Trading The Close Market Recap - 05/13/2026: Markets Ignore Hot PPI as China Delegation Sparks Stock Surge; Yields Climb

Financial markets are currently experiencing a profound divergence between fundamental economic reality and geopolitical euphoria. Despite receiving some of the hottest wholesale inflation data seen since 2022, equities continue to push relentlessly higher. In today’s Trading The Close, Pro Trader Drew Dosek at Verified Investing broke down this massive market disconnect, analyzing the technical levels that are holding the market up and the underlying risks that savvy investors must monitor.

From historic semiconductor runs to critical shifts in the bond market, today's price action offers a masterclass in understanding market psychology, technical resistance, and the discipline required to navigate euphoric conditions.

The Macro Disconnect: Inflation Reality vs. Geopolitical Euphoria

To understand today's market action, one must first look at the fundamental data that equities are actively ignoring. The producer price index (PPI) data released this morning revealed some of the worst wholesale inflation figures since 2022. In a normal market environment, this resurgence of inflation—coupled with rising gas prices—would trigger a swift selloff as investors price in tighter monetary policy and compressed corporate margins.

Yet, the market simply brushed the data aside. The catalyst for this bullish resilience is a massive United States delegation currently traveling to China.

"The markets are actually liking that news, thinking it's business first and that we're going to have some sort of good outcomes from these meetings, thus the push up in the markets today," noted Drew.

The delegation includes the U.S. President alongside a powerhouse roster of corporate executives, including the CEOs of BlackRock, Blackstone, Meta, Citi, Visa, and Elon Musk of Tesla. The market is pricing in the high probability of major business deals and trade agreements. This narrative has completely overshadowed the inflationary data, creating a euphoric environment where bad news is ignored, and potential good news is heavily front-run.

However, this disconnect is glaringly visible in the bond market. The 10-year Treasury yield tagged the crucial 4.5% level at the highs of the day before pulling back to close underneath the March 27th pivot. If the 10-year yield secures a confirming close above the 4.484% pivot, its next destination is the October 2023 pivot high.

Historically, rising yields act as a gravitational pull on equity valuations. As yields rise, capital traditionally rotates out of risk assets and into the safety of bonds. The fact that the S&P 500 and the 10-year yield are rising simultaneously is a structural anomaly. Traders must remain vigilant; eventually, this divergence will resolve, and the math of higher risk-free rates will reassert its pressure on stock multiples.

Index Technicals: The Mechanics of Breaking Resistance

The broader indices are reflecting this news-driven momentum, but they are doing so while heavily extended. The S&P 500 has been technically overbought since April 17th, with its Relative Strength Index (RSI) hovering around the 70 level. Yet, over the last six trading days, it has continued to grind higher.

The SPY ETF is now approaching a critical inclining trend line resistance at $747.54. Understanding how price action interacts with these major resistance levels is a cornerstone of technical analysis. Drew provided a brilliant analogy for this process:

"Imagine you're trying to get through this wall and that's what stocks do. They have to fight to get through barriers. They have to hit it, hit it, hit it, weaken that wall, maybe even break down parts of the wall with the repeated hits and then break through."

During a standard trading session, breaking through a major resistance level requires a massive expenditure of buying volume—or "energy." However, if the market receives positive news overnight from the China delegation, the SPY could simply gap over the $747.54 level. Gapping over resistance is highly bullish because it allows the asset to bypass the energy-draining process of chewing through sell orders, leaving more momentum available for a continued push higher.

Meanwhile, the tech-heavy QQQ is fighting its own technical battle. After dropping out of its inclining parallel channel—a structure dating back to the April lows—the QQQ managed to re-enter the channel. However, yesterday's price action negated that breach. The index now faces a ticking clock: it must secure a daily close above today's highs to re-establish itself within that bullish parallel structure.

In the small-cap space, the Russell 2000 (IWM) is quietly setting up a textbook breakout-retrace play. After pushing higher, IWM has consolidated sideways, printing two daily wicks that indicate buyers are aggressively defending the range. If this momentum sustains, IWM is targeting the top of its parallel channel at $293.64.

The Semiconductor Surge: Historic Runs and Looming Risks

No sector exemplifies the current market euphoria quite like semiconductors. The SMH ETF is approaching the top end of a massive move, trading near a critical resistance level of $585.26.

To understand the gravity of the current semiconductor rally, we must look at historical precedents. Between October 2022 and July 2024, the SMH went on an historic 245% run. Following that run, the sector experienced a 46% drawback, followed later by a 40% drawback. Today, the SMH is replicating that exact same magnitude of movement, pushing over 200% from its March 2025 lows.

While momentum can carry assets further than logic dictates, the lack of consolidation is a massive red flag for risk management.

"When we get vertical in nature, guys, I get a little bit nervous because when the selling starts, there's no consolidation for price to pause at when it is selling," warned Drew.

If history repeats itself and the SMH suffers a standard 40% drawdown from these extended levels, the ETF would plummet to $349—taking it below its April 2026 lows. For bulls, the healthiest possible outcome right now would be a period of sideways consolidation to work off the overbought conditions and build structural support.

At the heart of this semiconductor run is Nvidia. The stock has posted six consecutive green days, completely ignoring the heavy call option volume from last week that typically incentivizes market makers to pin the price lower. Nvidia's strength is heavily tied to the China delegation, as its CEO is present at the meetings.

Technically, Nvidia has flipped the bottom of its inclining parallel channel into support, with key defensive levels now sitting at $219.52 and the underlying trend line at $217.57. If the bullish momentum continues, the 50% median line of this parallel channel gives Nvidia a staggering upside target of $250.

Earnings and Upgrades: The Psychology of Chasing

Earnings season continues to provide explosive individual stock setups, perfectly illustrating how institutional upgrades and narrative shifts can override broader market concerns.

Ford (F) delivered a massive 13% upside move today. Interestingly, this wasn't driven by traditional auto sales, but by the company pivoting investor attention toward its energy storage business. By attaching itself to the "AI data center build-out" narrative, Ford triggered a massive influx of capital. However, technicals still matter. The stock closed right at a critical inclining yellow trend line. To maintain this bullish posture, Ford must cleanly beat today's closing level, which opens the door to the February pivot high at $14.80.

Mobileye (MBLY) saw a similar explosion, surging 14.08% on the back of full-year guidance raises and analyst upgrades. The chart history here is a perfect lesson in market mechanics. Mobileye previously broke down below a declining trend line, plunged under its parallel channel to create a classic "bear trap," and then violently reversed higher. It is now facing resistance at the 50% mark of its parallel at $11.38. If it clears that, the ultimate battleground lies just sub-$14, specifically a heavy resistance zone between $13.70 and the $14.33 pivot high.

ON Semiconductor (ON) also rocketed to brand new all-time highs today following analyst upgrades. The stock is now targeting the absolute top of a macro parallel channel that dates all the way back to the COVID lows. That top-end resistance sits at $124.23. Given how overbought the stock is, traders should expect severe resistance at this level unless a euphoric gap-and-go scenario unfolds.

NBIS provided another textbook earnings reaction, jumping 15% after beating EPS and revenue estimates (reporting a smaller loss than anticipated) and issuing strong guidance. The stock broke out of its parallel channel and is now targeting an inclining trend line just above $225. However, traders who missed the initial gap should exercise patience. Breakouts of this magnitude frequently retrace to test previous resistance as new support. Aggressive buyers should watch $185.48, with a secondary, higher-probability support level at $165.01.

Commodities and Crypto: Diverging Narratives

While equities ride the geopolitical hype, the commodity and cryptocurrency markets are telling their own nuanced stories.

In the energy sector, U.S. Oil dropped $0.80 (a 0.78% decline). This price action is a direct reflection of the U.S.-China meetings. The market is pricing in the hope that the Chinese President will exert influence over Iran to stabilize the Middle East and keep the Strait of Hormuz open. The fact that oil is dropping despite the ever-present threat of regional escalation shows just how much faith investors are placing in this diplomatic summit. Natural Gas, meanwhile, is consolidating healthily above its $2.90 support level, building the momentum needed to target the bottom of its parallel channel at $3.27.

Precious metals are showing constructive technical behavior. Gold is carving out a bullish near-term sideways consolidation pattern just underneath the $4,800 resistance level. This pause allows the metal to gather the energy required for a breakout, with the next major target sitting just shy of $5,000. Silver achieved a technical victory by closing above yesterday's resistance. It is now testing the top of its parallel channel at $88.31. A confirmed close above this level would flip pullbacks into buying opportunities, opening the door to the next resistance at $96.39. However, traders must remember that despite this strength, silver's macro chart pattern remains technically bearish until further structural damage is repaired.

Bitcoin is currently sitting at a precarious technical juncture. The cryptocurrency managed to hold its horizontal support at $79,523, but it is now trading underneath a critical inclining trend line that sits at $79,878.

"This wouldn't be the end of the road for Bitcoin, but it certainly would raise some concern because this current trajectory is now potentially being broken," Drew explained.

If Bitcoin prints a daily close below the $79,523 horizontal support, it will confirm a break of the current uptrend, likely ushering in a period of deeper technical selling.

The Discipline of Letting Trades Come to You

Perhaps the most important lesson for retail traders in a euphoric market is the discipline of patience. When stocks are gapping up 15% on AI narratives, the fear of missing out (FOMO) can be overwhelming. But professional traders don't chase; they wait for the market to come to their predefined levels.

Dynatrace (DT) serves as a perfect example of this discipline. Despite reporting a double beat on earnings, weak guidance and an analyst downgrade sent the stock tumbling. Rather than blindly catching a falling knife, technical analysis provides clear downside targets. Dynatrace is approaching a declining trend line at $30.92, but the truly significant historical support levels sit lower: a major May 2022 pivot at $29.41, and a heavily tested historical battleground at $27.48. These are the zones where risk-to-reward ratios actually favor the buyer.

Similarly, Shopify (SHOP) has been battered, breaking three separate inclining trend lines on its way down. The stock is deeply oversold, with an RSI hovering just above 31. It is currently testing near-term support at $94. If that level fails, the next structural support doesn't appear until $82.78, with a worst-case macro pivot down at $69.92. Because Shopify has broken multiple trend lines without a retest, technical rules suggest a bounce is highly probable eventually. When that oversold bounce occurs, the initial upside targets are $100.56, followed by $116.78.

Conclusion: Navigating the Euphoria

The current market environment is a fascinating psychological study. Investors are willingly ignoring the worst wholesale inflation data in years, choosing instead to front-run the potential outcomes of a high-profile geopolitical meeting. While this has created explosive upside moves in the S&P 500, semiconductors, and narrative-driven tech stocks, it has also left the market technically extended and vulnerable to sharp, vertical corrections.

As the 10-year yield creeps higher and sectors like semiconductors push past 200% historical run thresholds, the need for risk management has never been greater. By relying on strict technical levels—whether it's the SPY's $747.54 resistance, Nvidia's $217.57 support, or Bitcoin's $79,523 line in the sand—traders can remove emotion from the equation.

In a market driven by headlines and hype, technical analysis remains the only objective source of truth. By maintaining discipline, refusing to chase vertical moves, and waiting for high-probability setups at multi-factor support levels, investors can protect their capital and thrive regardless of what news comes out of the China delegation tomorrow.