The Market Takes a Breather
Weekly Outlook 05/18/26
Market Recap
Last week we flagged the leadership semiconductor stocks as parabolic and asked whether the broader tape would get pulled into digestion with them or whether rotation would carry the move. We got the answer this week. The QQQ printed a weekly red doji candle after six straight weeks of gains, semis and memory finally started to give back some of the move, and the tape has potentially shifted into a consolidation phase. How long that lasts, whether it’s a couple of weeks of sideways action or something deeper, is the open question.
The week was dominated by geopolitics rather than earnings. Trump’s visit to Beijing on May 14-15 was the headline event and delivered very little of substance, with nebulous commitments on agricultural and oil purchases, some talk of reopening chip sales, no firm deal on the Strait of Hormuz, and tariffs apparently not even on the table. The more interesting wrinkle was Taiwan, where Trump called the pending $14B arms sale “a very good negotiating chip” and declined to confirm whether the U.S. would defend the island, prompting Xi to warn that mishandling the issue would put the relationship “in great jeopardy.”
Friday’s selloff had a few overlapping drivers. Korea sold off overnight which set a soft tone for the open, Powell’s term winding down with the Warsh confirmation process moving forward kept the policy transition front of mind, and the US 2-year and 10-year both broke out, which reads as the market starting to test the incoming Fed chair. Layer that onto a tape that’s already six weeks extended and needing to digest, and you get the kind of session we saw to close the week.
Catalysts Over the Last Week
$NBIS | The data center print of the week. Q1 revenue of $399M (+684% YoY) blew past estimates, adjusted EBITDA flipped to a $129.5M profit, and they disclosed up to 1.2 GW secured in Pennsylvania for a new AI factory. Stock hit an all-time high of $214 intraday before settling +7% on the session.
$CSCO | Beat-and-raise quarter with record revenue of $15.84B and raised full-year AI infrastructure orders forecast to $9B, paired with ~4,000 job cuts to reallocate spend into AI. Stock surged 17% to a record high, biggest single-day gain in over two decades.
$FIG | Q1 revenue of $333.4M (+46% YoY) crushed estimates, raised full-year guide by $55M, NDR hit 139% (highest in over two years). Stock jumped 13% post-print, though the filing flagged Anthropic federal supply chain risk as an overhang.
$ONDS | Beat-and-raise blowout. Q1 revenue of $50.1M (+1000% YoY, 25% above the high end of guidance), pro forma backlog grew to $457M from $68M, raised full-year revenue forecast to $390M, plus a Palantir partnership announced alongside. Stock closed +26%.
$CRCL | Q1 revenue of $694M (+20% YoY), USDC circulation at $77B (+28% YoY), onchain transaction volume of $21.5T (+263% YoY). First print since the Clarity Act compromise, with a $222M ARC token presale at a $3B FDV from a heavyweight investor consortium also disclosed.
$POET | Announced a US$400M registered direct offering of common shares and warrants Friday, on the back of the Lumilens partnership advancing wafer-level photonic integration for next-gen AI optical networks.
$IREN | Announced a proposed convertible notes offering Monday to fund continued AI cloud expansion.
Watchlist
Semis
The headline event this week is $NVDA earnings Wednesday after close. Going in, the broader group has started to roll over, which is exactly the kind of digestion we were watching for last week. The question now is whether NVDA delivers the catalyst that re-ignites the move or accelerates the pullback.
$SOXL, $INTC | Watching to see if they continue pulling back after the historic rally.
$MU, $SNDK | Same idea on the memory side. Both were extended, starting to give back.
The Cerebras IPO debuted last week and the early action is the read here.
$CBRS | $350 is the inflection point IPO price. Above and the trend stays constructive, below and the name remains weak. Clean line in the sand.
$POET | Continued fade likely with the $400M registered direct offering dilution overhang now sitting on the tape.
The bigger IPO story is still ahead. SpaceX is targeting an Initial Public Offering on June 12, aiming to raise upwards of $80B on the Nasdaq under the ticker $SPCX, potentially making it the largest IPO in history. That’s the kind of event that pulls sympathy bids into the entire space complex in the lead up.
Space
$RKLB | Strong, not much to do here. Holding the post-earnings breakout cleanly.
$ASTS | News flow plus a 200 SMA reclaim attempt is the setup. Watching for follow-through.
$RDW | Data centers in space narrative, watching for momentum off catalyst flow.
$SATL | On watch as a sympathy name in the broader space complex into the SpaceX IPO setup.
Data Centers
Most of the group has entered consolidation ranges. $NBIS remains the clear leader at all-time highs post-earnings. Many of the others could become constructive post-market pullback if they break out of their bases.
$IREN, $CIFR, $HUT | All on watch for base breakouts. These are the names to focus on if the data center group rotates back to leadership.
Crypto
The complex is weak heading into the week. $ETH broke a recent range but remains inside the larger monthly ranges, so the trend is still undecided at the bigger picture level.
$BMNR | On watch within crypto-adjacent names.
Cybersecurity
Worth flagging that cybersecurity stocks are strong but there’s no actionable setup right now. Worth keeping on the radar for when one of these names tightens up into a clean base.
$CRWD, $PANW, $FTNT | All strong, none with an immediate trigger.
Closing Thoughts
The bulk of earnings season is behind us with just $NVDA left to go on Wednesday, still important given it’s the largest company in the world. QQQ tech and semis have started to pull back, which is healthy after an extended run rather than anything to read into negatively.
A quieter catalyst calendar paired with a tape that’s still digesting makes this a week to be reactive rather than aggressive. After a rally of this magnitude, most traders are sitting on real swing profits. The job now is protecting them. Letting the market come to you and not giving back hard-earned gains while it works through this digestion phase is the right posture here.
If you enjoyed this read, please consider leaving a like on the post, and let me know in the comments if I missed anything or what you’re watching for this week!
P.S.
If you haven’t checked out the Valhalla Portal yet, it’s where I track catalysts, setups, and market activity in real time - a live feed of everything that moves the tape, built for the community. I’ll be doing a dedicated post soon walking through all the features in detail, so stay tuned for that. In the meantime, you can check it out here: