Stock Market Outlook for May 7, 2026
Complacency is the highest in years, leaving the market vulnerable to a shock.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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Stock Highlight: |
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Protagonist Therapeutics, Inc. (NASD:PTGX) Seasonal Chart |
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America’s Car-Mart, Inc. (NASD:CRMT) Seasonal Chart
S.Y. Bancorp, Inc. (NASD:SYBT) Seasonal Chart
ARK Genomic Revolution Multi-Sector ETF (AMEX:ARKG) Seasonal Chart
Centerspace (NYSE:CSR) Seasonal Chart
Disclaimer: Comments and opinions offered in this report are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered is believed to be accurate, but is not guaranteed.
The Markets
Stocks jumped on Wednesday as headlines surrounding progress to obtain a deal with Iran to end the conflict sent the price of oil plunging (deja vu all over again). The S&P 500 Index ended higher by 1.46%, opening a new upside gap between 7270 and 7300. The gaps beneath the market, looked to as levels of support, continue to accumulate, including the big one between 6620 and 6740, and, ultimately, the character of the market has changed where levels of resistance hold less weight than levels of support. As the market continues to move higher, so too do downside risks in the near-term, which can now be pegged towards levels around 7000 (the January highs). We are still playing with a positive side bias (albeit with hedges that have been added in recent weeks– see our April 22 Market Outlook). Momentum indicators that have been rolling over from overbought territory in recent days hooked higher on the day, but there remains indication of upside exhaustion that could lend to a digestive phase on the horizon, particularly once we move beyond the height to earnings season. In the Seasonal Advantage Portfolio (which is strongly higher YTD, continuing to set new high watermarks) that we manage for clients at CastleMoore, we continue to be fully exposed to risk (stocks) after flipping from our low volatility stance around the end of March and our performance has been excellent (strongly outperforming the S&P 500 Index, Nasdaq Composite, and TSX Composite). The conflict in Iran remains a wildcard (and we are skeptical of the suggestion of a return to normal that the market is seemingly pricing in), but we have cues that we are following that would warrant abandoning our risk-on view and move towards a more defensive posture in risk assets. Subscribers can view the themes in our chart books to either Accumulate or Avoid that we continue to gear portfolios towards.
Today, in our Market Outlook to subscribers, we discuss the following:
- Emerging Markets
- Metals and Commodity Producers
- China Technology
- Oil, Yields, and the Dollar
- Energy Market: Core underlying risk
- Portfolio Strategy
- Sentiment Warning
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Sentiment on Wednesday, as gauged by the put-call ratio, ended overly bullish at 0.63.
Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
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