Stocks Rally On Deal Hopes, But Is The Good News Already Priced In?

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Stocks kicked things off on a strong note, with the S&P 500 and Nasdaq moving higher early, powered once again by tech.

A big part of the optimism seemed tied to growing expectations that the U.S. and Iran could be inching toward some kind of deal to wind down tensions.

One of the big winners was Micron, which surged a massive 15% after analysts turned increasingly bullish. UBS even floated the idea of more than 100% upside, pointing to long-term agreements as a key driver. Not bad for a stock that started last week on shaky ground during the broader sell-off in memory chip names.

On the geopolitical front, things remain a bit of a mixed signal. President Trump said talks with Iran are “proceeding nicely,” but also made it clear the U.S. is ready to take action if things fall apart.

At the same time, the U.S. confirmed it carried out “self-defense” strikes in southern Iran, targeting missile sites and boats involved in mine activity—though officials emphasized restraint amid the ongoing ceasefire.

Right now, markets seem to be leaning toward the idea that a détente could be announced in the coming days. That raises the big question: how much of this good news is already baked into prices?

By the close, it was a risk-on vibe. Small caps and the Nasdaq led the charge, while the Dow lagged.

Lower rate-hike expectations helped push bond yields down, the dollar bounced a bit, and commodities were mixed—gold gave back some of yesterday’s gains. Bitcoin had a wild ride too, briefly touching $78K before sliding back toward $75.5K.

The underlying hope is that progress on the U.S.-Iran front could ease energy prices, cool inflation expectations, and keep pressure off yields—but for now, traders seem to be cautiously optimistic.

So, I am pondering: Are markets getting ahead of themselves, or is there still more upside if a deal actually comes through?

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ETFs On The Cutline – Updated Through 05/22/2026

Ulli ETFs on the Cutline Contact

Do you want to know which ETFs are hot and which ones are not? Then you need my High-Volume ETF Cutline report. It tells you how close or far each of the 311 ETFs I follow is from its long-term trend line (39-week SMA). These are the ETFs that trade more than $5 million a day, so they are not some obscure funds that nobody cares about.

The report is split into two parts: The winners that are above their trend line (%M/A), and the losers that are below it. The yellow line is the line of shame that separates them. You can see how many ETFs are in each group and how they have changed since the last report (199vs. 218current).

Take a peek:

The HV ETF Master Cutline Report

If you are confused by some of the terms we use, don’t panic. I have a helpful Glossary of Terms for you.

If you want to learn more about the Cutline method and how it can make you rich (or at least less poor), read my original post here.

ETF Tracker Newsletter For May 22, 2026

Ulli ETF Tracker Contact

ETF Tracker StatSheet          

You can view the latest version here.

STOCKS KEEP CLIMBING DESPITE GROWING CROSSCURRENTS

[Chart courtesy of MarketWatch.com]

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Stocks finished higher, with broad gains across the board as Treasury yields finally eased a bit. That pullback in rates helped steady the market and set Wall Street up for a solid winning week—despite all the volatility along the way.

A big part of the market’s resilience still comes down to strong Q1 earnings, with a little help from cooling bond yields.

Earlier in the week, though, those same yields were causing plenty of headaches. The 30-year Treasury briefly hit its highest level since before the financial crisis, while the 10-year climbed to a more than one-year high.

Much of that move was driven by worries that a prolonged U.S.-Iran conflict could keep oil prices elevated and inflation sticky.

By Friday, oil had backed off its highs and traded mostly flat, as traders held out hope that tensions could eventually ease. Even with all the back-and-forth headlines, the major indexes are closing the week with solid gains.

Looking at the bigger picture, it was an interesting mix: stocks notched their eighth straight weekly gain, oil moved lower overall, and short-term yields climbed. At the same time, consumer sentiment sank to record lows, while the dollar and gold ended the week roughly unchanged. Copper, on the other hand, had a strong showing.

Under the surface, leadership told its own story. The Dow and Small Caps led the way, with the latter getting an extra boost from a three-day short squeeze. Meanwhile, the Magnificent 7 lagged noticeably, underperforming the broader S&P 493.

Bitcoin had a choppy week, bouncing around the $77K level, but held up fairly well considering ongoing ETF outflows.

So, even with stocks continuing to grind higher, there’s a bit of a tug-of-war building between rising yields, softening consumer sentiment, and shifting oil prices.

The big question is: which of these forces ends up driving the next major move in the market?

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Weekly StatSheet For The ETF Tracker Newsletter – Updated Through 05/21/2026

Ulli ETF StatSheet Contact

ETF Data updated through Thursday, May 21, 2026

How to use this StatSheet:

  1. Out of the 1,800+ ETFs out there, I only pick the ones that trade over $5 million per day (HV ETFs), so you don’t get stuck with a lemon that nobody wants to buy or sell.
  1. Trend Tracking Indexes (TTIs)

These are the main indicators that tell you when to buy or sell Domestic and International ETFs (section 1 and 2). They do that by comparing their position to their long-term M/A (Moving Average). If they cross above, and stay there, it’s a green light to buy. If they fall below, and keep going, it’s a red light to sell. And to make sure you don’t lose your shirt if things go south, I also use a 12% trailing stop loss on all positions in these categories.

  1. All other investment areas don’t have a TTI and should be traded based on the position of each ETF relative to its own trend line (%M/A). That’s why I call them “Selective Buy.” In other words, if an ETF goes above its own trend line, you can buy it. But don’t forget to use a trailing sell stop of 12%, or less if you’re feeling nervous.

If some of these words sound like Greek to you, please check out the Glossary of Terms and new subscriber information in section 9.

  1. DOMESTIC EQUITY ETFs: BUY— effective 5/20/2025

Click on chart to enlarge

This is our main compass, the Domestic Trend Tracking Index (TTI-green line in the above chart). It has broken above its long-term trend line (red) by +5.98% and remains in “Buy” mode, with our holdings being subject to our trailing sell stops.

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Markets Grind Higher Despite Rising Tensions And Choppy Rates

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Stocks came under pressure early, dragged down by a sharp jump in oil prices and rising Treasury yields. At the same time, Nvidia’s latest earnings report did little to spark enthusiasm in the tech sector.

Oil moved higher after reports that Iran plans to keep its enriched uranium inside the country, adding another layer of uncertainty to an already complicated situation with the U.S.

That spike in crude quickly spilled over into bond markets, pushing yields higher as traders started bracing for renewed inflation pressure—and the potential hit to economic demand.

Nvidia, meanwhile, actually delivered a strong report, beating both earnings and guidance expectations and even boosting its dividend.

But in this market, simply beating isn’t always enough. With expectations already sky-high, traders leaned into a classic “sell-the-news” reaction, leaving tech without much support.

It turned into another volatile session, with oil, yields, and stocks all moving closely together. But once again, dip buyers stepped in late in the day, helping the major indexes claw their way back into the green.

Small Caps led the rebound, fueled in part by another round of short covering, while the Mag 7 lagged the broader market this time around.

Elsewhere, bond yields ended mixed after swinging throughout the session, and the dollar bounced around before finishing mostly flat.

Gold churned sideways without much direction, while Bitcoin slipped slightly despite a wide $1,500 intraday range.

With yields whipping around and headlines on Iran changing by the hour, markets are stuck in this back-and-forth, headline-driven environment.

The big question now is: if yields start pushing higher again, will stocks be able to keep shaking it off?

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Yields Drop, Stocks Pop, And All Eyes Turn To Nvidia

Ulli Market Commentary Contact

[Chart courtesy of MarketWatch.com]

  1. Moving the market

Stocks got off to a solid start, with the major indexes moving higher early on, helped in part by a pullback in oil prices.

Traders were also positioning ahead of Nvidia’s earnings report after the close—a key event for the AI trade and overall chip demand. Nvidia shares were already edging higher ahead of the release, showing how much attention this name still commands.

It makes sense, too. One analyst noted that Nvidia alone has driven roughly 20% of the S&P 500’s gains this year—and nearly as much of its projected earnings growth—so whatever comes out of that report has the potential to move the entire market.

That’s especially important given the recent backdrop. Rising bond yields had pressured stocks over the last few sessions, with the S&P 500 and Nasdaq logging three straight declines.

The 30‑year yield even briefly topped 5.19%, its highest level in nearly 19 years, as inflation worries and uncertainty around the U.S.–Iran situation kept investors on edge.

But today, the tone flipped. Yields backed off sharply, oil prices dropped, and markets caught a strong bid after comments from Trump suggesting the U.S. may be in the “final stages” of negotiations with Iran.

Small caps led the charge, staging an impressive 2.5% rebound as yesterday’s short squeeze carried over. This time, though, the rally had better participation, with both the Magnificent 7 and the broader S&P 493 moving higher together.

The dollar took a hit on the day, which gave gold a lift back above $4,500. Bitcoin followed the risk-on mood as well, tracking big tech and pushing back above $77,500.

All told, markets seem to be climbing that familiar “wall of worry”—balancing strong economic data, shifting rate expectations, and ongoing geopolitical uncertainty.

But with so many moving parts, the big question remains: how long can this rally hold together before the next curveball hits?

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