Stock Market & Crypto Analysis for Week Ending 5/29/26

Key Concepts

• VWAP (Volume Weighted Average Price): A trading benchmark used to determine the average price a security has traded at throughout the day, based on both volume and price.
• Anchor/Anchored VWAP: A technical analysis tool that calculates the VWAP starting from a specific significant event (e.g., a year-to-date low, an earnings surprise, or the start of a conflict).
• Stage Analysis: A framework (Stage 1–4) used to categorize the lifecycle of a stock’s price trend (accumulation, markup, distribution, and decline).
• ATR (Average True Range): A technical indicator that measures market volatility by decomposing the entire range of an asset price for that period.
• Risk Management: The practice of identifying, analyzing, and taking steps to reduce investment risk, primarily through stop-loss orders and position sizing.
• "Guilty until proven innocent": A trading philosophy where a stock is treated as bearish (avoided) until it demonstrates clear evidence of a trend reversal (e.g., reclaiming moving averages).

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Market Overview and Performance

Brian Shannon reports that the S&P 500 and Nasdaq reached all-time highs, with the S&P up 5.5% and the Nasdaq up 11.18% for the month of May. Despite global macro indecision and inflation concerns, the market continues to defy gravity.

• Technical Stance: The market remains in a pattern of higher highs and higher lows above the rising 5-day moving average.
• Warning: While the trajectory appears unsustainable, Shannon emphasizes that traders should not predict tops but rather manage risk based on the 5-day and 20-day moving averages.

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Asset Class Analysis

1. Cryptocurrencies (Bitcoin, Ethereum, Solana)

• Status: Shannon views these as "broken."
• Details: He was stopped out of Bitcoin below the $76,000 level. He notes that Bitcoin, Ethereum, and Solana are all trading below their year-to-date anchored VWAPs.
• Strategy: He advises against both shorting and buying, suggesting a "leave it alone" approach until the assets show signs of stabilization.

2. Commodities (Oil and Gold)

• Oil: Currently trading below the anchor point from the start of the conflict. Shannon avoids trading oil due to high headline risk.
• Gold: Trading below declining 20-day and 50-day moving averages. Shannon suggests it needs to "digest gains" and warns of a potential descending triangle pattern.

3. Sectors and Specific Stocks

• Semiconductors: In a massive uptrend, finding support at the 20-day moving average.
• Biotech: Showing strength. Shannon highlights ALKS as a successful trade (bought at $37, currently $43) and NBIX as a high-conviction, profitable firm with strong earnings growth (sales up 42% last quarter).
• Financials: Neutral; trapped between a rising 50-day and a flat 200-day moving average.
• Google (GOOGL): Shannon executed a trade that resulted in a near break-even loss. He views the stock as "guilty until proven innocent" while it remains below its declining 5-day moving average.
• Twilio (TWLO): Currently back above its earnings-anchor; Shannon notes a strong long-term base on the weekly chart.
• Nvidia (NVDA): Shannon opted not to buy, citing the declining 5-day moving average as a "coin flip" scenario. He is waiting for the price to turn sideways before looking for entry evidence.
• IBM & Righetti: IBM surged 13% following news of a quantum computing bill. Righetti is being monitored for potential movement, though it remains choppy.

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Trading Methodology and Philosophy

• Risk Management: Shannon stresses that "it only ends badly if you don't have a plan." He advocates for using stop-loss orders and avoiding the delusion that markets will rise forever.
• The "2-Minute Exit": A strategy used to lock in partial profits (e.g., selling 1/3 of a position) near daily highs to mitigate risk.
• Shakeouts: Shannon notes that when an important low is undercut after a large decline, it often serves as a turning point for a reversal. He looks for "failed moves" to identify potential "fast moves" in the opposite direction.
• Personality of Stocks: He emphasizes understanding the ATR of a stock to avoid being shaken out by normal volatility.

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Synthesis and Conclusion

The market is currently in a strong uptrend, but Shannon warns that the primary responsibility of a trader is risk management rather than market forecasting. He advises against trying to catch "falling knives" in broken assets like crypto or gold, and instead suggests focusing on profitable, trending sectors like biotech. His core takeaway is to remain disciplined, follow price action rather than headlines, and always have a predefined exit plan to avoid catastrophic losses.