Title: Weekly S&P500 ChartStorm — 31 May 2026
Show: Chart Storm (chartstorm.info) — Weekly S&P500 ChartStorm
Author: Callum Thomas (Topdown Charts / Weekly ChartStorm)
Date: 2026-05-31 (PAID weekly post)
URL: https://www.chartstorm.info/p/weekly-s-and-p500-chartstorm-31-may
Length: written post (no timestamps)
Note: Written newsletter — verbatim body of the published post; no audio/timestamps. Charts referenced by their section number in the post.

Learnings/conclusions: The S&P500 gained +5.15% in May (+10.73% YTD). Investor expectations, allocations, valuations near record highs. Buyback tailwinds have faded, and semis look heavily overbought. Median stock short interest has surged to decade+ highs. Small caps & Software show overlooked opportunities. More and more signs of market extremes as a generational run in stock-market speculation sets in — risks/vulnerabilities arguably rising, but the trend is still your friend for now.

1. Happy New Month: S&P500 +5.15% on the month (+10.73% YTD), comfortably above its 10-month moving average, confirming Q1 as the third big bull-market correction since the 2022 low. The trend is still your friend.

2. The Age of Speculation: the percentage of people expecting higher stock prices a year out reached its second-highest reading ever in May.

3. Generational Shift in Investing: the average investor holds a record-high allocation to equities, and valuations (a measure of investor confidence) are close to all-time highs.

4. AI Earnings Euphoria: Wall Street analysts' Long-Term Average Earnings Growth estimate is closing in on record highs thanks to the AI earnings boom (/bubble?).

5. Unusual Times: Goldman Sachs' composite of market indicators is at stretched levels — not necessarily an imminent crash, but unusual times.

6. Buyback Backdown: expensive valuations alone aren't an issue without a catalyst; buybacks have gone from a major tailwind to nearly irrelevant (+big IPOs/issuance on the horizon), but the more likely trigger for a downturn is a recession/shock/crisis or prolonged monetary tightening.

7. Semis Fully Overbought: extraordinary scrambling into semiconductors — "the religion of AI stock-market euphoria"; semis are the "sure thing" of the moment.

8. Short Surge: median stock short interest at decade+ highs (betting against AI losers like software? funding longs with shorts in defensives? hedging? directional bets against AI?). If the rally broadens (equal-weight S&P has broken out), a short squeeze could assist higher.

9. Small Caps Still Can? IWM is up 70% from its 2025 low and back into weekly-overbought — but the 2020-21 advance ran ~+150% (the +70%/overbought point then was the middle of the run), per Frank Cappelleri.

10. Software Stocks (…and Bitcoin): Software (the sector everyone thought AI killed) has gone from slow recovery to sharp surging, IGV +6.25% Friday; Bitcoin looks less convincing. Worth tracking both as risk barometers and as under-the-radar opportunities outside the AI spotlight.

Portfolio Strategy Notes — Emerging Markets: South Korean equities surged (AI euphoria) and Taiwan ran on chips/AI. Some question whether EM strength is just TW/SK AI — but EM equities excluding Taiwan+Korea, equal-weighted, had a very strong run after a huge breakout. That said, the two biggest EM ETFs: IEMG has more than doubled VWO's YTD performance (VWO doesn't have Korea), so there's a real AI-stock impact for EM investors. 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 also benefits from SK/TW AI and a weak USD — reiterating a bullish view on EM equities. — Callum Thomas