A Major Market Shift Is Happening Right Now

Signals amid the chaos... Bond yields are rising around the world... Status quo in the Persian Gulf... 'Higher for longer' is back... There's tech – and everything else...

The chaos continues...

Listening to a mainstream news report on the radio this morning was enough to upset a good mood.

A United Arab Emirates nuclear-power facility was attacked by drones, most likely from Iran... there's an Ebola outbreak in Africa... and the Hantavirus cruise ship is being "disinfected" at a port in the Netherlands.

The reporter also said oil prices were "tempered." That's a matter of perspective, we suppose. Brent crude, the international benchmark, topped $110 per barrel this morning. And West Texas Intermediate was up to $108 per barrel. Those were their highest levels in about two weeks.

What a world...

I (Corey McLaughlin) won't add to the chaos today, but I am sharing two significant signals we're paying attention to right now that could help you protect and grow your portfolio...

The signal in the bond market...

In early April, we wrote that more inflation and the idea of higher Federal Reserve interest rates was the "next thing to think about" with the war in Iran dragging on.

Now, we're finally seeing that show up in the market...

The U.S. 30-year Treasury yield traded near 5.13% today, its highest level since 2007, and the 10-year yield is at 4.6%, which is its highest level since this time last year. While the former may grab your attention, the latter might not sound dramatic on its own.

But consider that on February 27, just before the war in Iran started, the 30-year Treasury was at 4.6%, and the 10-year Treasury was yielding 4%. Both have jumped about 50 basis points in a little under three months.

Ten Stock Trader editor Greg Diamond wrote on Friday that this move could lead to a leg lower for stocks...

I want to highlight the U.S. 30-year interest rate, which is much higher this morning...

We're going to keep an eye on the 5.15% level, where we've already gotten a double top. If the 30-year rate breaks above that level again (and it looks like it will), that'll open a floodgate of bond selling (due to interest rates rising). And that, in turn, would weigh on the stock market.

It's a similar story with the shorter-term U.S. 2-year yield. Today, it traded around 4%, up from its prewar 3.5% level.

This is the bond market adjusting to the idea of higher inflation expectations. As we've been reporting, bond traders are increasingly betting that the Federal Reserve will raise interest rates, if anything, this year.

When yields rise, bond prices fall as investors see that existing fixed-income payments are less valuable than newer, higher-yield bonds.

Essentially, the market is re-repricing inflation and/or growth expectations...

And it's not just a U.S. story...

On Friday, the folks at the Chart Report newsletter shared these charts from Robin Brooks of the Brookings Institution, which show that bond yields and expectations are hitting new highs in many countries...

It looks like war-related inflation is the latest catalyst for yields moving higher, but as the charts above show, the trend has been in place since 2020's monetary and fiscal responses to the onset of the COVID-19 pandemic.

The 'higher for longer' trade is on...

While oil prices and bond yields were higher today, the major U.S. stock indexes were mostly mixed. Once again, energy was one of the only S&P 500 sectors up, gaining nearly 2%.

The United States Commodity Index was up 0.3% and is trading near a record high. In the meantime, the "chaos" hedge of gold gained 0.5% to $4,550 per ounce.

Barring a sudden reopening of the Strait of Hormuz, these trends should stay in place. Today, finance ministers from the G7 countries began two-day meetings. Stalled Middle Eastern energy supply was the big topic and remains the status quo.

This afternoon, President Donald Trump posted on social media that a U.S. military "scheduled attack of Iran tomorrow" won't be happening, at the request of leaders from Qatar, Saudi Arabia, and the United Arab Emirates. But that changes nothing about current tanker flow in the region.

And the longer the standoff in the Persian Gulf lasts, the more consequences build...

You might recall these ministers met in March, closer to the start of the war, and announced an oil-reserve release plan that was set to last into July. But "more" might be needed sooner.

Analysts at JPMorgan Chase are saying global oil stockpiles will hit an "operational stress" level of around 7.6 billion barrels by June, at which point Asian countries and other nations heavily reliant on oil imports will have to ration fuel.

The 'biggest technical divergence I've ever seen'...

Greg has been tracking a potential top in the market heading into this year. And in this morning's Ten Stock Trader Weekly Market Outlook, he said the final stage of the "topping-out process" is here...

We're facing some of the biggest technical divergence I've ever seen in the market...

Semiconductor and technology stocks are topping, while financial, transportation, and small-cap stocks have already topped out. The S&P 500 and Nasdaq Composite Index may have topped out last week. And elsewhere, bitcoin isn't looking too great... bonds are down... and silver and gold have crashed.

As Greg reminded subscribers, tops tend to play out over time, and semiconductors and tech stocks – which have been ripping higher the past few months – could be the last dominoes to fall in 2026.

I've been tracking the major S&P 500 Index sectors for several weeks...

And the "divergence" Greg is talking about is plain to see.

Of the 11 big S&P 500 sectors, only technology has been making new highs over the past few months.

Health care stocks are down about 9% since a February high. Financials are about 8% below their high from January. Consumer staples are down 5% from a high in February. Industrials and materials stocks also topped in February.

Consumer-discretionary stocks rebounded in March but last made a high in January... Communications stocks have been essentially flat since last October... And real estate stocks are slightly below highs made in 2024.

Utilities, which have long been a "defensive" play but became more AI-oriented in recent years with their ties to data-center and electricity demand, have quickly dropped about 8% in a month... And they just broke below their 200-day moving average.

Then there's the technology sector, which began making new highs last month. It's now up about 40% since the end of March. It's like the old school exercise: "Which one of these doesn't belong?"

Tech is the outlier, but because of its outsized stature in the market-cap-weighted S&P 500 Index, the U.S. benchmark has been making new highs. The equal-weight S&P 500, meantime, made a slight new high earlier this month, but has pulled back since.

You can take this a few ways...

If you've owned tech during this recent run, you're probably pleased with the returns in your portfolio.

Over the weekend, I looked at part of my long-term portfolio and saw gains of 300% and 150% in a few positions that were only up double digits last quarter.

At first glance, that seems great...

But we've seen these types of parabolic moves before, and they don't typically end with a whimper. It's often some kind of pullback that you regret not selling ahead of later.

The question is how much of a pullback could be ahead. Over the past few trading days, tech stocks are down almost 4%. Today, the S&P 500 was about even, and the Nasdaq was down 0.5%.

After looking at my portfolio, I decided to sell around one-third of my biggest gainer because the stock is trading at an excessive valuation right now. I was happy to take profits and raise cash, which I'll likely deploy elsewhere soon.

If you're sitting on some huge gains in similar individual positions – in AI and tech stocks in particular – you might also want to consider trimming them. Because something has to give, and taking some risk off the table right now might make sense.

Either tech is leading a new phase of this bull market, and the other 10 sectors are simply being left behind... or tech is due for a pullback, and the sector will be the last of the dominoes to fall and take a lot of short-term gains with it.

In this situation, raising cash from big winners can be a good idea...

Stansberry Innovations Report editor John Engel alerted subscribers in his latest monthly issue on Friday to sell half of two AI-infrastructure positions that have had substantial run-ups.

It's not because John has soured on the businesses themselves but because their premiums in the market have become extreme. Both were trading for around 110 times enterprise value ("EV") to earnings before interest, taxes, depreciation, and amortization ("EBITDA")...

That's almost 10 times the S&P 500's average EV-to-EBITDA multiple. As John wrote...

That is a huge premium.

To justify a valuation like that while keeping the current share price unchanged, the company's earnings need to rise roughly 6.5 times, or about 550%. In other words, investors aren't simply pricing in strong growth. They're pricing in years of near-flawless execution and a massive expansion in future profitability.

This doesn't mean the underlying business trends are weak. Quite the opposite.

But when stocks become this richly valued, the margin for error narrows considerably. Even strong business performance can disappoint investors if growth merely meets expectations instead of exceeding them.

Knowing how investor psychology influences share prices is one reason we trimmed portions of our positions earlier this year. But disciplined investing also means recognizing when optimism has already become deeply embedded into a stock's price.

Stansberry Innovations Report will record gains of 1,183% and 851%. That's high enough to crack our Stansberry Research Hall of Fame of all-time highest-returning positions. You'll find them in the list for the first time this evening.

Kudos to John and the subscribers who followed his advice.

New 52-week highs (as of 5/15/26): Alpha Architect 1-3 Month Box Fund (BOXX), Cisco Systems (CSCO), Datadog (DDOG), Fanuc (FANUY), Monster Beverage (MNST), Palo Alto Networks (PANW), Pembina Pipeline (PBA), Starbucks (SBUX), and Valaris (VAL).

In today's mailbag, feedback on Dan's latest Friday essay... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"I don't buy into this cheap market scenario. To the contrary I believe it is even more expensive than people think. I am particularly worried about the fact that the market is fed by these large investments made by the hyperscalers.

"I remember at the beginning of the 1990s when we were deploying fibre-optic undersea cables everywhere with huge investments. At the height of this cycle Nortel was trading at $C 125 and was representing more 30% of the Canadian index. When the music stopped Nortel fell like a rock to $10. What will happen when these companies stop investing and the music stop again?..." – Subscriber Serge F.

"I love my Fridays, even though I'm retired. Another great Digest. I'm glad you're hanging with all those smart folks. I will rethink that recluse in the Pacific Northwest title someone gave you. I'm quite excited about your next Ferris Report. My commodities holdings are more volatile than I would like, but I'm a hundred of percent in the positive on many of the recommendations. I'm following Josh's work as well, but the 90-day holding period may be too out of the box for me right now. I've been with Stansberry for a while now. I am still fine tuning my approaches to the work you all do. I need current income, but I also know my portfolio will outlive me. Bring it on." – Stansberry Alliance member Jeffrey G.

All the best,

Corey McLaughlin
Baltimore, Maryland
May 18, 2026