NextOptions.com Market Outlook for 5/18/2026

Record Highs Remain in Play

The stock market showed ongoing strength last week as record highs were triggered into Thursday’s close following a summit between the United States and China. Friday’s pullback was a classic sell-the-news event as there were some solid developments but no major policy breakthroughs.

The Nasdaq tagged a low of 26,097 while finishing at 26,235 (-1.5%). Fresh support at 26,000 held. Undefined resistance is at 26,750.

The S&P 500 closed at 7,408 (-1.2%) with the low at 7,397. Fresh support at 7,300 held. Resistance is at 7,500.

The Dow traded down to 49,508 before ending at 49,530 (-1.1%). Support at 49,500 held. Resistance remains at 50,000.

Earnings and Economic News

Before the open: Baidu (BIDU)

After the close: Agilysys (AGYS), FatPipe (FATN)

Economic News

None

Technical Outlook and Market Thoughts

For the week, the Nasdaq slipped 22 points while the S&P 500 added 10 points. The Russell sank 2.5% and the Dow fell 83 points. Year-to-date, the Nasdaq has jumped 13% and the S&P has rallied 8%. The Dow is up 3% and the Russell has rallied 12% this year.

The S&P extended its winning streak to seven weeks while the Nasdaq’s streak ended at six-straight. Since the March 30th lows, the Nasdaq is up 28% and the S&P 500 is higher by 17%. The Dow has added 10% and the Russell has zoomed 16%.

The uptrend channels off the March 30th lows were recently readjusted after the Nasdaq and S&P made fresh higher highs. This was confirmed by the record peaks set on Thursday by both indexes. On Friday’s weakness, the S&P fell out of this technical pattern by a smidge while Tech’s held by a thread.

The Russell fell out of its uptrend channel last Tuesday and the Dow remains in a trading range. Volatility is edging up and crude oil is back above triple-digits.

The Nasdaq hit a record peak of 26,707 on Thursday after clearing our upper and revised Price Targets at 26,500-26,750 from just last week. This was assumed on closes above 26,250 and a level that failed to hold Friday. These are now resistance targets, once again.

Rising support is at 25,500-25,250. Closes below the latter would suggest weakness to 24,500-24,000 and a possible near-term peak.

The S&P 500 touched a new record high of 7,517 on Thursday. We recently predicted closes above our January 9th target at 7,150 would be bullish for further gains up to 7,350-7,500 and that came quick. Closes above the latter gets 7,600-7,750 in focus.

Support is at 7,350-7,225. Closes below the latter would imply a possible top with retest potential down to 7,100-7,000.

The Dow is still struggling clearing a possible-double top from the first half of the month at the 50,000 level and something we easily spotted. The index had a one day close above this level on Thursday’s trip to 50,206. Additional resistance is at 50,500 and the February 10th all-time peak at 50,512.

We talked about a range forming into Nvidia’s earnings (out Wednesday after the close) with the blue-chips and it has now reached 21 sessions. Crucial support is at 48,750 and the bottom of the range. Closes below 48,000 and the 50-day moving average would be a bearish development and likely indicate a near-term peak.

The Russell 2000 was the weakest link after sinking 2.5% for the week. The index tested a low of 2,791 with key support at 2,800 failing to hold. Backup help is at 2,725 and…2,675 and the 50-day moving average on heavy selling pressure. Closes below these levels would likely confirm a top.

Our April 17th Price Targets at 2,900-3,000 remain in play if 2,800 is recovered and held this week.

The S&P 500 Volatility Index (VIX) has closed and stayed below 20 since April 9th with Friday’s high hitting 19.27. Resistance targets for the bears remain at 20-22. Closes above 22.50 could lead to strength towards 24-26 and will likely confirm a near-term market peak with upcoming market WEAKNESS.

We predicted the VIX could trade down to 17.50-15 during May and the height of the first-quarter earnings season. This has been split with Nvidia’s earnings this week. The December 24th low is at 13.38 with back-to-back battles at the 13.50 level around that time period.

Once again, we want to highlight the relative strength index (RSI) levels for the major indexes as they have remained above and near the 70 level for the past five weeks on the Nasdaq and the S&P. Readings above this level indicates overbought conditions with the Nasdaq’s current RSI at 69 and the S&P’s RSI at 67.

Last week, we highlighted the first and second waves of support at: Nasdaq 25,250-24,500; S&P 500 7,225-7,100; Russell 2,800-2,725; and Dow 49,250-48,750. Same deal again this week.

For the year, the Track Record is now at 24-4 (85% win rate) for our Velocity Options directional Alerts with FIVE triple-digit winners: IRDM calls 120%; KEY calls 107%; VIAV calls 271% and 319%; and BCRX calls 100%.

Our covered call portfolio (Real Wealth Income Alerts) is now 9-0. We could have another round of New Alerts this week as there are several technical setups we are watching. Don’t forget to signup for Text Alerts if you haven’t done so already.

Futures are showing a nasty open for Monday morning. Nasdaq and Dow futures are down triple-digits at 179 and 400 points, respectively, as we head to press. S&P futures are sinking 44 ticks and the Russell futures are off a sweet 16.

Hot Stocks, Market News

NextOptions.com Market Outlook for 5/18/2026

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