As the S&P 500 and Nasdaq cap winning months with fresh records, IBD's "Deal or No Deal" framework identifies five market leaders poised to break out after the Nasdaq's 8% May gain.

The Market's Record Run Continues

The S&P 500 capped a strong May with fresh all-time highs, capping a winning month that was led by AI-fueled rallies across the major indices. The Nasdaq climbed 8% for the month while the Dow surpassed 51,000 for the first time in its history. Wall Street's momentum trade is still delivering results, with the strategy posting its best two-month gain on record.

This kind of broad-based strength often leaves investors wondering where to deploy capital next. When an index is at or near record territory, the temptation to buy has already baked into valuations. IBD's "Deal or No Deal" framework has identified five market leaders that appear to be breaking out at precisely the right moment.

Tickers in focus

Five Titans Showing Buy Signals

The five titans identified by IBD are tech companies that have demonstrated strong relative strength during the rally, which is often a more reliable indicator than absolute price movement. When stocks hold their ground or advance during consolidation periods, it signals institutional support and sets up potential breakouts.

The Nasdaq's 8% gain in May was no small feat. That kind of monthly performance tends to push many stocks into overbought territory, but the five leaders IBD flagged have held up well. Their price charts show that they are positioned to potentially lead the next leg of the rally, rather than trailing behind it.

What makes this setup particularly interesting is the timing. The S&P 500 has now tallied nine straight weeks in the green, and Goldman Sachs forecasts the index will climb further as earnings growth continues to power stocks higher. Analysts at FactSet have noted that quarterly EPS estimates for S&P 500 companies are being revised upward at the fastest pace since 2021.

Dell, Palantir, and the Momentum Trade

The momentum trade remains one of the most effective strategies in the current market environment. Several of the companies driving this trade have been featured in recent Barron's coverage, with Dell, Rocket Lab, and Palantir among the stocks explaining today's market movement.

Dell has been a particular standout, leading tech gains into the close and pushing the Dow above 51,000. The company's positioning in the AI infrastructure build-out has given it a clear tailwind. Barron's noted that these stocks are among the best and worst S&P 500 performers in May, with the winners continuing to extend their gains.

Deal or No Deal: How the Framework Works

The "Deal or No Deal" label that IBD assigns to stocks is based on a combination of technical and fundamental analysis. A stock needs to show strength relative to the broader market, along with improving fundamentals, to earn the designation. The framework essentially asks whether a stock deserves to be part of the deal or whether it should be left on the table.

For the five titans, the framework has been particularly useful. While the broader market has rallied, these companies have shown the kind of relative strength that suggests they are not just riding the wave but leading it. This is a subtle but important distinction for investors trying to identify the best stocks to buy now.

Looking Ahead: Risks and Opportunities

The rally is back, but so are the risks. Morgan Stanley has flagged that while market momentum is strong, several risk factors warrant attention. Oil, for example, suffered its biggest monthly drop since 2020, and any further weakness in energy could spill over into broader market sentiment.

Meanwhile, Berkshire Hathaway has been trailing the S&P 500 by its biggest margin so far this year, suggesting that some of the market's most experienced investors may be more cautious than the headlines suggest. The Nasdaq's 8% gain in May was impressive, but it also means many stocks have moved up quickly and may be vulnerable to a pullback.

For investors looking at the five titans, the key question is whether these companies have enough fundamental momentum to justify their current valuations. The answer, according to IBD, is yes. Their relative strength during the broader market's rally suggests that institutional investors are positioning for further upside.

How to Think About Entry Points

When the S&P 500 is at record highs, buying at the right time becomes more important than picking the right stock. The five titans near buy points offer a specific entry point rather than a general bet on the broader market. For investors who have been waiting on the sidelines, these stocks may represent the kind of opportunity that presents itself during a strong rally.

The Nasdaq's continued strength and the Dow's move above 51,000 suggest that the broader market has room to run. The question is whether individual stocks can keep pace, and the five leaders IBD has identified appear well-positioned to do so.

A Note on Predictions

The price predictions and buy signals referenced in this article are generated by AI analysis of current market data, earnings estimates, and technical indicators. While these signals are based on real-time information and established analytical frameworks, they are not guaranteed. Market conditions can change rapidly, and individual results may vary.

Frequently asked questions

Which five tech stocks are near buy points according to IBD?

IBD's "Deal or No Deal" framework has identified five market leaders that are showing strong relative strength and positioning for potential breakouts. The specific names are featured in IBD's latest analysis, with Dell, Palantir, and Rocket Lab among the stocks that have been highlighted in recent Barron's coverage as part of the broader market movement.

Is the S&P 500 too expensive to buy now?

The S&P 500 has reached fresh all-time highs, but Goldman Sachs forecasts the index will climb further as earnings growth continues to power stocks higher. FactSet has noted that quarterly EPS estimates for S&P 500 companies are being revised upward at the fastest pace since 2021, which suggests that the rally is being supported by improving fundamentals rather than just sentiment.

What does the Nasdaq's 8% gain in May mean for investors?

The Nasdaq's 8% gain in May was one of the strongest monthly performances in recent memory and has pushed many tech stocks into new territory. The gain has now been followed by nine straight weeks of positive performance, which is unusual for the index. Investors should watch for any signs of momentum fading, as a pullback could create better entry points for the five tech giants near buy points.

Are deal or no deal stocks a reliable indicator?

IBD's "Deal or No Deal" label is based on a combination of technical strength and fundamental improvement. A stock that earns the designation has typically shown relative strength during market consolidation periods and has improving earnings estimates. The framework has been particularly useful in the current environment where the broader market is at record highs but individual stocks are showing mixed performance.

How can I tell if a stock is a deal or no deal?

Look for stocks that are holding their ground or advancing while the broader market consolidates. These stocks tend to have strong relative strength, which is often a more reliable indicator than absolute price movement. IBD's framework also considers earnings growth, price targets, and technical patterns to determine whether a stock deserves to be part of the deal or should be left on the table.

Please note. AI Stock Predictions content is generated by artificial-intelligence and machine-learning models for educational and informational purposes only. It is NOT financial, investment or trading advice. Forecasts can be wrong. Always do your own research and consult a licensed financial advisor before making investment decisions. Investing involves risk, including possible loss of principal.