The move to higher highs in the NASDAQ Composite and S&P 500 Indexes has been primarily a function of a knee-jerk pile-in to any and every stock that announces anything that links their business or products to Artificial Intelligence. In the process, the market has been lifted by the "AI meme-theme dream team," including the ten stocks shown below. Whether it is analysts touting how some of these companies, like Microsoft (MSFT) or Alphabet (GOOG), will become primary purveyors of AI, or MSFT announcing it will help semiconductor maker Advance Micro Devices (AMD) develop AI-related chips, or an infinite-PE money-loser like Snowflake (SNOW) announcing it will acquire an AI-based search company, the AI-theme has been a powerful move in helping to generate some strong price moves in a number of stocks claiming the halo of AI. 
As the NASDAQ and S&P 500 break out to higher highs, the Dow, the 3,700-plus stock NYSE Composite and the small-cap Russell 2000 Indexes remain in downtrends off the February highs. The Russell 2000, which is heavily populated by smaller financials, has in fact remained in a bear flag for the past two months.
At best, this is a highly bifurcated market as the AI-theme stocks run higher even as the rest of the market, particularly economically-sensitive areas like machinery, industrial metals, and retail underperform, in some cases quite badly. The narrowing, meme-based leadership is also a cautionary sign in more traditional terms as well. A recent report from financial services firm Société Générale shows that all of the S&P 500's gains in 2023 have been due to AI-related stocks, thus without the AI meme-theme, it would be flat to down for the year.Meanwhile, reports that Treasury Secretary Janet Yellen indicated that more regional bank mergers, e.g., big financial fish swallowing up smaller financial fish in order to save the smaller fish, would likely be necessary when she met with bank CEOs this past week. This sent regional bank stocks tumbling on Friday, but the bottom line is that the group has mostly broken out of bear flags and to the downside over the past 1-2 weeks, with no recovery in sight.
At the same time, Congress is locked in a debt-ceiling debate, and when positive-sounding utterances from either side hit the news wires, the market has rallied, while it sells off when the opposite is reported. However, positive reactions to news of a possible deal may be too optimistic, since if a debt-ceiling is agreed to, the U.S. Treasury Department will need to issue $1.2 trillion in new debt in order to replenish its depleted cash reserves. This in turn could soak up liquidity in the financial system and drive Treasury rates higher. In a sense, the debt-ceiling debate is a case of damned if they do, damned if they don't.Precious metals have sold off this past week after hot money piled in during March and again in early May, if only briefly, as gold briefly posted all-time highs at $2089 an ounce. This past week it found support along the $1950 level, right on top of its prior March breakout point.
Silver has pulled into the area of consolidation it formed before breaking out in March on the heels of the emergence of the regional banking crisis that has materialized in 2023. Numerous cross-currents exist with respect to drivers, both bullish and bearish, for the precious metals and other alternative-currencies, such as Bitcoin ($BTCUSD).
The Market Direction Model (MDM) remains on a CASH signal.