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Issue No. 5  •  Wednesday, May 27, 2026

THE TRADING ADDICT

NEWSLETTER

by Maria Helmick

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Bulls, Bears & AI — Oh My

Nightly Market Story

Wall Street came back from the holiday weekend with buyers still in control. The S&P 500 closed at 7,519.12, up 0.6%, while the Nasdaq closed at 26,656.18, up 1.2%. Both finished at record closing highs. The Dow slipped 0.2% to 50,461.68, while the Russell 2000 gained 1.8% to 2,920.54. Growth stocks, small caps, technology, and semiconductors led the move, showing investors were still willing to take risk.

The strongest part of the market remains the AI and semiconductor trade. Chip stocks helped carry the rally, with the Philadelphia Semiconductor Index reaching an all-time high. Micron was one of the biggest stories of the day after a UBS upgrade helped push the stock sharply higher and into the trillion-dollar market-cap club. That tells us investors are still paying for AI infrastructure, memory demand, data centers, and anything tied to the next phase of artificial intelligence.

That is the bullish side of the tape. AI is still the engine, semiconductors are still leading, and earnings momentum is still giving buyers a reason to stay involved. But the setup is getting more complicated because leadership is concentrated. When AI, mega-cap tech, and chip stocks do most of the heavy lifting, the indexes can look very strong even if the average stock is not moving with the same power.

The biggest issue right now is not that companies are weak. The issue is that expectations are high. This market wants strong earnings, strong guidance, continued AI demand, stable inflation, manageable oil prices, and bond yields that do not get out of control. That is a lot to ask from a market already sitting at record highs.

There is still a real earnings argument behind the move. UBS recently raised its 2026 year-end S&P 500 target to 7,900 and lifted its 2026 EPS estimate to $335, citing strong consumer spending and continued AI data-center demand. The bullish case is that if earnings keep rising, AI spending keeps flowing, and the consumer holds up, the market can keep grinding higher.

The bearish case is that too much good news may already be priced in. High valuations do not automatically crash a market, but they reduce the margin for error. A small earnings miss, cautious guidance, rising yields, or a sudden oil spike can matter more than usual because the market is not priced for disappointment.

That is why rates and oil still matter. The 10-year Treasury yield fell to around 4.49%, which helped support risk assets. But if yields push higher again, expensive growth stocks become harder to justify. If oil spikes, inflation fears come back, rate-cut hopes weaken, and valuation pressure returns.

For now, the near-term trend is still bullish. The S&P 500 and Nasdaq are at record highs, semiconductors are leading, and small caps also participated. That is healthy action, but it is not a low-risk market.

Just because the indexes are green does not mean the market is offering clean trades. A green day can make the market look easier than it really is. Stocks can be extended, premiums can be too cheap, risk/reward can be weak, and late entries can leave traders with very little room for error. The job is not to trade because the screen is green. The job is to wait for a setup where the reward is worth the risk.

Bottom Line

This market can still go higher, but the easy part may be over.

AI, semiconductors, and earnings momentum are holding the tape up, but expectations are heavy. Near record highs, one hot inflation print, oil spike, yield jump, weak AI guide, or geopolitical headline can change the tone fast.

Do not confuse a green market with a clean trading day. Stocks can be extended, premiums can be too cheap, and late entries can have poor risk/reward.

FOMO is the trap here. Some traders are waiting for a red day or clean pullback, but the market keeps running without them. Do not chase just because you feel left behind. Keep some dry powder so when the market finally gives you that clean pullback, you can enjoy the powder day instead of standing at the bottom of the mountain with no skis.

Respect the uptrend, but make the market come to your level.