EB Daily Market Report - Thursday, May 22, 2025

Tom Bowley - May 22, 2025

Spring Special

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Executive Summary

Futures were a little mixed heading into today's opening bell, but after early back-and-forth action, we've seen mostly a recovery today
There's been solid leadership throughout the day as consumer discretionary (XLY, +0.69%) and technology (XLK, +0.36%) are the top 2 performing sectors on the session
Utilities (XLU, -1.27%) is today's lagging sector
Footwear ($DJUSFT, +2.14%) and autos ($DJUSAU, +1.93%) are helping to lift discretionary stocks; Tesla (TSLA, +2.38%) is rebounding and nearing its recent price high
Cryptocurrencies are very strong, with bitcoin ($BTCUSD, +2.92%) jumping to an all-time high of 111,100, its first-ever move above 110,000
Commodities are mostly lower, led by crude oil ($WTIC, -0.93%), which has fallen back to $61 per barrel
Renewable energy stocks ($DWCREE, -4.35%) are struggling as a result of the new tax bill; Enphase Energy (ENPH, -19.53%) is, by far, the worst-performing stock on the S&P 500

Market Outlook

We've seen a number of bottoming formations in recent weeks and it appears that the Dow Jones has a reverse head & shoulders pattern of its own:

The Dow Jones has gap support at 41,249 from May 9th that's worth keeping an eye on. Perhaps a test of that gap support will mark the bottom of the reverse right shoulder?

Sectors/Industries

Internet stocks ($DJUSNS) are beginning to show relative strength, in addition to their recent absolute strength:

It's always nice to see relative strength in areas like semiconductors ($DJUSSC) and internet. The DJUSSC has been performing extremely well over the past several weeks and internet appears as though it's ready to join the secular bull market party. If we do see a false breakout of a current reverse head & shoulders pattern, the rally in this group may be paused. But I believe the absolute and relative rallies off the April lows will continue.

ChartLists and Trading Strategies

Here are a couple of interesting trades, leading stocks that have pulled back to test their respective 20-day EMAs:

ISRG:

I'm always interested in leading stocks that test their rising 20-day EMAs. It helps to lessen the risk as any close beneath the 20-day EMA could be used as an exit point.

TTWO:

Appears to be forming a hammer today on the 20-day EMA after trading beneath it earlier this morning.

Upcoming Earnings

We now have our Upcoming Earnings ChartLists on our website, so be sure to check those out.

Economic Reports

Initial jobless claims: 227,000 (actual) vs. 230,000 (estimate)

May PMI composite flash: 52.1 (actual) vs. 50.6 (estimate)

April existing home sales: 4,000,000 (actual) vs. 4,130,000 (estimate)

Happy trading!

Tom