Callum Thomas — Weekly S&P500 ChartStorm — 31 May 2026
"More and more signs of market extremes as a generational run in stock-market speculation sets in — but the trend is still your friend for now." The S&P 500 gained +5.15% in May (+10.73% YTD); expectations, allocations and valuations near record highs.
One-line take: A weekly chart-survey of the S&P 500, mostly macro (no single-stock picks) but with a handful of named ETFs Thomas flags with a mild stance. The recurring theme is a cluster of extremes — the second-highest-ever share of investors expecting higher prices ("the age of speculation"), a record household equity allocation, near-record valuations, and an AI-driven long-term earnings-growth estimate near records. Yet he stresses that expensive valuations alone don't crack a market without a catalyst (recession / shock / prolonged tightening), and the tape is still above its 10-month average — "the trend is still your friend." Inside that, he points to overlooked opportunity outside the AI spotlight: small caps (IWM) with possibly more room, the left-for-dead software sector (IGV) "sharp and surging," and a reiterated bullish call on emerging markets (IEMG / VWO) that holds even ex-Korea/Taiwan and in local-currency terms. Bitcoin looks "less convincing" as a risk barometer; median stock short interest at decade-plus highs is latent squeeze fuel if the rally broadens.
1. Stocks & names mentioned
| Ticker | Name | Research | View | What's said | At |
|---|
| IWM | iShares Russell 2000 ETF (small caps) | QT · SA · STK | Positive | "Small caps still can?" — IWM is +70% off its 2025 low and back into weekly-overbought, but Frank Cappelleri notes the 2020–21 advance ran ~+150% (the +70%/overbought point then was only the middle of the run), so this could still be mid-run rather than exhausted. An overlooked corner versus the mega-caps. | article ↗ |
| IGV | iShares Expanded Tech-Software Sector ETF | QT · SA · STK | Positive | The sector "everyone thought AI killed" has gone from slow recovery to "sharp and surging" — IGV +6.25% on Friday. Thomas flags software as an under-the-radar opportunity outside the AI-euphoria spotlight, and a useful risk barometer. | article ↗ |
| IEMG | iShares Core MSCI Emerging Markets ETF | QT · SA · STK | Positive | Reiterates a bullish view on EM equities. The case holds three ways: strong even excluding Taiwan + Korea (equal-weighted, after a big breakout), strong in local-currency terms (not just a weak-USD story), and boosted by SK/TW AI. IEMG (which includes Korea) has more than doubled VWO's YTD — a real AI-stock impact for EM investors. | article ↗ |
| VWO | Vanguard FTSE Emerging Markets ETF | QT · SA · STK | Positive | The other big EM ETF, paired with IEMG to make the AI point: VWO excludes Korea, so its YTD is roughly half IEMG's — illustrating how much of EM's run is the Korea/Taiwan AI complex. Still part of the reiterated-bullish EM call (EM is strong even ex-TW/SK and in local currency). | article ↗ |
| BTC | Bitcoin | QT · STK | Neutral | Paired with software as a risk barometer — but here Bitcoin "looks a little less convincing." Worth tracking as a gauge of speculative risk appetite rather than a conviction call. | article ↗ |
"View" is Thomas's mild stance in this weekly post, not a buy/sell call — the four ETFs he names positively (small caps IWM, software IGV, EM IEMG/VWO) plus Bitcoin as a less-convincing risk barometer. The bare "semiconductors" / "S&P 500" / "equal-weight S&P" references are generic index/sector talk and aren't tabled; people (Cappelleri, Sethi, Zaccardi) are excluded. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis. The "At" links open the post (written, so no per-name timestamps).
2. Talking points
Happy New Month — May +5.15%, trend still your friend
- The S&P 500 gained +5.15% in May (+10.73% YTD), comfortably above its 10-month moving average.
- That confirms Q1 as the third big bull-market correction since the 2022 low — i.e. the uptrend is intact: "the trend is still your friend."
The Age of Speculation — expectations near a record
- The share of people expecting higher stock prices a year out reached its second-highest reading ever in May — a hallmark of late-cycle speculative enthusiasm.
Generational shift — record allocations, near-record valuations
- The average investor now holds a record-high allocation to equities, and valuations (read as a confidence gauge) are close to all-time highs — a generational shift into stocks.
AI earnings euphoria — long-term growth estimate near records
- Wall Street's Long-Term Average Earnings Growth estimate is closing in on record highs on the back of the AI earnings boom "(/bubble?)" — the consensus is pricing extraordinary durable growth.
Unusual times — Goldman's stretched-indicator composite
- Goldman Sachs' composite of market indicators sits at stretched levels — "not necessarily an imminent crash, but unusual times." A regime flag, not a timing signal.
Buyback backdown — valuations need a catalyst
- Expensive valuations alone aren't the issue without a catalyst. Buybacks have gone from a major tailwind to nearly irrelevant, with big IPOs/issuance on the horizon (a fading supply tailwind).
- The more likely trigger for a downturn is a recession / shock / crisis or prolonged monetary tightening — not high multiples by themselves.
Semis fully overbought — "the religion of AI"
- Extraordinary scrambling into semiconductors — "the religion of AI stock-market euphoria"; semis are the "sure thing" of the moment, and fully overbought.
Short surge — median short interest at decade+ highs
- Median stock short interest has surged to decade-plus highs (shorting AI "losers" like software, funding longs via shorts in defensives, hedging, or directional bets against AI).
- If the rally broadens — and the equal-weight S&P has broken out — that crowded short base is latent squeeze fuel that could assist higher.
Small caps still can? — IWM possibly mid-run
- IWM is +70% off its 2025 low and back into weekly-overbought — but the 2020–21 advance ran ~+150%, and the +70%/overbought point then was only the middle of the run (per Frank Cappelleri). So it may be mid-run, not exhausted — an overlooked corner vs the mega-caps.
Software (…and Bitcoin) — overlooked risk barometers
- Software — the sector "everyone thought AI killed" — has gone from slow recovery to sharp surging, IGV +6.25% Friday: an under-the-radar opportunity outside the AI spotlight.
- Bitcoin "looks a little less convincing." Both are worth tracking as risk barometers of speculative appetite.
Emerging markets — bullish reiterated three ways
- South Korea surged (AI euphoria) and Taiwan ran on chips/AI — but EM ex-Taiwan+Korea, equal-weighted, also had a very strong run after a huge breakout.
- The two biggest EM ETFs make the AI point: IEMG (incl. Korea) has more than doubled VWO's YTD (VWO excludes Korea) — a real AI-stock impact. The MSCI EM local-currency index has also run strongly (not just a weak-USD story).
- So EM looks good in local-currency terms, good even without Korea/Taiwan, and benefits from SK/TW AI and a weak USD — reiterating a bullish view on EM equities.
3. In plain English
A jargon-free note on the two ETF calls that need unpacking. (Plain-language companion to the table; renders on each ticker's consolidated page.)
IGV — Software ETF Positive
IGV is a basket of software-company stocks. For a couple of years the worry was that AI would kill traditional software — why pay for an app when an AI agent can just do the task? That fear left the whole sector cheap and ignored. Thomas's point is that the narrative has flipped: software has gone from a slow, quiet recovery to a sharp surge (the ETF jumped 6.25% in a single day), and almost nobody is talking about it because all the attention is on chips and AI. That makes it an "under-the-radar" opportunity — a place where you can find strength outside the crowded AI-euphoria trade — and a handy barometer of how much risk appetite is sloshing around the market.
IEMG / VWO — Emerging-markets ETFs Positive
IEMG and VWO are the two biggest emerging-market index funds, and the gap between them tells a story. The key difference: IEMG includes South Korea; VWO does not. This year IEMG has gone up roughly twice as much as VWO — and since the main thing IEMG has that VWO lacks is Korea (a market dominated by AI-chip giants like Samsung/SK Hynix), that gap is basically the "AI premium" inside emerging markets.
But Thomas's bullish call on EM doesn't rest only on that AI boost. He stresses EM is strong in three independent ways: (1) even if you strip out Taiwan and Korea entirely and weight the rest equally, EM still broke out and ran hard; (2) it's strong measured in each country's own currency, so it isn't just a story of a weak US dollar flattering the returns; and (3) on top of those, it gets the Korea/Taiwan AI tailwind and a weak dollar. When a trade works for several unrelated reasons at once, the case is more durable — which is why he reiterates a bullish view on emerging-market stocks.
Key points & figures extracted from the public PAID Chart Storm weekly post (in transcript.txt) for personal study. Not investment advice. © Chart Storm / Topdown Charts for source material.