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New Highs, Old Risks: IPO Momentum, Iran Headlines, and the ES at 7500
Danny Riley
May 26, 2026
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The Spark That Lit the Fire: How the IPO Boom Fueled the 2026 Rally
In early 2026, the long-closed IPO window finally burst open. After years of frustration, a wave of new listings flooded the market — and became a major driver of the surging stock rally. It started strong: over 20 traditional IPOs in Q1 alone raised more than $9.4 billion, the best start in five years. Success bred success. Every strong IPO delivered three powerful effects:
Unlocked Liquidity
Hot companies priced well allowed VCs and private investors to finally cash out. That money quickly flowed back into the broader market, especially growth stocks tied to AI and innovation.
Built Narrative Momentum
Each well-received debut — particularly in AI infrastructure, defense, and energy — reinforced bullish stories and created FOMO among investors. The market rose not just on earnings, but on fresh excitement.
Broadened the Rally
While the Magnificent Seven had dominated before, the IPO wave introduced new names and improved market breadth. This rotation helped the S&P 500 climb to new highs on healthier foundations. As one hedge fund manager said: “We moved from trading on hope and concentration to realization and distribution.” By mid-2026, the loop was clear: strong IPOs fueled the rally, and the rally encouraged more IPOs. Not every deal succeeded, but the winners provided the fresh fuel the bull market needed. In the end, the IPO resurgence proved that bull markets thrive on new stories and new capital entering the public arena.
Our View
It's 10:30 a.m. Saturday morning. Unless something major happens, I'm not going to change anything.
Like I posted last Friday, the US is considering unfreezing some of the funds locked up in foreign banks. Just saying that must mean a deal is getting close, but up to now, Iran has refused to stop its atomic program and ship its stockpile of uranium out of the country.
I do not know how the US can agree to anything like that. As I have said many times, I think Trump “needs” to get a deal, but at what cost?
The reason the US and Israel have gone to war against Iran is to stop the country from acquiring a nuclear bomb or bombs, and why would the US go to such great lengths to come up empty-handed? This is where the buck stops in my mind.
All of the above was written during Friday's trade and Saturday morning, and it's now Monday at 7:27 p.m. Trump insists there is a deal, but Iran is saying they never agreed to give up their uranium.
Iran has reportedly agreed "in principle" to give up or dispose of its highly enriched uranium stockpile as part of an emerging peace framework, though senior Iranian sources have publicly disputed this, creating conflicting narratives as negotiations continue. But a senior Iranian source told Reuters that Tehran has not agreed to hand over its highly enriched uranium stockpile, claiming that nuclear issues are entirely separate from the current preliminary agreement.
Yet the ES traded up to a new all-time contract high at 7569.75, and the NQ traded up to 29,995.00, only 5 points off 30,000, and crude oil (CLN26) traded down to 89.41.
There are 2 big questions:
Is this another Trump TACO?
Is Iran going to agree to shipping out the uranium and opening the Strait of Hormuz?
I'm always an optimist at heart, but Trump has fed the public a bag of BS too many times. It's hard to think it's a done deal until everything is signed off on, and at least for me, it doesn't seem that they have gotten to that point yet.
Our lean: I said over a week ago the ES was going to 7650, and I still think that way. But I also wonder if and when the time they finally agree that it won't be a sell-the-news event.
The index markets and energy markets have rallied, but I think it's too early to be celebrating. I think with the ES and Q up so much, if the ES gaps up sharply, you can sell the open or the early rallies, or just be patient and buy the pullbacks.
I did another story below that I think we all should remain focused on.
The Big Sell-Off
Foreign investors significantly reduced their stakes in U.S. Treasuries, leading to an overall monthly sell-off of $138.4 billion.
The Top Sellers: Japan and China led the exit, shedding $47.7 billion and $41 billion, respectively. China's holdings dropped to $652.3 billion — its lowest level since 2008. Other notable sellers included Luxembourg ($13.7B), Taiwan ($12.7B), Saudi Arabia ($10.8B), India ($7.6B), Canada ($6.9B), and the UAE ($5.8B).
The Buyers: A few nations bucked the trend and added to their stockpiles, most notably the United Kingdom ($29.6 billion), the Cayman Islands ($16.4 billion), and Germany ($3.7 billion).
Driven by Valuations & Geopolitics
Market experts note that a large portion of this decline was actually due to changing asset valuations rather than pure selling. A Bloomberg index of U.S. Treasuries slid 1.7% in March — the worst monthly drop since 2024 — as anxieties surrounding the war involving Iran stoked inflation fears.
In total, foreign investors faced a $142.1 billion valuation loss on their long-term Treasury holdings during the month.
The U.S. Dollar's Defensive Strategy: The GENIUS Act
The sell-off coincides with a broader downward trend for the greenback. The U.S. Dollar Index, DXY, which stood at 113 points in October 2022, has cooled down to 99 points.
To preserve the dollar's global trade hegemony and offer a faster alternative to traditional systems like SWIFT, the U.S. government is leaning into digital assets.
Legislation: In July 2025, President Donald Trump signed the GENIUS Act into law. This landmark legislation establishes a strict federal framework for U.S. dollar-pegged stablecoins, mandating clear reserve transparency and oversight.
Tokenizing the Dollar: By regulating stablecoins, the U.S. aims to ensure the dollar remains the primary asset for 24/7, instant cross-border settlements: https://defillama.com/stablecoins
The New Treasury Buyers: This digital push has created a new class of Treasury buyers. Stablecoin giants like Tether and Circle have become massive institutional holders of U.S. debt to back their tokens.
As of late 2025/early 2026, Tether reported holding $122.32 billion in U.S. Treasury bills, while Circle held $20.9 billion.
Japan's Currency Interventions
Separately, the report highlights massive movements by Japan's Ministry of Finance to prop up the sagging yen.
Market Action: Japanese authorities stepped into the market on April 30 and in early May 2026, spending an estimated $34.5 billion and $30.6 billion, respectively, to buy yen and counter a historic slide against the dollar.
The Treasury Connection: Historically, Japan funds these massive interventions by selling off its U.S. Treasury holdings. While April's official reserves data didn't yet show a massive drawdown due to the timing of the trades, U.S. Treasury Secretary Scott Bessent has already warned Tokyo that excessive bond volatility could spill over into the broader U.S. Treasury market.
Our Lean — Danny’s Trade (Premium only)
The ES traded in a 7469.25 to 7507.75 Globex trading range, with 240k contracts traded, and opened Friday's 9:30 ET regular session at 7469.75, up 31.50 points, or 0.42%.
After the open, the ES traded 7500.75 and then rallied 15.50 points up to 7516.25 at 9:40. It pulled back to 7500.50 just before the Leading Indicators and the U. Michigan Final Consumer Survey at 10:00, then sold off 21.75 points down to a new low at 7478.75 at 10:20. From there, the ES rallied 36.50 points up to 7515.25 at 11:30, pulled back to 7502.75, and rallied up to a lower high at 7513.25. It then dropped down to 7501.50 before rallying 22.50 points up to 7524.00 at 1:30. After that, the ES sold off 21.50 points down to 7502.50 at 2:05, traded up to 7510.25, and fell into a sideways-to-lower grind. It sold off down to 7486.50 at 3:30, upticked to 7595.50, sold off down to 7483.75 at 3:45, and traded 7489.00 as the 3:50 cash imbalance showed $1.6 billion to sell. The imbalance went out to $2.7 billion to sell, and the ES traded up to 7497.00 at 3:55 before trading 7490.75 on the 4:00 cash close.
After 4:00, the ES traded down to 7482.00 and settled at 7491.00, up 25 points, or +0.33%, up 3 sessions in a row, for a total gain of 113 points, or +1.53%. The NQ settled at 29,558.75, up 111.50 points, or +0.38%, and up 3 sessions in a row for a total gain of 634.50 points, or +1.61%. The YM settled at 50,662, up 283 points, or +0.53%, up 3 sessions in a row for a total gain of 1,203 points, or +2.43%, and the big winner was the RTY, which settled at 2,872.10, up 24.80 points, or +0.87%, also up 3 sessions in a row for a total gain of 118.90 points, or +4.32%.
In the end, the ES did exactly what it's done over the last 4 sessions: it sold off and then rallied, and like I said in the lean, look for some late risk-on late in the day. In terms of the ES, NQ, and YN's overall tone, they were firm, but the big winner both on the day and the week was the RTY, Russell 2000. In terms of the ES’s overall trade, volume was lowest in 12 sessions, with 240k traded on Globex, 932k traded on the day session, for a total of 1.172 million contracts traded.
Market-on-Close Recap
The 3:50 p.m. MOC opened with a clear sell-side tone with an imbalance of -$1.742B as sell interest. That set the tone for the auction: broad sell pressure with symbol participation still close to rotational.
The heaviest print came at 3:52, when the market reached -$2.691B, with $4.435B for sale and $1.744B to buy. The dollar lean hit -71.8%, a wholesale sell signal, while the symbol lean stayed near -52.3%, showing the pressure was concentrated in large-cap dollars rather than a full-market symbol washout. The imbalance then moderated through the close, improving to -$561M at 4:00 and -$161M by 4:01, but the sell bias remained intact.
Sector action was split. Communication Services was the most one-sided sector, leaning -96.8%, driven by GOOG and META sell imbalances. Energy was also wholesale sell at -86.9%, led by XOM. Health Care leaned -73.3%, while Information Technology was heavy at -65.0%, just shy of the -66% wholesale threshold, with AAPL, MU, MSFT, LRCX, MRVL, QCOM, and MSTR on the sell list. Consumer Discretionary also leaned materially negative at -65.9%, helped by AMZN selling, though TSLA showed buy-side offset.
On the buy side, Real Estate stood out at +67.3%, a notable wholesale buy sector, while Basic Materials showed +100% on limited participation. Materials and Consumer Staples were constructive but closer to rotational than wholesale. NVDA was the largest buy imbalance at $176.87M, followed by SPGI, PEP, TSLA, ADI, and CDNS. Overall, this was a sell-biased MOC led by mega-cap tech, communications, energy, and health care, with selective defensive and real estate buying underneath.
Fair Values for May 26, 2026:
SP: 15.16
NQ: 69.65
Dow: 59.59
Daily Market Recap 📊
For Friday, May 22, 2026
• NYSE Breadth: 61% Upside Volume
• Nasdaq Breadth: 64% Upside Volume
• Total Breadth: 63% Upside Volume
• NYSE Advance/Decline: 58% Advance
• Nasdaq Advance/Decline: 57% Advance
• Total Advance/Decline: 58% Advance
• NYSE New Highs/New Lows: 83 / 37
• Nasdaq New Highs/New Lows: 340 / 110
• NYSE TRIN: 0.88
• Nasdaq TRIN: 0.76
Weekly Breadth Data 📈
For Week Ending Friday, May 22, 2026
• NYSE Breadth: 59% Upside Volume
• Nasdaq Breadth: 59% Upside Volume
• Total Breadth: 59% Upside Volume
• NYSE Advance/Decline: 63% Advance
• Nasdaq Advance/Decline: 64% Advance
• Total Advance/Decline: 63% Advance
• NYSE New Highs/New Lows: 216 / 206
• Nasdaq New Highs/New Lows: 555 / 536
• NYSE TRIN: 1.18
• Nasdaq TRIN: 1.22
ES & NQ Levels (Premium only)
Economic Calendar
Today’s S&P500 Earnings: 31
Polaris Trading Group Summary - Friday, May 22, 2026
Friday’s PTG session was a constructive pre-holiday trading day, with David emphasizing headline awareness, disciplined level-to-level trading, and the value of the DTS and cycle frameworks. The day produced several clean examples of planned targets being fulfilled and offered useful reminders about risk management into a long weekend.
Pre-open tone: David opened the room with the daily links, disclaimer, and market context for “FRYday” ahead of the long holiday weekend.
Headline-driven opportunity: Geopolitical headlines around Iran/Pakistan and oil created active algo movement. David noted this provided an early D-Level short opportunity for nimble traders.
DTS targets fulfilled: The Daily Trade Strategy targets at 7475–7495 were reached, giving the room an early positive confirmation that the roadmap was working.
Three Day Cycle success: David highlighted “another solid 3 Day Cycle,” with the Three Day Cycle Objective at 7487 fulfilled and a 131-handle cycle target range.
DLMB setup worked again: After the 10:00 University of Michigan data, David said the DLMB levels played out, with the next lower target being the prior high, which was later tagged on the short DLMB play.
Member confirmation: DanV called the DLMB setup “solid again,” and David responded “well played,” reinforcing that the setup was recognized and executed effectively.
Additional level hit: David later noted that the 78s were tagged, continuing the theme of price respecting the mapped levels.
Late-morning bias: By 11:18, David said bulls would likely keep control for the remainder of the day, barring external news.
Key lesson: The session rewarded patience and execution at predefined levels rather than chasing movement, especially in a headline-sensitive market.
Risk-management reminder: The discussion about crossed positions in funded accounts was an important caution: traders need to stay vigilant because account or position errors can quickly become costly.
Close of room: David signed off before midday for the holiday weekend, wishing everyone a relaxing break and noting the room would be back Tuesday “in full metal jacket.”
Discovery Trading Group Room Preview – Tuesday, May 26, 2026
Tone: Equity futures are broadly higher, with major indices up roughly 0.6%–1.1% and the VIX near 16.6, suggesting a constructive risk tone without aggressive hedging.
Geopolitical: Oil remains the key macro swing factor, with Brent sharply lower after being whipsawed by conflicting Middle East headlines and shifting expectations around a potential peace deal.
Macro: Central bank commentary remains hawkish, with ECB and BOJ officials still focused on inflation persistence and geopolitical risk. Sri Lanka’s surprise 100-bp rate hike reinforces that policymakers are not ready to declare victory over inflation.
Tech/Momentum: Speculative flows remain concentrated in high-beta tech and semiconductor names, including Navitas, Rigetti, and AXT. Nvidia remains a key liquidity anchor despite trading slightly lower.
Earnings: Key catalysts include Salesforce, PDD, Marvell, HP, AutoZone, and DICK’s Sporting Goods.
Economic Calendar: Today’s calendar includes HPI and S&P/Case-Shiller Composite-20 HPI at 9:00 a.m. ET, followed by CB Consumer Confidence at 10:00 a.m. ET.
Volatility: ES volatility remains elevated, though the 5-day average daily range eased to 81.25 points.
Whale Bias: No whale bias today, as overnight large-trader volume was too light to be significant.
Trend: ES moved above its all-time high over the holiday weekend, then pulled back toward the former short-term uptrend channel top near 7540/45, which is now the key pivot.
Bull Case: Holding 7540/45 as support keeps the “blue sky” breakout scenario in play.
Bear Case: Failure to reclaim or hold 7540/45 opens downside room toward the short-term channel bottom near 7400/05.
Structure: The broader trend remains bullish, with the ES 50-day MA at 7038.50 above the 200-day MA at 6914.75.
Resistance: 7540/45, 7835/40
Support: 7460/65, 7400/05, 7325/20
