THE BIG IDEA
Last week, we wrote about “something weird” happening in the market and that there is seemingly always something usual going on.
Well, here we are again.
Check out these performances:
Name | Symbol | Price Gain |
|---|---|---|
Dell Computer | DELL | + 32.76% |
International Business Machines | IBM | + 12.71% |
Oracle | ORCL | + 10.84% |
Hewlett Packard | HPQ | + 8.12% |
Adobe Systems | ADBE | + 7.36% |
Microsoft | MSFT | + 5.45% |
These numbers are not their trailing 12-month gains. This is what happened on Friday.
The market’s biggest winners on Friday included companies that still smell faintly of dial up: IBM, Dell, Microsoft, Oracle, Hewlett Packard, Adobe. The ghosts of the 1990s came back to life as the market suddenly remembered who built the digital world.
Friday’s rally was surely not just a matter of traders feeling nostalgic for the tech titans of yesteryear. There was actually a cluster of items that sparked the rally. The main themes:
Dell’s positive financial report reminded everyone that AI needs more than just “chips”. It also requires actual hardware and infrastructure.
IBM announced planned investment of $10 billion into quantum computing.
Some emerging chatter about AI being used to monetize existing tech ecosystems.
The question for us now is what comes next? Was this just a one day event or the start of a longer swing back towards the less sexy names that have been overlooked?
The overall theme is probably real, but that doesn’t mean these stocks will go straight up from here.
We are watching to see how these stocks hold up during the next few trading sessions. If they immediately give back these gains, then there is nothing to see here. Move on.
On the other hand, and more likely in our opinion, is that they chop sideways for a few days or even a couple weeks. Some sort of reasonable consolidation/base would give us more confidence that there is another step (or two, or three) higher to come.
Using HP as an example, an ideal setup would be if the stock forms a bull flag pattern in the coming days.
Bull flags often finish with the stock continuing higher. There is of course no guarantee that the market gives us this pattern or that the result of it will be further gains.
Whatever happens with this group of stocks needs to be viewed against whatever is happening in the market more generally. After nine weeks of gains, it would not be surprising if the whole market cools off a little.
SEEN ON THE INTERNETS
Just buy the index!
Many smart advisors have correctly recommended doing this for a long time. “The index” of course being the S&P 500, purchased via ETFs or mutual funds built to replicate the holdings (and their weightings).
The Prime Wave has written before about how the S&P 500 is dominated by a small handful of stocks despite having “500” of them in the portfolio.
Last week on LinkedIn, Mukul Pal wrote in The Passive Implosion that the virtuous cycle benefitting mega-cap stocks may be reaching its end.
The larger the company became, the larger the weight. The larger the weight, the larger the flow. The larger the flow, the stronger the momentum. A self-fulfilling prophecy masquerading as diversification.
Pal is literally “talking his book” here. He has a book titled End Of Passive Investing: The story of a hidden bias.
That doesn’t mean he is wrong. He is probably ahead of his time on this topic. Give his thoughtful post a read when you have a couple minutes.
NUMBERS ONLY
98.39 | The NAAIM Exposure Index is beginning to run hot again. At 98.39 it is approaching levels that you tend to see at short-term (or more) market tops. |
17 | Not every stock is going up, up, and away. Seventeen members of the S&P 500 made a new 1-year low last week. |
26.48% | Best Buy, another leader from a previous generation, gained 26.48% last week. |
SWINGEX INDEX
As of market close on: 29 May 2026
Swingy says: Your eyes say yes, but the index says no. Be very selective about any new trades.
Learn more about how the Swingex Index works here.
WATCHER
Stocks highlighted here each week are not recommendations to buy or sell. They are provided as ideas for swing traders to follow up on with their own research.
NKE 2026 YTD
NKE (Nike): After last week’s space related idea, this week we will keep our feet on the ground with Nike.
When most stocks hit bottom at the end of March, NKE went in the other direction. There was a gap down to prices NKE had not seen since before COVID. And the stock stayed down. “Stabilizing at lower levels” is the nice way of saying it.
But maybe things are beginning to swing in NKE’s favor. After a fake-out to even lower lows a couple weeks ago, buyers came in and took the stock back up to the top of its recent trading range.
There is a bit of a psychological air pocket between $47 and $51, so NKE may be able to quickly run back up to that $51 mark in a short period of time.