Weekly Review - 2026-May-29

It was never my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight! - Jesse Livermore

AMAT Investing

May 31, 2026

Last Week’s Comment: Daily double top broken out. And the low volume rally continues.

Level 1: Why is it happening?

Economic Data: Production: ISM PMI vs. SPX

Analysis: Sharp increase in Chicago’s PMI.
Outlook: (very) Bullish

Economic Data: Production: Dallas & Philadelphia Manufacturing vs. SPX

Analysis: Small increase in Dallas Manufacturing Index.
Outlook: Neutral

Economic Data: Consumption: Consumer Sentiment

Analysis: No changes since last week.
Outlook: Neutral

Interest Rates: FED, 2yr, 10yr, and 30yr Rates

Analysis: Slight reduction on rates, yet elevated in comparison with Fed’s reference rate. If the Fed is forced to elevate the rates it could be bad for stocks.

Comment: As this push to higher rates and higher inflation comes from the supply side of the economy (prices are going up because there is less supply not more demand), the Fed may consider, rightly so, to not increase rates and wait for the supply shock to pass. This ‘no-movement’ by the Fed will be seen as good for the markets. Based on this alternative point of view, I’m upgrading the outlook from bearish to neutral.

Outlook: Neutral

Context Investors Sentiment: Credit Spreads

Credit spreads move in tandem with the S&P, but when they diverge, that’s often an early warning signal.

Analysis: Spreads continue to advance.
Outlook: Bullish

Level 1: Why is it happening? Summary

Economic Data (long-term): Bullish
Interest Rates: Neutral
Investors Sentiment: Bullish

What is happening? – Level 2

Price Action: SPX – Long Trend – 20 & 10 years

Analysis: Both channels broken on the upper side. Despite the action being bullish, this shall be considered late in the cycle and our outlook shall be bearish. We shall be selling positions here, not entering new ones.
Outlook: Bearish

Price Action: RSP – Trend – Weekly & Daily

Analysis: Equal weight jumped above previous S/R level (daily). Weekly RSI is still not overbought. This rally could continue for a while, expanding the number of stocks participating in the rally.
Outlook: Neutral to Bullish

Breadth & Volatility: % Stocks above SMAs vs. RSP

Above 200 Daily SMA

Above 20, 50, and 200 Daily SMAs

Analysis: With Above 200D (red) in bullish territory, and above 20D (green) and 50D (blue) above their 50 level, I’m upgrading the outlook from neutral to bullish.
Outlook: Bullish

Breadth & Volatility: Bullish Pct. Index & McClellan Summation Index

Analysis: Both indicators continue in their bullish areas. I’m keeping the bullish outlook.
Outlook: Bullish

Breadth & Volatility: Ratio Low Volatility Stocks / SPY vs. SPY and RSP

Analysis: Sharp increase in the ratio. In retrospective, I shall have kept my bullish outlook for longer.

Comment: The ratio’s distance to its 50D MA is very elevated. Looking into previous years, in 2023 we have a similar situation developing during the month of June. Markets rallied until the end of July, with a first scare drop on June 15th.

Outlook: Bullish

Breadth & Volatility: New Highs vs. SPY & RSP

Analysis: Very low New Highs (grey line behind the yellow) with a downward trend (yellow). I’m leaving the outlook in neutral (definitely not bearish).
Outlook: Neutral

Breadth & Volatility: VIX vs. SPY & RSP

This chart is mainly to detect market bottoms.

Analysis: VIX getting too low. Yet it can remain there for weeks as it happened before (for example during summer 2025).
Outlook: Bullish

Options: (Inverted) Put/Call Ratio vs. SPY

Analysis: Extreme P/C read (grey) and average at historically top highs. I’m keeping the outlook as Bearish.
Outlook: Bearish

Options: Gamma Exposure – SPX

Analysis: First time that we see such a high GEX at 8,000, which is 420 points away.
Outlook: Bullish

Level 2: What is happening? Summary

Price Action: Neutral
Breadth & Volatility: Bullish
Options: Neutral (one Bearish and one Bullish reading)

Where is it happening? – Level 3

Bulls vs. Bears: RSP vs. RSPD (Cons. Disc. – Bulls) and RSPS (Cons. Sta. – Bears)

Analysis: Ratio (yellow) continues in bearish territory but improving rapidly (as we have seen in the RSP price action). Bulls (green) seem also to start reacting positively. I’m upgrading the outlook to neutral.
Outlook: Neutral

Sectors Rotation

Market & Economy Rotation

US Sectors order by ISM PMI Correlation (between parenthesis)
Growth Sectors - shall outperform when the market is bullish:
XLK: Technology (71%)
XLY: Cons. Discretionary (67%)
XLI: Industrials (66%)
XLB: Basic Materials (66%)
XLF: Financials (59%)

Value Sectors - shall outperform when the market is bearish:
XLV: Healthcare (55%)
XLC: Communications (49%)
XLE: Energy (44%)
XLU: Utilities (35%)
XLP: Cons. Staples (30%)
XLRE: Real Estate (16%)

Analysis:
With a market moving at this speed is difficult to decide in which moment of the cycle we are. We know that the economy is improving from lower levels, so we could consider it “Early Recovery”. The market, after the noise brought by the Iran war, is signalling towards a Bull Market as we shall see Technology and Industrials leading.

Sectors Performance

In the US market, there is a predominant group above everything else, technology. As W. Buffet said, do not bet against America - so do not bet against technology.

Sectors Bullish Percent Index

Growth Sectors:

Value Sectors:

Any sectors below their red levels are good opportunities to find great companies at good valuations or buy sector ETFs (buy cheap). Those sectors above their Green levels are candidates to be sold (sell expensive).

Buy Opportunities: Utilities, Consumer Discretionary, Materials (soon)
Sell Opportunities: Real Estate

Level 3: Where is it happening? Summary

Bulls vs. Bears: Bearish
Market & Economy Rotation: Bull Market

All Levels Summary and Final Thoughts

Level 1 Summary - The Why