May 15, 2026
The S&P has continued to leg higher in a picture-perfect breakout that now looks less like a “V” and more like a checkmark.
The market continues to follow the post-Netscape pattern, and more and more investors are starting to embrace the comparison. Is now the wrong time to be rooting for that comparison?
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May 15, 2026
The sharp rally off of the March 30th low has seen the Nasdaq climb 25.9%. Back at the time of the low, the Nasdaq was extremely oversold, trading 2.85 standard deviations below its 50-DMA. In percentage terms, the Nasdaq was down 8.4% below that same moving average, which was a lot, but far from any sort of record setting reading.
Fast forward to yesterday’s close, the opposite was true. While the index wasn’t even extremely overbought (only 1.9 standard deviations above its 50-DMA), it did finish 13.4% above its 50-DMA for the most extended reading since June 2020. Going back throughout the over 50 years of history of the index, such extreme readings in the 50-DMA spread have been uncommon. Prior to the 2020 instance, the only other times it traded as far above its moving average was in 2009, various points in the 1990s to the Dot Com bubble burst in the early 2000s, 1982, and 1975.
In the chart below, we show how the Nasdaq performed in the one year before and after those historic peaks in the 50-DMA spread. For each line below, day 0 indicates the peak reading in the 50-DMA spread. As shown, of the dozen previous periods, the Nasdaq has been higher versus one year prior seven of the times. This latest rally ranks as the fifth largest of those at 40%. Only the 1992, 1999, and 2000 instances saw bigger gains. Of those periods with larger gains, the following year only saw the index higher twice (up 9.5% after the 1992 instance and 75% after the January 1999 instance) whereas the others were more immediately leading up to the early 2000 Dot Com peak.
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May 15, 2026
Although the index is lower to round out the week, the S&P 500 repeatedly reached more record highs recently. With the rally largely unabated, the index has been in overbought territory (> one standard deviation above its 50-DMA) every single session since April 14th. Not only has the S&P been overbought, but firmly so. Of the 24 consecutive sessions in overbought territory, the past 23 have seen the index close at least 1.5 standard deviations above its 50-DMA.
As shown below, this is now the longest streak of firmly overbought readings (consecutive trading days with the index at least 1.5 standard deviations above its 50-DMA) since September 2020. Looking back to the start of the 5-day trading week in 1953, there have been a total of 22 other streaks of at least 23 days. The longest of these extended to 33 straight sessions in March 1983 and May 1967.
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May 15, 2026
The S&P 500 has been driven higher by large-cap hyperscalers and semiconductors over the last month. This has pushed the index significantly above its 50-day moving average, indicating it’s well above trend right now.
As shown below, the index would need to fall 8% just to get back down to its 50-DMA from these levels!
The S&P’s price has now been “overbought” (more than one standard deviation above its 50-DMA) for 23 straight trading days:
But while price is overbought, the underlying breadth in the index looks absolutely horrific.
With the S&P remaining at overbought levels for more than a month, one would expect a majority of stocks in the index to be overbought as well. In reality, though, more than a third (36.8%) of S&P 500 stocks are actually “oversold” (more than one standard deviation below the 50-DMA), while just 29.8% are overbought.
The fact that so many more stocks are oversold than overbought in the S&P, even with the index’s price elevated well above its 50-DMA, highlights the narrowness of the recent rally.
Passive index investors have benefited even with the narrowness, but active investors without exposure to the AI infrastructure stocks have had a rough go of it.
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May 15, 2026
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“I always like to look on the optimistic side of life, but I am realistic enough to know that life is a complex matter.” – Walt Disney
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It may be Friday, but investors are in no mood to celebrate as equity futures are sharply lower. The Nasdaq is leading the losses, declining 1.28% while the S&P 500 is poised to open down by just under 1% (-0.90%). Treasury yields continue to march higher as they have all week, and in the commodity space, WTI crude oil is spiking 3% to just under $104 per barrel while gold is down over 2.5%. Bitcoin is also lower, falling by just 1%.
The weakness in US futures follows a lousy night in Asia. The Nikkei fell 2%, China was down over 1%, and South Korea plunged over 6%. Following these declines, all of Asia’s major indices finished the week lower. Higher yields contributed to the negative tone, and in South Korea, a potential labor strike at Samsung pressured that stock.
Weakness in Asia worked its way into Europe, and stocks are likewise lower across the board with declines of more than 1%. Here again, the primary culprit is higher yields, although CPI in Italy rose less than expected.
Getting back to the US, there’s not much in the way of earnings reports this morning, but at 8:30, we’ll get the release of the May Empire Manufacturing report, followed by Industrial Production and Capacity Utilization at 9:15.
With inflation headlining the week’s economic data, and much of it surprising to the upside, yields have been an unavoidable and uncomfortable focus for investors. Almost across the entire yield curve, we’ve seen yields move higher this week, pushing the prices of the underlying bonds lower.
The snapshot of Treasury ETFs across the yield curve shows the story. Except for the shortest duration treasuries, prices have moved lower over the last five trading days (since last Thursday’s close), and the magnitude of the declines increases the further you go out on the curve. The magnitude of the declines hasn’t been extreme, but any treasury ETF with a duration of more than a year is currently oversold and will only get more oversold at the open today. YTD, it’s also been a year to forget, with declines nearly across the board.
Of all the points on the yield curve, the 30-year is probably at the biggest crossroads. For nearly three years now, right above 5% has been a level the 30-year has flirted with multiple times, but each time it got there, the sellers didn’t have the firepower for a meaningful breakout. This week has been the third major test of that level as the yield pushes up towards 5.10% this morning. Will the third time be the charm or a strikeout?
The iShares 20+ Year Treasury ETF (TLT) is the opposite of the 30-year yield. Prices plunged during 2022 and into early 2023 as the Fed hiked rates and inflation surged. As price pressures eased, yields and treasury prices stabilized, and while there was a rally off the 2023 lows into mid-2024, momentum quickly stalled out. Ever since then, prices have been stuck in the mid-80s, and this morning, TLT is trading down over 1% and testing support right around $84. It’s been a multi-year bear market for fixed income in the post-COVID era, and if these support levels don’t hold, the sector could be in store for a new leg lower.
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May 14, 2026
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- The rebound in AI Doom stocks has broken over the past week while proxies for OpenAI have ripped higher.
- The past month has seen a historic consistency of new highs despite breadth hardly notching any new highs.
- Both import and export prices rose significantly more than expected in April data.
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