Bottom Line
Top of BookTraders faded the rally to start the week, and for the first two sessions they were right — stocks sold off Monday and Tuesday before the tape found its footing and bounced. What caught my eye on the way back up was breadth. I’ve been telling you for weeks to keep an eye on the S&P 500 Equal Weight as one of the things to look at, and this week it delivered: fresh all-time highs in both the Equal Weight index and the Dow Jones Industrial Average. That is exactly the kind of broadening Wall St. wants to see — it tells you the rally is no longer the property of a handful of mega-cap names. Bulls are still in control.
Control, though, is not the same as comfort. Three things can derail this: Iran peace talks, higher oil prices, and higher Treasury yields — and all three are wired together. Right now those are the levers driving the near-term price action. Higher oil prices tend to lift longer-dated Treasury yields, because the market reads energy as an inflation input; higher long yields, in turn, generally trigger selling in stocks. When oil prices fall, the chain runs in reverse and equities catch a bid. It really is that mechanical at the moment, and this week the market was buoyed by easing oil and easing long-end yields heading into Friday.
The swing factor on oil is, of all things, a social media account. Any development — or any post — from President Trump on the Iran conflict moves crude. This week he delivered a couple of posts pointing to progress in the Iran peace talks, and WTI crude responded by falling more than 10% on the week. Keep that linkage front of mind, because it cuts both ways: the same posts that took oil down 10% can take it back up just as fast.
Nvidia reported on Wednesday, and it was a solid “beat and raise” quarter. But as has so often been the case with this stock, a great print did not produce a great post-earnings reaction — the number was good, the move was not. What’s notable is that the muted NVDA reaction did nothing to stop the money flowing into the group. The PHLX Semiconductor Index (SOX) is trading at all-time highs, and the rotation reached software as well, with the iShares Expanded Software ETF (IGV) hitting its highest level since January. The bid for AI exposure is still very much there — at least in the near term.
It is worth noting the tone of the commentary around this tape. The word starting to show up — from Siegel and others — is “irrational.” Not “bubble.” Irrational. Exuberance may be turning a wee bit irrational, and that is the more useful word, because it describes a market that has gotten ahead of itself without claiming the underlying story is fake.
Which brings me to the Fed, and the new chair. Kevin Warsh is taking the reins of the U.S. central bank at an unusual moment — the stock market is booming, and everyone is fixated on it. How much the market factors into his policy decisions is, frankly, still an unknown. I don’t remember who mentioned it, but while listening to one of my shows this week someone framed the predicament well: the Fed is in a lose-lose position. Cut rates, and it risks its credibility — there will be a perception it has lost its independence. Hike rates, and it risks the economy. And we know how President Trump operates: he is fixated on the market and he turns on people quickly. If either move sends stocks lower, Warsh could very quickly become the fall guy for a falling market. Right now everyone is enjoying a moment of nicety.
Step back, though, and the fundamental backdrop is genuinely strong. The economy is growing around 4% — and it is doing that essentially on its own, without policy help. That growth has fed straight through to earnings: last quarter earnings grew 27.5%, revenues were up 11%, and margins expanded in the face of inflation. That is powerful, and it is broad-based across a lot of sectors — even if, so far, only the technology names have been rewarded for it. That gap is exactly where a catch-up trade in the lagging sectors could come from. The consumer companies that reported this past week were conservative in their guidance, but the actual results were ok. There is a lot of underlying momentum here.
And then there is the bigger thing — AI. This is not one trade; it is a stream of industries from the chips out to the power and electrification that is not going away for now. Ending a war can help the consumer rather than hurt the build-out. The most useful framing I heard this week — only about 8.7% of the top 3,000 companies are even generating AI revenue today.
But — and this is the whole point of the title — none of that lets us off the hook on the bond market. Warsh is not going to be able to cut rates so easily. He has said he wants to shrink the balance sheet, which I think is healthy, but that is very hard to pull off in an environment where you cannot cut. So, he is going to be a little stuck for a while. With Warsh, the base case is no cut — and with inflation sticky, standing pat is itself a quiet form of tightening. The talk of a rate cut needs to be set aside; there is no realistic shot of lower rates for months and months. Even the dot plot is under fire — almost no one likes it, almost no one can justify its existence, and the outgoing chair made that very point himself in his final news conference.
So here is where we land. To investors, the Fed has become something close to an afterthought — the AI story is simply that dominant, and the changes a new chair makes tend to be long-lasting, taking a year or more to show up. In the short run, the bulls have the tape, the breadth is broadening, and the earnings are real. But the bond market is speaking — higher yields, no cuts, a term premium that has come back — and when the bond market speaks, we are supposed to listen. Still dancing. Still close to the door.
There’s a moment in every cycle when the bond market stops being background noise and becomes the story itself. We are in one of those moments. The G7 government bond yield complex just printed its highest reading in more than twenty years, and Dr. Torsten Slok at Apollo captured the diagnosis cleanly in The Daily Spark last week: this is not a one-factor move. Four forces are pulling in the same direction at the same time — renewed inflationary pressure from elevated energy prices as the Middle East conflict disrupts global oil supply; persistently large government deficits requiring ever-increasing bond issuance; the end of central bank quantitative easing, with the Fed balance sheet potentially shrinking; and investors, finally, demanding higher term premiums and higher inflation premiums in a world that is visibly deglobalizing and fragmenting along geopolitical lines. None of those four are close to resolution. As Slok puts it, the era of artificially suppressed yields appears firmly behind us — rates will stay higher for longer, and investors should plan accordingly.
Technical Analysis
Course Rules — Support, Resistance & ConfirmationI’ve been studying charts for 32 years now, as you can see week in and week out when I give you levels — that’s where price tends to settle for a fight between the bulls and bears.
This week I will give you the outline from my course rules on support and resistance; same applies for trendlines.
Support, Resistance, and Price Confirmation
Support and resistance are foundational concepts in technical analysis that represent historical reaction zones where price has previously shifted due to changes in supply, demand, and liquidity behavior.
Support
A support level is a price zone where previous buying response or liquidity absorption has slowed or reversed declines.
In intraday trading, prior session lows are commonly used as reference points for potential support, though their significance depends on market context, volatility, and participation.
How to Use Support Levels
Long positions / breakdown scenarios: If price breaks below a key support zone with strong participation, it may indicate a shift in market structure and weakening demand. This can justify reducing or exiting long exposure depending on overall trend context.
Buying at support (confirmation required): Avoid entering blindly at support. Wait for confirmation of response, such as:
- rejection candle structures (e.g., wick rejection / hammer-type formation)
- stabilization or compression in price action
- evidence of absorption or buying pressure in flow/volume
Short positioning near support: As price approaches support, probability of reaction or liquidity sweep increases. Risk management becomes more important than assuming immediate continuation, as temporary rebounds are common.
Principle
Support and resistance are dynamic reaction zones driven by liquidity and participation, not fixed barriers. Their validity is determined by price behavior and confirmation, not the level itself.
Bottom Line
- Support/resistance = reaction zones, not exact price lines
- Breaks matter, but false breaks are common
- Confirmation requires price + structure + participation
- Levels evolve (support ↔ resistance flips)
- Behavior > level (market reaction defines validity)
S&P 500 — SPX
Trend Bullish — Equal Weight Broke OutSPX has been above the 20, 50 and 200-day moving averages since April 7. The trend structure is clean and bullish on a long-term basis; RSI came in a bit — toward 60 — and settled at 68. Next resistance is the next trendline I have around 7,560 and support around 20 Day MA 7,250 & previous trendlines.
I would keep an eye on S&P equal weight — last week I pointed out to see whether it will break all-time high. That has happened.
Nasdaq Composite — COMP
All Resistance Taken OutEvery resistance level was taken out. The only resistance I have are some trendlines around 26,500, then the next Fib# is 29,390. Next supports can be found at a retest of last all-time high 24,040 & or the moving averages.
Up 20+% off the March 30th lows. I pointed out last week the Relative Strength Index (RSI) was at 82 — it settled this week at 67.
Dow Jones Industrial Average — DJI
Broke Out With Equal-Weight S&PDOW, like the equal-weighted S&P, also broke out. If we manage to clear this week’s high, I don’t have any resistance till 52,630. Support are the moving averages and trendlines.
Russell 2000 — RUT
Approaching All-Time HighsRUT is also approaching its all-time highs. A pull-in to the lower band of its Bollinger Bands found support.
VIX — Volatility Index
Rejected Below the 100 DMAKeeping an eye on the CBOE Volatility Index (VIX): in order for the market to stay up, I would like to see the VIX continuing to trade below the 50 and then the 200 DMA. VIX found resistance below its 100 DMA.
Crude Oil WTI — CL
Broke 50 DMA SupportAs you see on my chart the levels I have drawn out a few weeks ago are playing out perfectly — they are acting as support and resistance zones based on where price is coming from. We broke support at the 50 DMA.
Gold — GC
Bearish MA Cross · Fib Levels WorkingGold has long & medium support at the 200 day MA. I see short-term resistance at the Fib levels I have and the 100 & 50 DMA; two weeks ago I wrote they appear as if they want to cross down soon — that happened last week. The Fib#’s (horizontal lines) are working as areas for trading points.
Fixed Income — 10-Year Treasury Yield
Resistance Taken Out — Market Not ListeningThree weeks ago I wrote that the significant march higher in yields is probably the bond market suggesting to the equity markets that this may be stagflation — but the market doesn’t seem to be listening; the AI momentum is very strong. What the Fed will do is the question on the table. 4.5 was resistance; next resistance is 4.80–4.90, while 4.25 and trendlines are support. Resistance was taken out — look for my next levels using the purple lines.
US Dollar Index — DXY
38% Fib + 2008 Trendline HoldingChart is showing support at FIB support lines 38% I drew out a few months ago. (If 38% is supported that’s usually a bullish sign.) The same goes for the upward sloping trendline I drew out, which dates back to 2008. If this area doesn’t hold, we would need confirmation before it turns into resistance. (That area has held a few times now.)
Bitcoin — BTC
Breakout Failed to Hold as SupportI’ve been showing you this level for a few weeks now. Chart is showing resistance at the 100 DMA and a Fib# at 79,826. (That level was hit a few times and held, but two weeks ago it broke that resistance, and longs needed to see that area turn into support — which didn’t materialize.) Support was found in the 61–65,000 area; closer supports are the horizontal lines I have. Next resistance is 84,300 & 85,600 and then the 200 MA.
Futures — Commodity Complex
Bloomberg Commodity Index False BreakoutTwo weeks ago I wrote: Bloomberg Commodity Index is reaching all-time highs. (We hit that resistance and sold off; they broke through again and then back below that level — a false breakout until that resistance is held as support.) Cattle futures new highs (I drew the line in the sand as a yellow line; you should read about seasonality when it comes to cattle futures). Soybean; I wrote it broke out of the consolidation area (last resistance seems to be support now — that’s a good sign for the bulls). Rough rice we saw a triangle formation which broke to the upside, then we saw a flag formation which indicates further upside — they broke out of that flag. OAT — support around 335, resistance 385–7.
ETF — IGV Software
Inverted Head & Shoulders BreakoutIGV appears to be breaking out from an inverted head and shoulders. IGV holds the support zone $74.38 I pointed out to you in previous weeks — by the way, that’s a healthy retracement via the Fib#’s. Next resistance $88.23 was taken out for now. Watching my horizontal support and resistance lines which seem to be working nicely.
Silver Futures — SI
Levels Not Working CleanlyMy levels aren’t working for Silver — it’s mostly support and resistance lines per prior days and weeks.
Semiconductors — SOX
30-Year High · +60% Over 200 DMASOX is trading 60% above its 200-day SMA, so it’s still stretched from an intermediate-term perspective.
SOX at a 30-year high. Read into that what you want. Semis lead at inflection points, both up and down. Next resistance area 13,072. Support: MA and horizontal lines. SOX pulled in to its 20 DMA and that was enough for the bulls.
NVIDIA — NVDA
Sell-on-News Watch · Resistance $270Last week I pointed out we may see a sell-on-the-news reaction after earnings, because that has been the trend. The next resistance for NVDA on my charts is $270. Support can be found at the MA and horizontal lines.
Weekly Economic Calendar
Week of May 25 – May 29, 2026| Day | Time ET | Release |
|---|---|---|
| MON 5/25 | — | Memorial Day Holiday — No Scheduled Reports |
| TUE 5/26 | 9:00 AM | S&P Case-Shiller Home Price Index (20 Cities) |
| TUE 5/26 | 10:00 AM | Consumer Confidence |
| WED 5/27 | — | No Scheduled Reports |
| THU 5/28 ⚠ | 8:30 AM | Initial Jobless Claims |
| THU 5/28 ⚠ | 8:30 AM | Durable-Goods Orders |
| THU 5/28 | 8:30 AM | Durable-Goods Minus Transportation |
| THU 5/28 | 10:00 AM | New Home Sales |
| FRI 5/29 ⚠ | 8:30 AM | GDP (Second Revision) |
| FRI 5/29 | 8:30 AM | Personal Income |
| FRI 5/29 | 8:30 AM | Personal Spending |
| FRI 5/29 ⚠ | 8:30 AM | PCE Index |
| FRI 5/29 ⚠ | 8:30 AM | PCE (Year-over-Year) |
| FRI 5/29 ⚠ | 8:30 AM | Core PCE Index |
| FRI 5/29 ⚠ | 8:30 AM | Core PCE (Year-over-Year) |
| FRI 5/29 | 8:30 AM | Advanced U.S. Trade Balance in Goods |
| FRI 5/29 | 8:30 AM | Advanced Retail Inventories |
| FRI 5/29 | 8:30 AM | Advanced Wholesale Inventories |
| FRI 5/29 | 9:45 AM | Chicago Business Barometer (PMI) |
Key Earnings
Week of May 25 – May 29, 2026Monday (May 25): Market Closed (Memorial Day) — No Earnings.
Tuesday (May 26): Before Open — AZO, PONY, PSKY. After Close — ZS, SMTC, MOD, APPS.
Wednesday (May 27): Before Open — PDD, ANF, DKS, BNS, BMO, BBWI. After Close — CRM, SNOW, MRVL, SNPS, HPQ, P, AMSC, HEI, NTNX, BRZE, A.
Thursday (May 28): Before Open — XPEV, BBY, TD, DLTR, RY, LI, KSS, PLAB, FUTU, BURL. After Close — COST, DELL, PATH, MDB, OKTA, S, ADSK, ESTC, ASAN, AMBA, GAP.
Friday (May 29): No Major Earnings Scheduled.
Weekly Commodities Futures Overview
Selective Trend Continuation vs. Macro Repricing RiskMacro Theme: Selective Trend Continuation vs. Macro Repricing Risk. This week, commodity futures markets continued transitioning away from broad fear-driven positioning and into a more selective leadership environment. However, unlike last week’s early stabilization phase, markets are now facing a more important question: Can established commodity trends sustain momentum if inflation and growth expectations begin repricing again?
The dominant macro structure remains centered around Federal Reserve rate path expectations, Treasury yield stability versus renewed upside pressure, U.S. Dollar resilience, geopolitical premium in energy markets, China demand / industrial growth sensitivity, and weather-driven agricultural volatility.
Markets are increasingly showing sector divergence rather than broad commodity alignment, suggesting institutional capital is rotating more selectively.
Key Macro Observations
- Commodity markets became more rotational than directional
- Treasury yields remain a major cross-market driver
- U.S. Dollar remains firm, but no aggressive breakout
- Inflation-sensitive commodities remain highly reactive
- Risk appetite improved modestly, but conviction remains uneven
- Broad macro fear is no longer accelerating — but repricing risk remains elevated
Continued trading with elevated geopolitical sensitivity, but increasingly shifted toward balancing supply concerns against slower global demand expectations. Persistent Middle East premium; OPEC / supply discipline supportive; demand growth concerns limiting aggressive breakout continuation. Pullbacks continue attracting buyers; upside breakouts remain headline-sensitive; high intraday volatility intact. Supported above key macro support zones but lacking clean trend acceleration.
Continued showing signs of trend maturity after prolonged weakness. Seasonal demand still mixed; storage levels a moderating factor; selling pressure reduced materially; short-covering becoming more likely. Lower-high structure still partially intact, downside acceleration clearly slowing, increased mean-reversion behavior emerging. Transitioning from a clean bearish trend toward a consolidation / rebalancing phase.
Improved this week as markets reassessed rate expectations and geopolitical uncertainty remained supportive. Moderating Treasury yield volatility; stable-but-not-stronger US Dollar; safe-haven demand gradually returning; inflation uncertainty raising macro hedge demand. Buyers defending support zones; higher-quality consolidation; reduced downside liquidation. Beginning to shift from stabilization toward early constructive accumulation.
Showed stronger relative improvement than gold this week. Industrial demand sentiment stabilized; gold support helped the broader precious metals complex; reduced liquidation pressure. Higher volatility remains; relative strength improving; still vulnerable to macro rate surprises. Remains more tactical than gold, but upside participation improved.
Improved modestly as growth-sensitive sentiment stabilized. China stimulus expectations remain critical; global industrial slowdown fears moderated; Dollar strength still capping aggressive upside follow-through. Two-way rotational trade; reduced downside momentum; more consistent dip-buying participation; improved base-building behavior. Transitioning from stabilization toward a tentative recovery structure.
Remain among the strongest leadership groups across the commodity complex. Weather uncertainty, crop condition sensitivity, supply chain and export disruptions, and continued global food inflation concerns. Trend leadership remains intact; pullbacks continue being bought; momentum constructive; relative strength still strongest across commodity sectors. Risks: crowded long positioning, increased volatility, sharp corrective pullback potential if weather improves.
Positioning & Flow (COT Insight)
Positioning continues evolving from “panic defense” toward “selective trend reinforcement.” Dollar longs remain elevated; metals shorts are less aggressively expanding; agriculture longs are increasingly crowded; energy participation is improving; and macro hedge flows are returning modestly into precious metals. Implication: commodity markets may now become more vulnerable to rotation-driven reversals, short-covering rallies, crowded-trade flushes, and data-driven volatility spikes.
Key Cross-Market Signals
- Trend Leadership Is Becoming Clearer — agriculture remains strongest, oil structurally supported, metals improving, natural gas stabilizing.
- Inflation Sensitivity Is Rebuilding — commodities are reacting faster to rate expectations; Fed repricing remains dominant.
- Dollar Still Matters — Dollar strength is still suppressing upside acceleration, but there has been no major breakout yet.
- Macro Fear Has Shifted to Tactical Repricing — panic liquidation has faded; the market is now focused on selective macro valuation and positioning.
Risks to Monitor (Upcoming Week)
- Core PCE / inflation expectations
- Treasury yield volatility
- Federal Reserve communication
- Geopolitical escalation risk (energy-sensitive)
- China stimulus / industrial demand updates
- Weather-driven crop volatility
- U.S. Dollar breakout or reversal
Bottom Line
Closing SummaryThis week suggests commodity futures markets are moving deeper into a selective trend environment, where leadership is becoming clearer but positioning is also becoming more crowded. Geopolitical influence: elevated, especially energy. Macro influence: still dominant. Trend quality: improving, but uneven. Positioning risk: increasing in leadership sectors.
This environment increasingly favors relative strength rotation, tactical trend participation, crowded-position awareness, and cross-market macro confirmation. Current leadership structure: agriculture is strongest; gold and silver are improving; oil is supported but volatile; copper is stabilizing; natural gas is consolidating.
The commodity complex is no longer broadly repricing fear — it is now determining which trends can strengthen into sustained leadership, and which are becoming vulnerable to exhaustion or reversal. Still dancing — close to the door.
by Eli G Levy · eli@cannontrading.com · May 24, 2026 · Issue 020