Weekly Market Recap – Week Ending May 29, 2026
U.S. markets ended the week with a clear risk-on tilt, led by a strong rebound in technology and growth-oriented names. The Nasdaq 100 ETF QQQM gained 2.88%, while the Technology Select Sector SPDR ETF XLK surged 5.89%, supported by sharp 30-day advances in names such as Dell (DELL) , Murata Manufacturing (MRAAY), Arm Holdings (ARM), Rocket Lab (RKLB), and Astera Labs (ALAB). Market leadership remained narrow but decisive, with technology, small caps, materials, and consumer discretionary showing positive momentum, while defensive and rate-sensitive sectors such as consumer staples, utilities, real estate, and energy lagged.
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Strategy Note:
Last week, we began this note by noting that on Memorial Day weeks since inception, the SPDR S&P 500 ETF Trust (SPY) had historically demonstrated a consistent positive short-term seasonal bias. As shown in the market index ETFs tracked above, 2026 followed that script well.
Unfortunately, as noted last week, this month is a much less propitious month to add to positions, especially using SPY weightings that represent the S&P 500 Index. History has not been kind to SPY when it comes to the performance of June in midterm election years. 2022 is such a year. Add that to the current economic doldrums characterized by rising inflation that experts predict will soar higher for longer and flattish GDP forecasts for the rest of 2026. Paraphrasing the historically inaccurate “Sell in May” quote, it seems that in the past, traders going away in June haven’t been missing much, a trend likely but not guaranteed to continue this year. A third factor is that according to our proprietary valuation models, almost 60% of the stocks we follow are overvalued. Historically, that has been a sign that US stocks could be susceptible to a decline.
All that said, our predictive models disagree with our concerns about macro variables combined with temporal history. High-cap tech is still most favored, especially ticker QQQ that represents the Nasdaq-100. That ETF gets our highest rating of 5. SPY is rated 4, further indicating that our predictive model remains positive on large cap tech. Furthermore, QQQ is rated more highly than QQQE which uses an equally weighted portfolio of Nasdaq-100 stocks and is sponsored by DirexionShares. QQQE is rated 4. Even more dramatic is the discrepancy between SPY and RSP. The Invesco Equal Weighted S&P 500 ETF (RSP) is now rated 2 (Sell). It contains the same stocks as SPY but does not overweight technology like SPY does due to equal versus market cap weighting. Moreover, XLK, the StateStreet SPDR Select Sector Technology ETF, is the only one of the 11 Select Sector ETFs rated 5.
We thought it might be useful to highlight the large cap technology stocks that lag the rest as candidates as potential positions to be reduced. These are technology stocks with more than $100 million in market cap, rated 3 (Hold) or less, and also overvalued by our valuation model. This list includes IBM, Cadence Design (CDNS), Snowflake Technology (SNOW), and AT&T (T). Although there isn’t a lot that our models like in large cap technology, these four stocks might be the best choices for reallocation to value.
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