Individual Investors (AAII) saw retail bulls increase 4 percentage points to 35.6% but below their historical average of 37.5% for a second straight week. The National Association of Active Investment Managers (NAAIM) Exposure Index, however, saw money managers increase their equity exposure by 16.4% from last week, landing at 98.4%. That's the highest equity weighting since mid-January. Finally, while the Percentage of Bullish Investment Advisors eased to 45.3%, Advisors looking for a correction increased for a second consecutive week rising to 32.1%, the most since mid-April.

Market Posture: Based on the status of the Market Edge, market timing models, the 'Market Posture' is Bearish as of the week ending 05/15/2026 (DJIA - 50,579.70). For a closer look at the technical indicators and studies that make up the market timing models, check out the tables located below.

Industry Group Rankings: What's Hot (8) - What's Not (22): The following are the strongest and weakest Industry Groups for the period ending 5/28/26. Strongest: Technology Hardware, Conglomerates, Industrial and Telecommunications. Weakest: Paper & Forest Products, Infrastructure, Agriculture and Integrated Oil & Gas. To review all the Industry Group rankings in the Market Edge universe, click on the Industry Group tab.

ETF Center: The top performing ETF categories for the week ending 5/28/26 were: Sector-Alternative Energy (+11.40%), Specialty Technology (+7.53%), Blend-Small Cap (+5.72%), Growth-Small Cap (+4.89%) and Sector-Basic Materials (+4.23%). The weakest categories were: Commodity-Energy (-7.08%), Sector-Energy (-6.73%), Commodity-Blend (-3.46%), Commodity-Agriculture (-1.44%) and Shorts (-1.16%). To review all the ETF categories in the Market Edge universe, click on the ETF Center tab.

By David L. Blake, CMT