EB Daily Market Report - Special Portfolio Adjustment - Wednesday, May 20, 2026

Tom Bowley - May 20, 2026

Very Important Note

We opened our current Portfolios at the close yesterday and one of our Portfolio stocks - Keysight Technologies (KEYS) - reported its latest quarterly results. We loved the stock heading into its earnings report and, upon initial release, KEYS shot higher in after hours trading yesterday afternoon at 375, 9% higher than its 344 close. That initial strength, however, did not hold up overnight and KEYS gapped lower this morning. Upon closer look, KEYS did not meet is quarterly revenue estimate and, thus, did not meet one of our primary filters for our portfolio stocks - beating both quarterly revenue and EPS estimates.

Because our portfolios are just getting started and we have another 90 days to ride these stocks, we are removing KEYS at today's close and replacing it with Vistance Networks (VISN), which has moved roughly 10% lower after gapping up with solid quarterly earnings recently. We apologize for the inconvenience, but we're not comfortable riding out an entire quarter with a company that just missed revenue expectations - especially when we have plenty of other options with companies that DO meet our key filter. I do not foresee making any other changes to our portfolios this quarter, but did feel it was prudent to make this change.

KEYS may very well move higher in the coming quarter. Its earnings exceeded Wall Street estimates by a very wide margin, which was good, but again, missing revenues is a problem for us, so we're making the change. This change will impact the AGGRESSIVE PORTFOLIO.

Executive Summary

Futures were higher overnight and our major indices gapped higher at the opening bell
The 10-year treasury yield ($TNX) is down 10 basis points to 4.57%, making small caps (IWM, +2.30%) more attractive
Crude oil prices ($WTIC, -5.90%) fell back below $98 per barrel
Energy (XLE, -2.08%) is lagging, given the significant drop in crude prices
Consumer discretionary (XLY, +2.36%) and technology (XLK, +1.81%) are leading a strong day, in which 8 of 11 sectors are higher
Furnishings ($DJUSFH, +6.87%) and home construction ($DJUSHB, +4.81%), after massive recent selloffs, are both benefiting from the lower interest rates
Semiconductors ($DJUSSC, +2.58%) are rallying back from the depths of a max-pain-related selloff
Airlines ($DJUSAR, +8.24%) are leading a strong transportation group ($TRAN, +2.52%)
United Airlines (UAL, +9.81%) is today's best-performing S&P 500 stock

Market Outlook

We finally saw a bit of relief in our major indices' overbought conditions as a 20-day EMA test unfolded in the key semiconductor group:

Because semiconductors represent nearly 17% of the S&P 500 and nearly 30% of the NASDAQ 100, the pullback in this area clearly had a negative impact on both of these indices. We've now established clear resistance on the DJUSSC at the most recent price high, while the low yesterday near the 20-day EMA will provide us short-term support. Our major indices will likely break out or break down based on whether resistance is cleared on the DJUSSC, or if support is broken.

Sectors/Industries

We all should know by now that the semiconductor group is the clear market leader. But as money rotates and semiconductors inevitably pause for a period of consolidation, the bigger market question is whether money leaves the market, resulting in a bigger index selloff, or if it simply rotates into other industry groups, helping to hold up our major indices.

Another industry group with fairly strong correlation to the S&P 500 is broadline retail ($DJUSRB). I discussed this group last week, highlighting both the absolute and relative strength of this discretionary group. The DJUSRB also tested its 20-day EMA yesterday, just like the semiconductors:

It's also very nice to see the AD line rising strongly in this group as well. I suspect we'll see this group move back to all-time highs in the not-too-distant future.

ChartLists and Trading Strategies

After earnings reports are released, I like to find leading stocks in various industry groups at key gap support levels. Here are just a couple of examples of what I like to look for:

GEV:

STRL:

In the case of GEV, a trip was made back to test the bottom of gap support. At this point, the selling on STRL has only found its way back to the TOP of gap support. Given the massive volume that accompanied STRL's gap higher after earnings, I'd be surprised if the 700 support level is violated. Time will tell, but that's where I'd keep a closing stop loss.

Upcoming Earnings

Our Upcoming Earnings ChartLists and Upcoming Earnings Relative Strength ChartList are still included on our website, but earnings season is winding down. We'll provide these ChartLists for the next couple weeks, then we'll pause until Q2 earnings season begins in mid July.

Economic Reports

FOMC minutes released at 2:00pm ET

Happy trading!
Tom