Caruso Weekend Report: May 18, 2025
This report is a small part of the Caruso Insights membership and serves as an excerpt from the full weekend report. It is provided to members as a quick takeaway document for the upcoming week.
Weekend Summary
It’s not your imagination — market strength has been far broader than the NVDA-driven bull runs of 2023 and 2024. As of Friday, 74% of NASDAQ stocks are trading above their own 50-day moving averages, even though the index remains a fair stretch below its year-to-date highs (see chart below). While a pause is likely — especially following Monday’s anticipated market reaction to Moody’s U.S. debt downgrade — the strength we’re seeing resembles the early stages of a new bull market, not just another bear market rally.
The rally has been so swift and relentless that many investors have been caught off guard, with positioning far below where it likely should be. That means even if we do see downside, pullbacks are likely to be shallow and short-lived, as underexposed investors look to quickly buy any weakness.
This week’s US–China trade war de-escalation marks a major shift in tone. Understandably, many investors — fatigued by years of geopolitical headlines — may have missed its significance or been slow to react. However, this is a meaningful development, and quite possibly the final piece needed to ignite a new bull market. For those who missed it, I broke down the event’s importance and compared it to past major market turning points in this video:
👉 Watch here:
With most investors still looking to put money to work, the best stocks to buy are usually the ones that are hardest to accumulate. The most extended stocks today are showing exceptional investor demand and are likely to be the first supported on any pause or pullback.
Given the broad market strength, there are a tremendous number of strong setups to choose from — but DUOL, NFLX, ZS stand out with some of the highest relative strength in the rally so far. These names are likely to find support quickly if the market dips.
“Don’t be thrown off by the swarm of gloom and doomers. In the long run, they have seldom made anyone any money or provided any real happiness. I have also never met a successful pessimist.” – William J. O’Neil