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SP500 & NAS100 back within 0.6% of respective all-time highs; DJ30 within 0.04%!
Stock markets this week overcame inflation fears, tepid Nvidia outlook.
3 factors fueling rebound: AI trade comeback, lower oil prices, and buy-the-dip.
Wall Street predicts 14-16% potential 12-month upside for major US indexes.
New record highs this week: TWINDEX, Neth25, HYPE, Apple, Goldman Sachs, and many more!
REVIEW - 3 Assets to Watch (May 18-22): GBPUSD+ and Nvidia lacklustre; Bitcoin rebounds off $76k exactly as expected!
At the time of writing:
The benchmark S&P 500 index is set for its 8th straight weekly gain - its longest such winning streak since 2023!
Wall Street analysts still predict that the S&P 500 index can climb a further 16% over the next 12 months - fresh record highs are bound to happen (though not a guaranteed outcome).
Wall Street analysts still predict that the Nasdaq 100 index can climb a further 14% over the next 12 months - fresh record highs are bound to happen (though not a guaranteed outcome).
Wall Street analysts predict that the Dow can climb a further 13.6% over the next 12 months.
This latest rebound in major US stock indexes are notable, in light of the surge in bond yields that began this time last week, and clouded the start of this trading week.
READ MORE (published Mon, May 18): Soaring bond yields hurt stocks, cryptos
Markets sold off bonds, stocks, and even cryptos at the onset of the week, as inflation fears ran high.
Oil prices fall on easing geopolitical risk premium: Stuttering progress in US-Iran nuclear negotiations drove a meaningful pullback in oil prices (Brent crude: UKOUSD; WTI US crude: USOUSD) this week, which markets interpreted as a potential relief valve on the inflation outlook. Lower oil also reduced the near-term pressure on the Fed's rate path, giving stocks room to rally even as long-end yields remained elevated.
Momentum and dip-buying overriding macro headwinds: Despite the 30-year Treasury yield hitting its highest level since 2007 and FOMC minutes flagging that a majority of members saw a rate hike as likely warranted if inflation persists, equity momentum proved resilient. Dip buyers stepped in aggressively, treating the bond-driven pullback as a buying opportunity rather than a structural break.
AI trade re-ignition: Investors rotated back into the AI theme with conviction, with Nvidia's revenue last quarter, along with this quarter's guidance - both beating consensus. Although the reaction in Nvidia's share prices were tepid (see more below), it reinforced the AI capex supercycle narrative and fuelled broader AI-adjacent names, sending broader market indexes higher.
This buy-the-dip action is on the cusp of sending the SP500 to its longest winning streak since 2023!
Today (Fri, May 22), this Taiwanese stock index pipped its previous all-time intraday high of 3645.5 posted on May 12th, as the broadening of the AI trade also sent Asian stock indexes soaring!
Furthermore, TWINDEX is Bybit's best-performing stock index so far this week (+4.1% week-to-date) and also so far in 2026 (+53.7% year-to-date)!
For comparison:
This European index includes ASML among its members, with this chipmaker accounting for about 15% of the NETH25 index.
As ASML soared on the revived AI trade, it helped NETH25 punch also into never-before-seen prices.
This token linked to DeFi platform, Hyperliquid, also hit a new record high on May 21st!
Wed, May 20th: Hyperliquid ETFs saw their biggest 1-day inflows since their launch earlier this month, attracting over US$25 million in net inflows mid-week.
Tue, May 19th: Bybit Learn published this article, as reported by Bloomberg, "SEC may unveil plan for tokenized stocks this week!". The Bloomberg report may have contributed to the ETF inflows/heightened demand for HYPE.
Even these individual US stocks hit their respective record highs this week:
and many more!
The week appeared rudderless for 2 of our 3 chosen "Assets to Watch" for this week:
1) GBPUSD+ did lean towards the upside 1.350 target, but has been resisted at its 50-day simple moving average (SMA) all of this week.
DECODE: The simple moving average (SMA) is a widely-followed technical indicator. It often acts as either a:
Some of the most commonly used SMAs are the 14-period, 21-period, 50-period, 100-period, and 200-period.
Markets have been pushed and pulled by the shifting developments surrounding US-Iran peace talks, which remain at a deadlock, leaving FX markets seemingly rudderless.
2) Although Nvidia delivered higher-than-expected Q1 earnings and Q2 guidance at its most recent earnings announcement (after US markets closed on Wed, May 20th), it wasn't enough to excite markets.
Instead, investors and traders cast their attentions to other AI-linked investments, leaving its bellweather behind - neither achieving our upside or downside targets published since Monday, May 18th.
READ MORE (published Wed, May 20): Nvidia Earnings - all you need to know
3) At least Bitcoin did fulfill our downside scenario (almost) perfectly!
On Monday, May 18th, while BTC was trading around $77k, we wrote this following trade scenario:
DOWNSIDE: A further fanning of inflation fears may keep weighing down BTC to test its 50-day SMA/$76k psychological level for immediate critical support.
Within just hours of that Monday report being published:
Bitcoin dipped briefly below $76k only to rebound higher since - showcasing that psychological level's merits as an "immediate critical support" level!
Stay tuned for fresh insights and trade inspirations next week on Bybit Learn's "Market Pulse" - also available on the Bybit app.
DISCLAIMER:
This article is provided for general information and reflects the author's views only. It does not constitute investment advice, nor an offer or solicitation to buy or sell any financial instruments or digital assets. Your ability to access or use any products or services mentioned may be subject to the laws and regulatory requirements of your jurisdiction.