No-Advice Disclaimer: This analysis is for informational purposes only and not a recommendation to buy or sell any security.

Stock Market Outlook: May 31st =
Uptrend

Author: J.Wenger ---- Published: May 31, 2026 ---- Last Updated: 2026-05-31
Disclosure: The author holds no material positions in the securities mentioned. See Editorial Policy & Disclosures for details.

The stock market outlook shows an uptrend in place, with stocks at all time highs to close out the month of May.

Emerging Market Equities, Technology, and High Beta outperformed; Oil, Energy, and Low Beta underperformed.  Social media diplomacy continues to wag the markets, but tech earnings and new IPO rules are giving the market something else to discuss.

TREND ANALYSIS

The S&P500 ( $SPX ) rose 1.4% last week.  The index is:
  • ~7% above the 50-day moving average
  • ~11% above the 200-day moving average
The three technical indicators used to identify trends remain bullish:

Technical analysis chart of $SPX showing 6 months of candlesticks with 21-day, 50-day, and 200-day moving averages, volume with EMA(50), ADX(14) with +DI and -DI, and OBV with MA(62) through 2026-03-22.

Technical Analysis – $SPX – 2026-05-31

PERFORMANCE HIGHLIGHTS & COMPARISONS

Asset Classes

Emerging Market Equities ( $EEM ) led assets higher last week; Oil led to the downside ( $USO ).  Bitcoin eased back to neutral bias ( $IBIT), while Developed and Emerging Market Bonds ( $BNDX, $PCY ) rallied back to bullish.

Performance comparison of major asset class ETFs ($USO, $IBIT, $GLD, $SPY, $VEA, $EEM, $IEF, $BNDX, $PCY, $DXY) showing 1-week, 4-week, and bias-shift returns relative to the U.S. Dollar.

Asset Class Performance vs. U.S. Dollar – 2026-05-31

S&P500 Sectors

Technology ( $XLK ) led the sectors higher, gaining 7% and now up over 20% in the past 4 weeks! Energy ( $XLE ) led lower, taking a hit from oil prices.  Communications and Industrials regained bullish bias, while Consumer Staples and Energy ( $XLP, $XLE ) dropped back to bearish.

Performance comparison of S&P500 sector ETFs ($XLC, $XLY, $XLP, $XLE, $XLF, $XLV, $XLI, $XLB, $XLRE, $XLK, $XLU, $SPY) showing 1-week, 4-week, and bias-shift returns.

S&P500 Sector Performance – 2026-05-31

S&P500 Investing Styles

High Beta ( $SPHB ) bested all styles last week; Low Beta ( $SPLV ) was the worst performer and dropped back to bearish bias.  High Dividend ( $SPHD ) eased to neutral bias, and Defensives ( $POWA ) jumped back to bullish.

Performance comparison of investment style ETFs ($SPHB, $SPLV, $IWO, $IJH, $IWF, $OEF, $IWN, $IJJ, $IWX, $MTUM, $QUAL, $SPHD, $POWA, $SPY) showing 1-week, 4-week, and bias-shift returns.

Style Performance vs. S&P500 – 2026-05-31

COMMENTARY

Markets

The Tech sector propelled the S&P500 to is 9th consecutive up week.  If that seems like a lot, that's because it IS a lot.  Dell Technologies ( $DELL ) blowout earnings weren't overlooked like Nvidia's.  This week encompasses more important earnings for the sector, including cyber-security firms Palo Alto Networks ( $PANW ) and Crowdstrike ( $CRWD ), along with Broadcom ( $AVGO ), a member of the recently expanded Magnificent 7 ( the Mag7+ or Mag 10 ).

With an impending IPO in June, SpaceX is sucking up more and more oxygen in financial media.  Last week saw a critical mass of headlines finally bring aspects of the listing to light, specifically the unprecedented rules changes being enacted with the filing.  And thanks to a couple of those rule changes, you're going to own it soon via index funds, whether you want to or not.

  1. Waiting period for Index Funds
    • Historically, new IPOs traded for up to a year before being allowed to join an index like the Nasdaq.  On May 1, 2026, Nasdaq altered the timeframe, allowing any new listing, ranked in the top 40 by market cap, to enter the Nasdaq-100 after 15 trading days.  Other indexes (e.g. Russell 1000) decided to allow mega-caps, like SpaceX, to enter their indexes after 5 trading days.

    • Basically, the new rule significantly reduces the price-discovery period, meaning anyone doing fundamental analysis has very little time to audit a company properly.  That's kind of a big deal when said company's first financial statement showed a ~$5 billion net loss for 2025.

  2. Share Availability (Spot Gamma)
    • Passive indexes required new additions to have ~10% of their shares "free-float" (i.e. freely available to the public vs. locked up among insiders, founders, or private portfolios).  Most Large and Mega Cap stocks float around 20%.  SpaceX's S-1 filing indicates that public float will be 3%-5%, so exchanges have eliminated minimum float constraints entirely for "top-tier" listings.

    • Because the float is so low, the indexes will apply a float multiplier when determining the weighting SpaceX will have in the index, thereby increasing how much of the free-float indexes will be forced to buy (or sell when the time comes).

So what's the takeaway?  For an index owner, not much, other than the new risks to the index.  For sector, style, or individual stocks, the impacts may be more noticeable.  Basically, SpaceX stock will have guaranteed demand from index funds when they need to rebalance.  And any stock with a large index weighting (i.g. Mag 7) will see selling pressure during that timeframe.  

A mini-example played out on Friday, when major indexes experienced some forced rebalancing ( e.g. MSCI Equity Indexes ).  In the last 15 minutes of the session, Nvidia plunged more than 2%, while Microsoft jumped 1.5%.  Even Cramer commented:

Every rebalance for Anthropic, SpaceX and OpenAI will lead to the chaos we saw at 3:50 p.m. unless we take this stuff out of the shadows. The manipulation potential is so fraught and the losses will be so palpable that it has to be discussed ahead of time to stave it off!!! @jimcramer

Macroeconomic Data and Policy

April PCE (y/y) hit +3.8%, higher than March and much higher than last year's +2.3%.  That's a significant increase in the rate of change!  Core PCE told a similar story: +3.3% y/y, higher than March and much higher than April 2025.  Given the Strait of Hormuz remains closed, the trend higher likely continues into the summer months.

The second estimate of Q1 GDP came in at +1.6%, which means the U.S. economy likely avoided stagflation in the first part of the year.  The GDP comparisons get harder in Q2 and Q3, which both saw growth near 4% in 2025.

Geopolitics

Social media was abuzz with rumors that the U.S. and Iran had reached a 60-day ceasefire agreement.  While a framework may be available, the actions speak louder than words and there's been no change in the military posture or Strait of Hormuz traffic, despite the drop in oil price.

EYES ON THE HORIZON

It's employment week in macro land, alongside the latest PMI data.
  • Monday: ISM Manufacturing PMI
  • Tuesday: JOLTS
  • Wednesday: ADP Payrolls, ISM Services PMI
  • Thursday: --
  • Friday: NFP

Best to Your Week!

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Content Sources: Bloomberg, CNBC, Federal Reserve Bank of St. Louis (FRED), Hedgeye, StockCharts.com, TradingEconomics.com, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics.
Price and Volume charts provided courtesy of stockcharts.com.

Performance Methodology: All sector performance data is sourced from ThinkorSwim and reflects price‑only returns calculated using end‑of‑week closing data. Bias classifications follow a proprietary Invest Safely, LLC model and update only when trend conditions meet predefined thresholds. All calculations are consistent across every chart on this page.

Disclaimer: Invest Safely, LLC is an independent investment research and online financial media company. Use of Invest Safely, LLC and any products available through Invest‑Safely.com is subject to our Terms of Service and Privacy Policy.

Not a recommendation to buy or sell any security.

Looking for more information on the Stock Market Outlook Signals? You'll find it here:



If you're interested in learning more about the relationship between price and volume, or how to find and trade the best stocks for your growth strategy, check out this book via the following Amazon affiliate link:

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In the past, I reviewed market outlook signals as if they were a mechanical trading system, while pointing out issues and making adjustments. The goal is to give you to give you an example of how to analyze and continuously improve your own systems.

For historical Elliott Wave commentary and analysis, go to ELLIOTT WAVE lives on by Tony Caldaro.

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Any referenced performance is “as calculated” using the referenced funds and has not been independently verified. This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any reader or contributor, from any specific funds or securities.
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The S&P 500 Composite Total Return Index (the "S&P") is a market capitalization-weighted index of 500 widely held stocks often used as a proxy for the stock market. Standard & Poor's chooses the member companies for the S&P based on market size, liquidity, and industry group representation. Included are the common stocks of industrial, financial, utility, and transportation companies. The S&P is not an index into which an investor can directly invest. The historical S&P performance results (and those of all other indices) are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual in determining whether the performance of a specific portfolio or model meets, or continues to meet investment objective(s). The model and indices performance results do not reflect the impact of taxes.

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