EB Daily Market Report - Wednesday, May 27, 2026
Executive Summary
- Futures were up slightly overnight and our major indices have traded in a fairly narrow range throughout the session
- Consumer stocks are leading the action with discretionary (XLY, +1.71%) and staples (XLP, +1.28%) the only sectors gaining more than 1%
- Gambling stocks ($DJUSCA, +3.83%) are strong as MGM Resorts Intl (MGM, +9.45%) soars past overhead price resistance - more on this one below
- Energy (XLE, -1.33%) is today's weakest sector as oil prices ($WTIC, -4.81%) retreat back below $90 per barrel
- Other commodities like silver ($SILVER, -2.29%) and gold ($GOLD, -1.17%) are lower as well
- Semiconductors ($DJUSSC, -0.77%) are showing weakness after another recent run higher, putting some pressure on our major indices
- Boston Scientific (BSX, -12.49%) is the worst-performing S&P 500 stock after cutting its FY2026 revenue guidance
Market Outlook
Interest rates are being watched closely to see if the bond market is providing us any clues as to what the Fed might do next. After a solid push higher in the 10-year treasury yield ($TNX), we've seen a significant pullback to the rising 20-day EMA:
When we look at the TNX in the last several months, the move up seems like it could be a big problem. However, when we scroll out to the bigger picture, similar to the above, it appears to me that interest rates remain pretty well anchored between key overhead yield resistance and yield support.
Sectors/Industries
I really don't like trying to call tops in red-hot areas of the market, because those attempts are usually feeble. Of course, I'm talking about the semiconductor group (SOXX). After an extended run to the upside AND a negative divergence in place, a reversing candle certainly doesn't guarantee a top, but it does suggest a much higher level of risk. That could be where we find ourselves after today's action, depending on the close.
Here's a 6-month chart of the SOXX:
The reversing candle is questionable as I write this at 3:15pm. Will we selloff and print a bearish engulfing candle? Will we hold and simply print a dark cloud cover candle (not quite as bearish as an engulfing candle)? The volume is heavy, so a reversing candle would carry a bit more weight given the volume.
The second question would be this. Let's say we do print a bearish engulfing candle and the SOXX does top near-term. Do we see money leave the stock market, resulting in a selloff on our major indices, or does money rotate into other areas, keeping our major indices at or close to all-time highs?
ChartLists and Trading Strategies
If the second question above is the latter, where we see a bunch of rotation, then I'd be looking at leading stocks in areas outside of semiconductors. Here are some names and a couple charts:
CSX:
CSX is a leading railroad stock, just breaking out, that could benefit from more money rotating into value-oriented areas of the market.
MGM:
I love the breakout here in MGM, along with the increase in volume. I'd expect to see a continuing upside move here, with key support now residing at 40.00 and 38.50.
Other stocks that are interesting and breaking out include FDX, MNST, DAL, EW, KIM, and MAR.
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 next week, then we'll pause until Q2 earnings season begins in mid July.
Economic Reports
None
Happy trading!
Tom