Weekly Market Recap (May 19-23): Markets Cool Off as Headline-Driven Volatility Returns – Healthy Pause or Warning Sign?
Everything you need to know about last week's markets performance and what to expect next.
Dear readers,
Welcome back to My Weekly Stock, where in-depth market analysis meets proven momentum-based trading strategies. My mission? To help you win in the markets with unbiased, data-driven insights you can act on.
Friday means it's time to review the week in the markets. Each week, I dedicate hours to curating this market recap, preparing insightful analysis with clear visuals and a structured layout—making it easy for you to find exactly what you need, week after week. And because it's easy to get swayed by personal bias, I like to let the data do most of the talking.
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SUMMARY
Here are this week's highlights and what to look out for next:
1. The markets were negative this week, with the S&P 500 down -2.6%, the Nasdaq -2.5%, and the Dow Jones -2.5%. Consumer Defensive (+-0.6%) and Utilities (+-1.4%) were the best-performing sectors.
2. The S&P 500's long-term trend is improving, and the short-term momentum is mixed. 6,000 is the next resistance, while 5,780 is support.
3. The Q1 earnings season is under way and 476 companies from the S&P 500 index have released their quarterly results, with 76% beating estimates. Earnings are expected to be up 14% in Q1 and 8% in 2025.
4. Market sentiment is at the "Greed" level (64/100) as measured by CNN’s Fear & Greed indicator, while VIX is at a high value of 22.
5. Earnings reports from Nvidia and Costco, the latest PCE readings and GDP update are scheduled for next week.
My take:
Markets finally took a breather this week and it was hardly a surprise as we were overdue for a pullback. We saw some sharp intraday selloffs, especially at Monday and Friday’s opens, but dips mainly were bought.
In this headline-driven environment—where sentiment can shift within minutes based on a single social media post—it’s essential to maintain a steady hand and not overreact. And for now, I’m not overly concerned and view this week’s action as a much-needed consolidation. But to keep the bullish scenario in play, we’ll ideally need to see momentum resume soon and a renewed push to challenge the 6,000 resistance. A clean break there would open the path toward new all-time highs.
PERFORMANCE RECAP
1. S&P 500 Sector Performance
This week, 0 out of the 11 S&P 500 sectors posted gains. Consumer Defensive led the market with a -0.6% increase, while Energy was the laggard, dropping 4.1%.
Year-to-date, 6 sectors have achieved positive performance. Utilities is the top-performing sector with a 7.1 % gain, while Consumer Cyclical lags behind, with a 6.1 % loss.
2. S&P 500 Top & Worst Performers
Over the last five trading days, 14% of the stocks in the S&P 500 index rose in value.
Top Performers:
$GEV (GE Vernova Inc): 8.5%
$DG (Dollar General Corp): 8.4%
$INTU (Intuit Inc): 7.4%
$NEM (Newmont Corp): 7.1%
$MRNA (Moderna Inc): 5.6%
Worst Performers:
$CPRT (Copart, Inc): -15.9%
$AES (AES Corp): -18.2%
$DECK (Deckers Outdoor Corp): -21%
$ENPH (Enphase Energy Inc): -21.4%
$FICO (Fair Isaac Corp): -23.1%
In addition, 41 stocks within the S&P 500 reached a new 52-week high, while 10 stocks set new lows. The majority of this week’s highs came from the Industrials sector.
Notable Highs:
$V (Visa Inc)
$MA (Mastercard Incorporated)
$NFLX (Netflix Inc)
$GE (GE Aerospace)
$IBM (International Business Machines Corp)
Notable Lows:
$KHC (Kraft Heinz Co)
$GIS (General Mills, Inc)
$IQV (IQVIA Holdings Inc)
$ERIE (Erie Indemnity Co)
$DOC (Healthpeak Properties Inc)
MARKET MOMENTUM
1. Momentum Review
To evaluate the market's current health, I examine 4 key elements: performance, breadth, trends, and key levels. Healthy bull markets typically feature indices setting new highs, broad market participation, and ascending trend lines.
Performance (MIXED 🟡): evaluating recent market performance to gauge the momentum’s strength. Ideally i want to see returns accelerating short-term and index trading less than 5% from its 1-year high
1-month performance: +5.9% 🟢
3-month performance: -3.0% 🔴
vs. 1-year high: -5.6%🟡
Breadth (MIXED 🟡): assessing market participation to understand the health of the trend. Extreme levels (above 80% or below 20%) may indicate overextended trends.
% of stocks above 200-day moving average: 46% (down from 55% last week) 🟡
% of stocks above 20-day moving average: 49% (down from 85% last week) 🟡
Trends: analyzing trend strength across multiple timeframes using exponential moving averages, scored on a scale of 1 to 5. A score of 3 or above suggests solid trends and supports holding a position.
Weekly chart: SOLID ⭐️⭐️⭐️ (stable vs last week)
Daily chart: STRONG ⭐️⭐️⭐️⭐️ (worst vs last week)
4-hour chart: MIXED ⭐️⭐️ (worst vs last week)
Key levels: identifying critical price zones to confirm the current trend or signal a potential reversal.
Support:
$5,575 (-3.9%)
$5,700 (-1.8%)
$5,780 (-0.4%)
Resistance:
$6,000 (+3.4%)
$6,175 (+6.4%)
$6,250 (+7.7%)
2. Post of the Week
This week's momentum analysis is about the top and worst-performing stocks in each sector. The difference in performance between the best and worst-performing stocks in each sector is huge, emphasizing the importance of stock selection. Choosing wisely when it comes to stock selection can have a significant impact on your portfolio.
EARNINGS & ECONOMIC REPORTS RECAP
1. Earnings Outlook
Q1 Earnings: S&P 500 earnings are expected to grow by 14%, rising to 16% when excluding the energy sector.
2025 Full-Year Outlook: Earnings are expected to increase by 8%, slightly below the 10-year average growth of 9%.
Analyst Revisions: Over the past month, 51% of all earnings revisions by analysts have been upward adjustments to their outlook.
Valuation: The forward 4-quarter P/E ratio stands at 21.7, above the 5-year and 10-year historical averages.
2. Earnings Season Recap
Out of 476 S&P 500 companies that have reported first-quarter earnings, 76% exceeded EPS expectations. It is in line with the four-quarter average of 77% and above the historical average of 67%.
Below are some notable companies that reported earnings last week. I’ve highlighted their EPS and revenue performance vs estimate, as well as their stock return this week.
One highlight of the week was Intuit ($INTU), the clear winner with double beat on Revenue and EPS. The stock gained 7% for the week.
3. Economic Reports
It was a light week on the economic data front, with few notable releases. The main focus was on the preliminary PMI readings for May, which came in stronger than expected and pointed to a modest improvement in economic momentum.
Main reports of the week:
S&P Global Manufacturing PMI (Thu): Rose to 52.3, above expectations (49.9) and last month’s 50.2.
S&P Global Services PMI (Thu): Also came in at 52.3, beating expectations (51.0) and up from the previous 50.8.
MARKET SENTIMENT
Measures of investor sentiment can be helpful as they provide insight into the views and opinions of professional or individual investors. While not definitive predictors of market direction, these measures can serve as a valuable complement to other indicators and analysis tools, helping to paint a more comprehensive picture of the market's current state.
1. AAII Sentiment Survey (Individual Investors)
The American Association of Individual Investors (AAII) conducts a weekly survey to gauge members' expectations for the stock market over the next six months. Results are published every Wednesday.
In the latest survey, 38% of respondents had a bullish outlook, up from 36% the previous week.
2. BofA Bull & Bear Indicator (Institutional Investors)
The Bank of America Bull-Bear Indicator measures investor sentiment based on fund managers' and institutional investors' views. Scores range from 0 (extremely bearish) to 10 (extremely bullish).
The most recent reading was 3.6, a slightly bearish sentiment.
3. CNN Fear & Greed Index (Technical)
This daily measure analyzes seven indicators to assess how emotions drive market decisions. Scores range from Extreme Fear to Extreme Greed.
The index closed at 64 (Greed), up from 71 last Friday.
THE WEEK AHEAD
1. Economic Calendar
It will be a short trading week in the U.S. due to the Memorial Day holiday, but markets will still face a handful of potentially market-moving releases. Key updates include the second estimate of Q1 GDP, the Fed’s preferred inflation gauge (PCE), and the latest FOMC meeting minutes—all of which could shape expectations for future policy moves.
Key reports to watch:
FOMC Meeting Minutes (Wed): A closer look at the Fed’s May policy meeting could offer new insights into the balance of risks around inflation and growth.
GDP (Thu): The second estimate of Q1 growth is expected to be closely watched, with economists expecting a slowdown to -0.3% QoQ, down from 2.4% in Q4.
Core PCE Price Index (Fri): The Fed’s preferred measure of inflation. The YoY rate was 2.6% last month, while the MoM reading showed no change (0.0%).
2. Earnings Calendar
The earnings season continues next week, and 13 companies from the S&P 500, including Nvidia and Costco, are expected to release their quarterly results.
Below are notable stocks reporting earnings next week, along with several key indicators I like to monitor:
Stock Indicators:
3-Month Performance: Assessing recent stock trends.
RSI (Relative Strength Index): A reading above 70 suggests overbought conditions, while below 30 indicates oversold.
P/E Ratio: A value below 25 often points to a "cheap" valuation or low growth expectations.
Stock Price Reactions to Earnings:
1-Day Stock Return on Earnings: How the stock performs on its earnings release day.
Implied Volatility: The options market's forecast for the expected 1-day stock move after earnings.
3. Stock Analysis of the Week
Every week, I share my analysis of 1 stock that has reported earnings in recent weeks, focusing on implications for long-term investors. This week, I prepared an analysis of Target ($TGT).
👨💻 My View: PASS
Talk about testing long-term investors' patience—Target is now rounding out its fourth year since peaking in 2021. And it's been a tough ride, filled with sharp declines and fakeout rallies.
The last bounce ended in April 2024 and failed to change the narrative. Since then, the stock has stayed locked in a persistent downtrend.
Last week's earnings only reinforced the bearish case. As long as we remain below key trend lines like the 30-week EMA, I'm not ruling out more pain ahead. No signs of a turnaround yet.
Check out the post for more details about $TGT performance, trend and key levels.
Community Spotlight
This week, I am glad to feature my friend
, the author of , a no-fluff newsletter about building wealth through smart investing, mindset shifts, and real-life lessons. His mission? To help you reach financial independence without falling for the usual traps.Here’s one of his latest posts on quantum technology, definitely worth a read:
CONCLUSION
Thank you for reading my Weekly Market Recap, which, I hope, got you ready for the week ahead.
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Thanks again, and I look forward to sharing my market recap with you next week.
Happy investing!
My Weekly Stock
DISCLAIMER
The information provided in this newsletter is for informational purposes only and should not be taken as financial advice. Any investments or decisions made based on the information provided in this newsletter are the reader's sole responsibility. We recommend that readers conduct their own research and consult a qualified financial professional before making investment decisions. The author does not assume any responsibility for any losses or damages arising from using the information provided in this newsletter.
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For anyone interested, here are my Apr PCE inflation estimates: https://arkominaresearch.substack.com/p/apr-2025-pce-inflation-estimate?r=1r1n6n