How stellar? Just head over to the Market Summary page, switch to the monthly timeframe, and look at the gains in the Equities panel. The only group in the red was Dow Utilities. Even more impressive is the Weekly Streak column: the S&P 100 ($OEX), S&P 500 ($SPX), and the Russell 1000 (IWB) have now logged a whopping nine straight up weeks.
The S&P 500 gained 6.22% in May, well above its 3.27% average over the last five years. If you follow the StockCharts Seasonality chart, you already know that the old “Sell in May and go away” adage hasn’t exactly been the wisest strategy.
Like the S&P 500, the Nasdaq Composite ($COMPQ) and Dow Jones Industrial Average ($INDU) also closed at record highs, with the Dow closing above 51,000 for the first time. Clearly, optimism is running high, driven largely by AI-related stocks and strong quarterly earnings.
The Cboe Volatility Index ($VIX) is at 15.32, suggesting investors are complacent. The NAAIM Exposure Index (!NAAIM) is at 98.38, indicating that institutional investors remain extremely bullish.
Individual investors, though, are leaning a bit more bearish. That’s why I’m keeping a close eye on two key market breadth indicators: the NYSE Advance-Decline Line (!ADLINENYA) and the NYSE McClellan Summation Index ($NYSI). Right now, both still point to expanding breadth (see chart of $NYSI below).
There isn’t much to dislike about this market. With this much investor enthusiasm, it makes sense to respect the price action and follow the trend. At the same time, this is when investors should pay attention to what’s happening beneath the surface.
Watch the fun unfold as Tom Bowley, Julius de Kempenaer, Grayson Roze, and Dave Keller go head-to-head and try to beat the star of the show, the StockCharts Technical Rank (SCTR) Team!
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