MARKET ANALYSIS
Here’s What You Need To Know

• Futures are firmer this morning, with the Nasdaq and Russell 2000 leading again as the market continues to lean risk-on into the final trading session of May.

• The headline macro relief is oil. WTI is down more than 2% this morning, while Brent is also lower and trading around the low $90s after the U.S. and Iran agreed to a 60-day memorandum of understanding to extend the ceasefire.

• That is clearly supportive for equities because lower oil reduces immediate inflation pressure, helps ease the bond market concern, and gives growth stocks more breathing room.

  

  WTI VRVP Daily & Weekly Chart

• But we do not want traders to get too focused on the day-to-day drop in oil. Crude still has a 90 relative strength rating versus the SPX, and it is still bouncing above its rising 20-week EMA. That is not a broken trend.

• In other words, oil is cooling in the short term, but energy is still structurally strong. If geopolitical risk reappears or the ceasefire extension starts to look fragile, oil can very quickly become a market problem again.

• The reason equities are holding up so well is that earnings and AI infrastructure demand continue to dominate the tape. Dell is surging after raising full-year guidance, while Hewlett Packard Enterprise, Super Micro and HP are all being pulled higher in sympathy.

• That matters because this is no longer just a semiconductor story. The AI trade is spreading across servers, memory, hardware, cloud, power, data centers and broader infrastructure. The market is still rewarding anything directly tied to the physical buildout of AI capacity.

• Asia is confirming the same message. South Korea’s Kospi and Japan’s Topix both hit record highs, with Samsung rallying after shipping samples of its latest high-bandwidth memory chip. That reinforces the idea that the global AI memory cycle remains one of the strongest themes in the market.

• The broader U.S. market also remains powerful. The Nasdaq is on pace for an 8% gain in May, while the S&P 500 is set to finish the month up almost 5%. That is not a weak tape.

• The caveat is that this is still a leadership-driven market. Tech, AI hardware, semiconductors and higher-beta growth continue to carry the tape, while weaker consumer-facing areas like retail are still showing pressure.

• That split matters. Gap and American Eagle are both under pressure after disappointing sales updates, which tells us the consumer side of the market is not participating with the same strength as the AI and infrastructure side.

• So the macro message today is balanced but constructive. Oil is helping, AI earnings are still strong, and risk appetite is alive. But crude is not dead, inflation risk has not disappeared, and leadership remains concentrated in the strongest themes.

• For traders, the playbook remains the same. Stay focused on leading groups, avoid chasing the most extended names into vertical moves, and watch whether capital continues to rotate into cleaner setups in software, small caps, mid caps, industrials and AI infrastructure.

S&P 500

54.07%: over 20 EMA | 55.86%: over 50 EMA | 57.25%: over 200 EMA

• SPY is still showing very strong follow-through to the upside, with yesterday’s full-body candle coming after a two-day contraction. Relative volume remains low at around 65% of the 20-day average, and it has been broadly consistent with the last five sessions, but price continues to climb regardless.

• A large part of this strength is still coming from the major large-cap names, especially AMZN, META and the broader mega-cap technology, software and semiconductor complex. The market’s strongest pockets are still doing the heavy lifting.

• That said, SPY is now sitting at roughly an 8 ATR multiple extension from the 50-day EMA, which means we still need to be cautious with fresh breakout entries. This is not a weak tape, but it is a technically extended one.

• The important point is that we have not yet seen clear evidence of buying momentum slowing down. Yesterday’s highs around $755 still showed active demand, with roughly 1.7M shares traded green versus around 1.5M shares traded red. Buyers are still present at the highs, which tells us demand remains firm.

  

  MAGS VRVP Daily & Weekly Chart

• The obvious area to keep tracking remains the MAG7. These stocks are the main driving force behind both the Nasdaq and the S&P 500, and the group still looks healthy. The MAG7 has pushed higher from a two-day breakout and is only around 6.19 ATR multiples above the 50-day EMA, which is far more constructive than the broader semiconductor extension.

  

  GOOGL VRVP Daily & Weekly Chart

• GOOGL remains our number one large-cap play in this space. It is sitting at only around 5.3 ATR multiples above the 50-day EMA and continues to consolidate neatly. There is still a possible flush lower of around 5.65% into the rising 10-week EMA and 50-day EMA, which we would view as an immediate long bounce opportunity. So far, though, demand continues to show up around the rising 20-day EMA.

• The key message is simple: SPY is extended, but the leadership underneath it remains strong. We still expect higher prices, but fresh entries need to be far more selective.

S&P 400 Midcap

57.25%: over 20 EMA | 60.25%: over 50 EMA | 58.50%: over 200 EMA

• MDY largely filled the gap as expected, pulling back into the rising 10-day EMA before bouncing.

• The bounce came on higher relative volume at around 89% of the 20-day average, which is a constructive sign. However, we are also seeing supply begin to build at the highs.

• The visible range volume profile around the $682 highs shows more than a 7 to 1 ratio of selling volume versus buying volume, which tells us that supply is starting to mount in that area.

• This is not a sell signal. We still see plenty of reason to remain optimistic on the mid-cap complex, especially given the broader rotation into lower-cap names. But it does mean MDY may need more time to tighten before it can materially expand higher again.

• The weekly candle is important here. So far, this looks like a failed breakout with a fade at highs on declining volume. That does not break the structure, but it does tell us that chasing strength here is not the right entry tactic.

• We still prefer mid-caps as a major area for long exposure, but the better trades will come from individual names forming tight volatility contraction patterns rather than buying MDY blindly into supply.

Russell 2000

64.82%: over 20 EMA | 67.93%: over 50 EMA | 61.86%: over 200 EMA

• The small caps produced a fuller candle yesterday, and while we did get the shakeout we expected, the pullback toward $288 was bought up almost immediately.

• The weekly chart still looks extremely strong, especially after last week’s retest of the 10-week EMA. That pullback shook out a lot of traders, but it also reset the structure and created a much cleaner platform for continuation.

• We see no reason to be bearish on IWM here as there may be chop on the short-term daily cycle, but that does not warrant flipping bearish on small caps. This is still a very strong broad-market rally, and the strength in IWM is one of the clearest signs that risk appetite remains alive.

• Small caps continue to tell us that the market is not only being carried by mega-cap tech. The rally is broadening, and that requires confidence.

FOCUSED STOCK
NVDA: Pullback Long Showing Strength

ADR%: 3.42% | Off 52-week high: -9.4% | Above 52-week low: +61.2%

• NVDA is still one of the cleanest pullback-long setups in the market. The stock has pulled back in a very linear, low-volume manner toward the rising 10-week EMA, which is exactly the kind of reset we want to see in a leading stock.

• Yesterday, NVDA bounced around $209, with the 10-week EMA sitting near $205. It is not a perfect test, but it is close enough to treat this as a valid higher-timeframe support reaction.

• The candle structure also looks constructive, with price beginning to form what looks like an immediate reversal attempt, potentially through a doji-style candle.

• We believe NVDA is an excellent pullback-long candidate here and the ideal entry would be as close as possible to the 10-week EMA, but even an entry around the current price level can be justified if the stop is kept tight around the $208 zone.

• That gives the trade a clean risk profile, especially because NVDA remains inside the number one group in the market right now: semiconductors.

• The key point is the quality of the pullback. It has been linear, controlled and low volume. That is exactly what we want to see when a market leader resets into rising higher-timeframe support.

• NVDA remains a leading stock in a leading group, and this pullback offers a far better entry than chasing extended semiconductor breakouts at highs.