Market Update
May 22, 2026
Hello everyone,
The market is getting hot again.
AI is still leading. Earnings are still supporting the move. Stocks are still pushing higher.
But the risk/reward is starting to get messy.
AI Rally, Greed Returning & Crypto Weakness
Over the past few weeks, I have been focused on three major risks:
Inflation returning
War escalation
Oil and energy acting as a tax across the whole economy
Historically, wars often create short-term volatility and fear before markets eventually recover higher.
What surprised me this time was how aggressively stocks and the S&P rallied despite the Strait of Hormuz still being an issue and missiles flying.
The market is now back in Greed.
Sentiment is moving very quickly again, and my view has not changed:
I do not chase green candles.
I would much rather wait for fear, red weeks, panic, and cleaner risk/reward entries.
News Events
AI continues to dominate the market narrative.
Big Tech is expected to spend more than $700B on AI infrastructure this year, with some estimates suggesting AI capex could reach $800B+ by 2028.
Despite the massive spending, only around 20% of businesses currently use AI, which is why the market continues to price in huge future growth.
Earnings have also remained strong across many AI-linked companies, which gives the rally more support than a pure hype bubble.
This is why the strongest parts of the market continue to be:
Chips, storage, cooling, memory, nuclear, copper, electrical infrastructure, photonics, quantum computing, and data-centre infrastructure.
The market’s current belief is simple:
AI spending today = massive future profits tomorrow.
For now, earnings are still supporting that narrative.
AI Bubble or AI Super Cycle?
A lot of large investors and macro analysts are becoming concerned that parts of this rally look similar to the late-stage dot-com period.
Back in the late 1990s, telecom companies massively overbuilt internet infrastructure.
Stocks exploded higher.
Earnings initially looked strong.
Then demand failed to justify the valuations.
Today, data centres are playing a similar role.
AI infrastructure is the modern version of the fibre-optic boom.
That does not mean markets instantly crash.
But it does mean expectations are extremely high.
The issue is not whether AI is real.
AI is obviously real.
Companies are already using AI instead of people. Startups are building with fewer employees. AI capabilities are improving almost every week.
So I am not comparing AI to dot-com because I think AI is fake.
I am comparing the market behaviour.
The technology may be real, but the prices can still become stretched.
That is the key difference.
Traditional Finance Sector
S&P 500
The S&P continues to show strength, but the move is becoming crowded.
The trend is still up, and the trend is your friend until the end.
However, I am not interested in chasing after such a strong move.
If the market gives us fear, panic, or a clean pullback, that is where the better asymmetric opportunities usually appear.
AI & Semiconductors
Semiconductors remain the backbone of this rally.
If AI spending remains aggressive, semis can continue leading.
However, if hyperscalers slow down spending later, semiconductors could get hit very hard because so much future growth is already priced in.
That is the risk.
Strong sector. Powerful narrative. But crowded.
Bonds
The bond market is flashing a warning.
The 10-year Treasury yield is now above the S&P earnings yield.
In simple terms:
Investors can currently get higher yield from safer government bonds than from the stock market.
This usually happens when equities become expensive and risk appetite becomes too aggressive.
The bond market is basically saying:
Stocks are expensive.
Market Positioning
The market is starting to look heated again.
Investors bought $8.7B of US equities.
ETFs saw $6.8B of inflows.
Institutions bought $6.9B.
Hedge funds added $1.2B.
This is classic momentum chasing.
It does not mean the market has to fall tomorrow.
But it does show that FOMO is returning.
At the same time:
Fear & Greed is back around 61.
The Buffett Indicator is around 219%.
Valuations are near some of the highest levels in history.
This market is now more expensive than the dot-com bubble and the GFC peak on some measures.
Again, that does not mean we instantly crash.
But historically, when valuations reach these levels, future volatility usually increases.
Oil, War & Strait of Hormuz
Markets initially rallied on hopes that the Middle East would de-escalate.
However, oil risk is still not gone.
The Strait of Hormuz remains one of the most important energy chokepoints in the world.
If oil keeps rising, it creates pressure across the economy.
Higher oil means:
Higher inflation pressure.
Higher costs for consumers and businesses.
More pressure on stocks and bonds.
This is why I am still watching oil closely.
Oil can act like a tax across the entire market.
If energy prices keep rising, the market may eventually have to price that in.
Economy Showing Mixed Signals
The economic data is not clean.
On one side, layoffs are increasing.
On the other side, hiring has rebounded strongly.
That creates a mixed picture.
The labour market is not collapsing, but there are cracks.
Consumers are also under pressure.
Charge-offs are rising.
Housing is weakening beneath the surface.
Oil has moved sharply higher since December.
Housing data is also showing weakness.
Median new home prices fell, real home prices are at their lowest levels since 2014, and there is a major gap between median and average home prices.
My read:
Luxury buyers are still spending.
The average consumer is weakening.
That is not a healthy long-term setup.
Crypto Sector
Bitcoin
Bitcoin is showing weakness.
Relief rallies are normal during crypto bear markets, and the 83k–85k area is where I would usually expect weakness to return, which we have seen play out.
As always, this time could be different, and maybe we go higher.
But BTC has a clear issue right now:
The S&P is up strongly.
The Nasdaq is up even more.
Bitcoin is barely up in comparison.
That detachment is a major sign of weakness.
If stocks finally correct, I believe BTC is likely to get hit hard.
The reason is simple:
TradFi investors are now much more involved through ETFs.
When sentiment shifts, weaker assets usually fall first and fast.
Altcoins
Most altcoins are still in brutal drawdowns.
Many are down 70–95% from where I sold.
This is normal bear market behaviour.
The bleed usually continues into summer and creates maximum pain before better opportunities appear.
That is why I am not rushing.
I want panic.
I want fear.
I want better entries.
Strategy / MicroStrategy Risk
Saylor has spoken about the possibility of selling BTC if circumstances require it.
It is possible that products like STRC are designed to raise cash to keep buying BTC, while using BTC or cashflows to pay the yield.
This can work in strong markets.
But it becomes dangerous if BTC enters a standard 70%+ drawdown, especially with extra fear around quantum risk.
The structure starts to look like leverage with a high cost of capital.
That does not mean it fails.
But it does increase risk if the cycle turns against them.
My Current View
The market is:
Powerful
Momentum driven
AI-led
Earnings supported
But also:
Expensive
Euphoric
Crowded
Leverage heavy
Semiconductors remain the backbone for now.
AI is real.
The trend is still up.
But I am not chasing greed.
I am not FOMO buying green candles.
What I want is:
Fear.
Panic weeks.
Cleaner setups.
Better asymmetric entries.
There will always be another opportunity.
For crypto, business is usual.
Weakness is still clear, altcoins have already been destroyed, and BTC is not showing the same strength as equities.
Maybe stocks continue running for a while longer.
Maybe they correct into summer and give us better entries across BTC, crypto, and equities.
Either way, I am staying patient.
The goal is not to buy because everyone else is excited.
The goal is to buy when the risk/reward is actually worth it.
Summary
AI is still driving the market higher, and earnings are currently supporting the move.
But valuations are stretched, positioning is crowded, and sentiment is moving back into greed.
The bond market is warning that stocks are expensive, oil and war risks remain unresolved, and the economy is showing mixed signals beneath the surface.
Bitcoin is still showing weakness compared to equities, and if stocks correct, crypto could be hit hard.
My strategy remains the same:
Do not chase.
Wait for fear.