Volume Analysis | Flash Update – 5.18.26
Sell in May & Go Away?
Despite a severe hiccup on Friday, the S&P 500 continued its march higher from the March lows, closing the week up 0.13%. The advance was not overwhelming, yet the bulls managed to hold the field. Capital flows and volume were largely neutral, though leaning modestly bullish.
Capital inflows led outflows by a 55% to 45% margin on above-average Capital Weighted Dollar Volume, with both inflows and outflows running above average. Total Capital Weighted Volume was average, as were upside and downside volume, with 58% of Capital Weighted Volume to the upside versus 42% to the downside. The message was not one of overwhelming conviction, but neither was it one of retreat.
With the mightiest of the Nephilim (NVDA) reporting next week, the generals, represented by the Invesco QQQ Trust Series 1, took a slight pause, finishing down -0.36%. This marked their first lower weekly close since the first week of April, even as they continue to lead the intermediate advance. Most other units followed lower, except for the brass commanders, represented by the Schwab U.S. Dividend Equity ETF, which gained 0.32%.
The troops, represented by the iShares Russell 2000 ETF, gave the more troubling signal. After advancing earlier in the week, they fell into full retreat, closing down -2.32% and ending the week with an ominous gravestone doji. In battlefield terms, the troops charged the hill, briefly raised the banner, then were driven back lower before the close. That pattern deserves attention.
Market breadth also remains a concern. The NYSE Advance Decline Line continued to diverge from the S&P 500 and broke beneath April 17th’s large outside bar. Breadth had been one of the strongest commanders earlier in this campaign, but it is now losing formation. In the spirit of And Then There Were None, another supporting unit begins to fade from the front line.
Cross-asset signals remain unsettled under the shadow of the Iran war. Gold gave back last week’s gains and closed near support, forming another spinning top pattern. Silver broke above its defining March 20th resistance, but was quickly driven lower to close down on the week. The commodity scouts sounded the shofar, but the walls held. No clear Jericho moment has yet arrived.
Overall, the accumulated trends of Capital Weighted Volume and Capital Weighted Dollar Volume continued higher, but they remain relatively divergent from price. According to volume analysis theory, volume should lead price, but in this rally off the bottom, it trails it. Because volume confirmation arrived after the price breakout, skepticism remains warranted.
The advance may still contain elements of retail fear of missing out, especially as investors remember missing prior bottoms during last year’s tariff tantrum. As rumors of a possible Iran conflict resolution circulate, confidence is building and investors are moving back into risk assets in anticipation. Yet anticipation is not confirmation. Hope can rally the ranks, but capital commitment should ultimately back the trade.
This week, all eyes turn to Nvidia, scheduled to report Wednesday, May 20th after the close. The daily volume analysis picture appears neutral. The price chart looks bullish, with October 31st resistance (tied to the prior S&P 500 gravestone), finally overtaken from a solid multi-month base. Yet volume has not confirmed price’s breakout, while the intermediate volume outlook leans slightly more bearish than bullish.
Risk Command
The market remains in a cautious advance. Price continues to march higher, but breadth is weakening, the troops have stumbled, and volume still trails price. Investors should respect the rally, but not assume victory. Position sizing, diversification, and support discipline remain essential. If volume and breadth rejoin the advance, the party may continue. If not, the old warning of “Sell in May and go away” may grow increasingly louder. For now, the bulls still hold the field, but the ranks are thinning, and then there were none left without a plan.
Grace and peace,
BUFF DORMEIER, CMT
Updated: 5/18/2026. Historical references do not assume that any prior market behavior will be duplicated. Past performance does not indicate future results. This material has been prepared by Kingsview Wealth Management, LLC. It is not, and should not, be regarded as investment advice or as a recommendation regarding any particular security or course of action. Opinions expressed herein are current opinions as of the date appearing in this material only. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate their ability to invest for the long term. Investment advisory services offered through Kingsview Wealth Management, LLC (“KWM”), an SEC Registered Investment Adviser.
