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Bear is waving hello to us last week, but not yet entering the bull's zone.

SP500: -0.4%

After opening the week with a record-high close, equities took a hit in the midweek session after an article in the New York Times highlighted a potential obstruction of justice move by President Trump. However, the bulk of Wednesday's loss was retraced in the second half of the week as a ‘buy the dip' mentality set in. The S&P 500 ended the week lower by 0.4%.

Crude oil was a focal point on Monday, jumping 2.1% to $48.86/bbl, on news that the world's top two oil producers--Saudi Arabia and Russia--are in favor of extending the original OPEC/non-OPEC supply cut agreement, which is currently scheduled to end in June, by another nine months. The commodity's positive performance helped the benchmark index climb 0.5% to a fresh all-time high.

The major averages ended the second session of the week little changed, but a solid performance from mega-cap names like Microsoft (MSFT) and Amazon (AMZN) pushed the Nasdaq to another record high. Led by NVIDIA (NVDA), chipmakers also underpinned the tech-heavy Nasdaq with the PHLX Semiconductor Index adding 1.5% for the second day in a row.

On Wednesday, equities suffered their worst one-day decline since September following a New York Times article that claimed President Trump asked former FBI Director James Comey to shut down the Bureau's investigation of former National Security adviser Michael Flynn. If true, some legal experts believe the alleged incident would qualify as obstruction of justice, which is an impeachable offense.

The allegation forced Wall Street to come to a quick realization that President Trump's pro-growth agenda items (i.e. tax reform, deregulation, and infrastructure spending) might not come to fruition as quickly as envisioned or perhaps not at all. The S&P 500 settled Wednesday's session with a loss of 1.8%. However, the bearish sentiment didn't last long as investors ‘bought the dip' on Thursday.

Underpinned by the semiconductor and biotechnology industries, the S&P 500 advanced 0.4% on Thursday in the face of a Reuters report that the Trump campaign might have had at least 18 undisclosed contacts with Russian officials and others with Kremlin ties leading up to, and after, the U.S. presidential election. The potentially concerning report helped keep the S&P 500 below its 50-day simple moving average, but the key technical level was no match for the bulls on Friday.

The major U.S. indices ended the week on a positive note with the S&P 500 adding 0.7%. The Friday session had a risk-on feel to it with cyclical sectors showing relative strength, Treasuries ticking down, and the CBOE Volatility Index (VIX) dropping over two points. Crude oil came back into focus once again, jumping 2.0% to $50.33/bbl, following reports that top oil producers will consider increasing the size of the OPEC/non-OPEC production cut when they meet on May 25.

The fed funds futures market still points to the June FOMC meeting as the most likely time for the next rate-hike announcement with an implied probability of 78.5%, unchanged from last week's 78.5%.

• Nasdaq Composite +13.0% YTD

• S&P 500 +6.4% YTD

• Dow Jones Industrial Average +5.3% YTD

• Russell 2000 +0.8% YTD

Sector Performance:

Utilities sector is still showing relative strength, while other defensive sectors are also ending the volatile week in the green. Healthcare, Industrials, Materials sector are improving significantly from last week's deep negative returns.

Yield Performance:

The yield flattened mildly from last week, indicating a risk-off attitude. As Thursday and Friday recorded quite a strong 'buy in the dip' move among the investors, I thought it'd be interesting to compare the yield curve on Wednesday (which is the most bearish day of the week since September) so I can know how the bond investors think.

There wasn't visible change of view amongst the bond investors, except that their doubt to near-term outlook's become slightly positive as compared to long-term outlook. If we compare the SP500's 1.05% gain on Thursday and Friday, we can see the significant difference of the change of view between the bond and stock market investors.

Commodities Performance:

Crude oil closed higher.

Gold closed higher.

Silver closed higher.

Copper closed higher.

Week 21 BMO:

Week 21 has a 60% chance of ending the week in positive during the last 5 years.

Info: Stock Trader's Almanac

• Friday before Memorial Day tends to be lacklustre with light trading. Dow down 9 of last 16, average -0.3%

Important Earnings Release:

Wed BMO: TIF

Wed AMC: HPQ, PVH

Thus BMO: ANF, BBY, DLTR, SIG

Thurs AMC: COST

Key Economic Dates:

Thoughts:

Last week proved 'THE TIME IS NOT NOW' yet as the market top that many bear investors have been waiting for has proved to be a short one night stand romance only. The market rallied back more than half of the drop immediately after the bearish Wednesday. Interestingly, the bond investors aren't really buying it as the bond price doesn't really change (you can say at all). As Trump has inked a multi-billion dollar deal with Saudi Arabia during his first state visit, coupled with the 'buy the dip' sentiment of the investors, I'd expect the coming week to be range-bound, as political uncertainties still lingering. Also, there's a conflict between the seasonal model and the almanac, as almanac shows quite a bearish week.

#Macros