EB Weekly Market Report - Monday, May 18, 2026

Tom Bowley - May 18, 2026

ChartLists/Spreadsheets

The following ChartLists/Spreadsheets were updated either late yesterday or earlier this morning and have been updated on our website:

Strong Earnings (SECL)
Strong Future Earnings (SFECL)
Raised Guidance (RGCL)
Bullish Trifecta (BTCL)
Short Squeeze (SSCL)
Leading Stocks (LSCL)
Matt's Hot Stocks (HTCL)
Upcoming Earnings
Upcoming Earnings Relative Strength

The above ChartLists and spreadsheet have been updated through Friday, May 15th. You can view and/or download these ChartLists from our website, and also read about them to gain a better understanding of how they can help in your trading success.

Weekly Market Recap

Major Indices

Sectors

Top 10 Industries Last Week

Bottom 10 Industries Last Week

Top 10 Stocks - S&P 500/NASDAQ 100

Bottom 10 Stocks - S&P 500/NASDAQ 100

Big Picture

Given the current overbought conditions, potential fallout from max pain, higher-than-expected inflation readings last week, and the surge higher in the 10-year treasury yield AND crude oil, I think there's a good chance that we've seen a short-term top at 7500 on the S&P 500. The 5-day CPCE (shown below) would corroborate this assessment. It doesn't change a thing as far as my long-term forecast. I still fully expect we'll continue to see record highs later this year and in 2027. But, in the very near-term, I could see a 20-day EMA test upcoming and if, for some reason, that 20-day EMA fails to hold, 7000 would be a very important price and psychological support level.

Sustainability Ratios

Here's the latest look at our key intraday ratios as we follow where the money is traveling on an INTRADAY basis (ignoring gaps):

QQQ:SPY

Keep in mind that the intraday analysis provided is a "work in progress". I continue to analyze this data to see if it helps provide us clues about calling market direction. It makes common sense to me that it should help in some sense, but it'll require a much longer-term study to determine its worth.

Growth stocks generally perform poorly when Wall Street anticipates an inflation problem. The QQQ:SPY never even paused with those inflation readings, which tells me that any perceived inflation problem will be short-lived.

IWM:QQQ

This intraday reading continues to spiral lower. While I don't believe inflation will be a longer-term issue, many market participants seem to be shying away from small caps with the 10-year treasury yield ($TNX) spiking. I see better days ahead for the IWM, but short-term, things are dicey in the small cap world.

XLY:XLP

There remains some hesitation in this ratio, so it is reason to pause and check other indicators to see if there's corroboration. I don't see enough warning signs to believe that any pullback at hand would be anything other than a short-term pullback after an extended run. If this ratio should continue lower and clear both the intraday and closing XLY:XLP ratio support from late March, then I would be willing to consider that as a stronger warning.

I'm willing to give this ratio a bit of room as the market digests recent gains.

Sentiment

5-day SMA ($CPCE)

Sentiment indicators are contrarian indicators. When they show extreme bullishness, we need to be a bit cautious and when they show extreme pessimism, it could be time to become much more aggressive. Major market bottoms are carved out when pessimism is at its absolute highest level.

It was very odd, but the last low in the 5-day CPCE did not provide any sort of short-term top. We almost always see at least a 2%-3% drop when this 5-day moving average reaches the .47-.48 level. Not last time, though. Well, the 5-day SMA has dropped below .48 yet again. This time, the S&P 500 seems to be more willing to roll over after hitting the 7500 level. This 5-day CPCE is usually a fairly reliable indicator for a short-term pullback, so I'm going to side with bears right now. Should we test the rising 20-day EMA, I'll likely grow more short-term bullish.

253-day SMA ($CPCE)

This longer-term 253-day SMA of the CPCE is our "ocean-liner" signal, unlike our short-term speedboat indicator. Any significant change in direction in this 253-day CPCE, in the past, has had profound effects on the S&P 500.

This long-term moving average seems to be searching for direction. It looked like we had reversed the downtrend and started potentially a lengthy rise. That has changed as this moving average rolls over and now heads lower. Which is it? I'd simply say this signal is neutral at the moment.

Long-Term Trade Setups

Since beginning this Weekly Market Report in September 2023, I've discussed the long-term trade candidates below that I really like. Generally, these stocks have excellent long-term track records, and many pay nice dividends that mostly grow every year. Only in specific cases (exceptions) would I consider a long-term entry into a stock that has a poor or limited long-term track record and/or pays no dividends. I try to review the long-term picture once a month, and I reviewed all of the following stocks as of last Monday, May 4th:

JPM – has consolidated with the entire banking industry, still looks solid
BA – 275 remains the long-term obstacle, now trending above 20-month EMA
FFIV – trending up above its 20-month EMA
MA – last week's high pierced 20-week EMA, but was false breakout
GS – very extended, remains strong relative to its investment services peers
FDX – set new all-time high, but AMZN just announced competing service
AAPL –strengthening on weekly chart, needs to clear 288.35
CHRW – pulling back and consolidating after doubling in 6 months
JBHT –nice breakout in 2026 after 3-4 years of consolidation
STX - simply amazing run since April 2025 low, seems no end in sight
HSY - very disappointing failure to hold onto 200 price support
DIS - been waiting on this one for awhile, needs to hold 77-80 support
MSCI - 4+ years of consolidation continues after prior rapid ascent
SBUX - short-term breakout near 100, now staring at major 115 resistance
KRE – still looks great in the long-term, awaiting lower interest rates
ED – retesting recent breakout near the 110 level; 17-year uptrend intact
AJG - year-long downtrend remains in place, watch 194.41 price support
NSC – cup with handle breakout in mid-2025, measurement to 360 or so
RHI – support in 22-23 range now established and needs to hold
ADM – remains in solid uptrend off April 2025 low
BG – breakout in January 2026 has led to further gains, nice uptrend
CVS – big rally off 20-month EMA support, key resistance near 95
HRL - weak stock, but it is a dividend aristocrat (raising dividends for 25 yrs+)
DE – trending up, but continues to significantly underperform CAT
LULU - will the bleeding stop at the 2020 pandemic low of 128.84?
TTD - software is rebounding, but TTD's relative strength remains weak
META - big gap lower last week with earnings, gap support is 606
ADBE - bouncing with software rebound, key initial resistance at 259
KMB - another dividend aristocrat, with solid price support at 95
ORCL - added most recently and it's soared, leading April software rebound
ABBV - added last week after a recent 20% decline to its 20-month EMA
MCD - added last week after a 2 1/2 month decline, and amidst a rising yield

Keep in mind that our Weekly Market Reports favor those who are more interested in the long-term market picture. Therefore, the list of stocks above are stocks that we believe are safer (but nothing is ever 100% safe) to own with the long-term in mind. Nearly everything else we do at EarningsBeats.com favors short-term momentum trading, so I wanted to explain what we're doing with this list and why it's different.

Also, please keep in mind that I'm not a Registered Investment Advisor (and neither is EarningsBeats.com nor any of its employees) and am only providing (mostly) what I believe to be solid dividend-paying stocks for the long term. Companies periodically go through adjustments, new competition, restructuring, management changes, etc. that can have detrimental long-term impacts. Neither the stock price nor the dividend is ever guaranteed. I simply point out interesting stock candidates for longer-term investors. Do your own due diligence and please consult with your financial advisor before making any purchases or sales of securities.

Looking Ahead

Upcoming Earnings

The following list of companies is NOT a list of all companies scheduled to report quarterly earnings, however, just key reports, so please be sure to check for earnings dates of any companies that you own. Any company in BOLD represents a stock in one of our portfolios and the amount in parenthesis represents the market capitalization of each company listed:

Monday: BIDU ($51 billion)
Tuesday: HD ($301 billion), KEYS ($62 billion)
Wednesday: NVDA ($5.47 trillion), ADI ($211 billion), TJX ($163 billion), LOW ($123 billion), INTU ($103 billion)
Thursday: WMT ($1.05 trillion), DE ($157 billion), NTES ($76 billion), ROST ($68 billion)
Friday: None

Key Economic Reports

Monday: None
Tuesday: April pending home sales
Wednesday: FOMC minutes
Thursday: Initial jobless claims, April housing starts & building permits, May Philadelphia Fed manufacturing survey
Friday: May consumer sentiment, April leading indicators

Historical Data

I'm a true stock market historian. I am absolutely PASSIONATE about studying stock market history to provide us more clues about likely stock market direction and potential sectors/industries/stocks to trade. While I don't use history as a primary indicator, I'm always very aware of it as a secondary indicator. I love it when history lines up with my technical signals, providing me with much more confidence to make particular trades.

Below you'll find the next two weeks of historical data and tendencies across the three key indices that I follow most closely. The percentage for each calendar day represents the annualized return for that day. An example of how this is calculated is reflected next to the first day under the S&P 500 and in parenthesis:

S&P 500 (since 1950)

May 18: -13.84% (Ex: cumulative gains =-2.95% over 54 trading days since 1950. -2.95% x 253/54 = -13.84%)
May 19: -24.84%
May 20: -13.54%
May 21: -17.00%
May 22: +7.87%
May 23: -42.73%
May 24: -5.11%
May 25: -15.90%
May 26: +54.11%
May 27: +67.71%
May 28: +2.19%
May 29: +24.25%
May 30: +46.09%
May 31: +31.78%

NASDAQ (since 1971)

May 18: -9.09%
May 19: -40.95%
May 20: -15.72%
May 21: +8.14%
May 22: +33.58%
May 23: -61.46%
May 24: +16.31%
May 25: +15.82%
May 26: +106.29%
May 27: +175.36%
May 28: +37.03%
May 29: -36.86%
May 30: +28.79%
May 31: -8.12%

Russell 2000 (since 1987)

May 18: +82.33%
May 19: -39.72%
May 20: -27.33%
May 21: +79.76%
May 22: -12.32%
May 23: -46.30%
May 24: -10.50%
May 25: +38.88%
May 26: +170.50%
May 27: +199.60%
May 28: +0.94%
May 29: +4.42%
May 30: +44.38%
May 31: +24.72%

The S&P 500 data dates back to 1950, while the NASDAQ and Russell 2000 information date back to 1971 and 1987, respectively.

Final Thoughts

The secular bull market advance almost dodged two very hot inflationary reports and monthly max pain associated with May options expiration. Almost. Market makers finally played some games on Friday morning as we saw gap downs, especially in areas where plenty of options are traded - like semiconductors ($DJUSSC). Between index and stock options, I imagine billions of dollars were saved on Friday alone. Many call option holders will exercise their options, putting them at further risk on Monday and the early part of next week. This is what I'll be watching:

Inflation? Can we take the thought of higher inflation seriously, when large cap growth (IWF, +0.67%) easily outperforms large cap value (IWD, -0.74%) on the heels of those two hot readings on CPI and PPI? Also, gold ($GOLD, -3.73%) is widely considered a hedge against inflation, so why weren't investors flocking there? The reports showed inflation. The media headlines talked about inflation. But Wall Street didn't seem to be concerned about inflation. I pay attention to the latter.

Earnings. Earnings are essentially over for Q1. NVIDIA Corp (NVDA) will be reporting this week and is not the technical leader of semiconductors like it's been in the past. In fact, its relative strength vs. the semiconductor group has been downtrending for almost a year. Don't be shocked if NVDA disappoints this week. If so, semis have probably topped for a bit. There will be a few other big reports like Walmart (WMT), but the overwhelming number of companies have now reported. It was another very strong earnings season, helping to explain the massive run up in stock prices.

Sentiment. The 5-day CPCE doesn't call short-term reversals wrong very often. The low 5-day reading in mid-April did nothing to slow the bulls, but last week another short-term warning sign printed as this moving average dipped to .48 again, and the S&P 500 appeared to print a top on Thursday, given the selling that took place on Friday.

Interest Rates. While stocks didn't react to the inflation reports the way I expected, treasury yields surely did. The TNX soared last week, rising on 4 of the 5 days and reaching 4.60%, a level not seen since July 2025. 4.75% and 5.00% are the next two key resistance levels. A move above 5.00% is something that I believe could really spook the market in the short-term, so I'll be keeping a close eye on the TNX. The FOMC minutes will be released on Wednesday and that has the potential to jar investors.

Technical Price Action. While we can talk all day long about this secondary indicator or that secondary indicator, and what those signals might mean, there's nothing more important than the price action. Right now, price action is bullish. End of story. Therefore, I expect key support will hold. My best guess is that a 20-day EMA test is coming and the market will bounce off of that. Further down the road, I do believe a 7000 test is possible, but I want to see how the market reacts to a 20-day EMA test first.

Happy trading!

Tom