Weekly Market Recap – Week Ending May 15, 2026
U.S. equity markets were mixed this week, with broader ETF performance showing limited movement across the major benchmarks and sectors. The NASDAQ 100 ETF (QQQM) slipped modestly, while the S&P 500 ETF (SPYM) was nearly flat, indicating a pause in broader market momentum. Sector performance was uneven, with Energy (XLE), Consumer Staples (XLP), and Health Care (XLV) posting gains, while Materials (XLB), Industrials (XLI), Utilities (XLU), and Real Estate (XLRE) moved lower. Despite the muted ETF backdrop, select individual stocks delivered strong 30-day gains, led by Sterling Infrastructure, Intel, Micron Technology, Seagate Technology, STMicroelectronics, and United Microelectronics, suggesting that stock-specific momentum remained highly concentrated in infrastructure and semiconductor-related names.
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Strategy Note:
The adage “sell in May and go away” is memorable but not quite accurate historically. While it is true that the six months from October 1 through April 30 between 1926 and 2025 has averaged about 500 basis points (+5 percentage points on average, a difference of about 7.3% to 2.3%), the May – October period still has gained on average. In terms of frequency, the S&P 500 Index posts positive returns during these months about two-thirds of the time. Moreover, most timing strategies have backfired over time. So, prudent investors do not sell in May.
Macroeconomic and political experts are more concerned with a future that could combine relentlessly persistent inflation with a near-stagnant economy. The most vulnerable stocks in such an environment include stocks with high valuations and high betas that have an average or below average forecast for future gains. Specifically, we looked for stocks that were overvalued according to our valuation model, had a Beta of at least 1.25, 25% more impacted by market moves than the average stock and also has a ValuEngine rating of 3 engines or less.
21 stocks fit this screen. Notably, three of them had ratings of 2 (Sell). They are: Alaska Air Lines (ALK); Jet Blue Airways (JBLU); and Archer Aviation (ACHR). The first two are being hit by a double whammy. Their cost basis is going up substantially with fuel costs and related inflation while the cyclical nature of their consumer discretionary businesses means that demand could weaken with the economy.
The other 18 stocks caught by this screen are all rated hold. Notable among them are: technology companies Oracle (ORCL) and Uniti Group (UNIT), construction companies DR Horton (DHI) and Taylor Morrison (TMHC) and G-III Apparel (GIII), an apparel company in the Consumer Discretionary sector.
Since a number of these companies have already taken a price hit, we do not recommend shorting these companies. If you own them now, however, you might wish to consider lightening up on or eliminating these exposures.
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