Two China-based electric vehicle (EV) names are in the spotlight today following their May delivery numbers. Li Auto Inc (NASDAQ:LI) delivered 40,856 vehicles, representing 20.4% growth from April. Nio Inc (NYSE:NIO) announced 23,231 vehicle deliveries -- down from 23,900 in April but still up 13.1% year-over-year -- while its new brand, 'Firefly,' saw decent growth. 

It's worth noting that the EV "price war" -- broadly attributed to BYD Auto -- has caught the attention of the Chinese government, which could be weighing on the sector today. On June 1, the People's Daily, which speaks for China's Communist Party, criticized the "rat-race competition." 

LI was last seen down 2.3% at $27.69, despite the strong data as well as a price-target hike from Goldman Sachs to $35.30 from $31.70. The stock has been consolidating above the $28 level since mid-May, following a sharp rally from its April 9 low of $19.10. Year-to-date, the equity is up roughly 16%. 

Nio stock was down 0.8% at $3.51 at last check, eyeing its ninth loss in 10 sessions. The shares are below all moving averages between the 20- and 320-day trendlines, and were rejected in mid-May at the 100-day. Creeping back toward its April 8 five-year low of $3.02, NIO is down 19.4% in 2025. 

“A JPMorgan survey released on Wednesday added emphasis to growing fears in the $29 trillion Treasury market. The poll’s all-client category for outright short positions—which includes central banks, sovereign wealth funds, real money and speculative traders—has climbed to the most since around mid-February. Fueling that doubt is the US losing its last top credit score, passage in the House of a spending bill that would add trillions more to an almost $37 trillion national debt, and a steep selloff in Japan’s super-long bonds.”

   - Bloomberg Evening Briefing, May 28, 2025  

Stock market participants are cautious due to fears of rising interest rates. This has investors wondering if the next major move in bonds is higher (yields lower), and if equity prices will rise as well.

Market positioning is at its most bearish since mid-February. This pessimistic extreme on bonds preceded a major short-term move lower in the 10-year Treasury bond yields from the mid-February high of 4.6% to the early March low of 4.1%.

During that period, stocks moved lower with yields. However, with 10-year Treasury yields moving lower last week, stocks are flat. This happened despite a poor reaction in the stock market to benign inflation data Friday morning, which was supportive of bonds. 

The S&P 500 Index (SPX – 5,911.69) found support at its 200-day moving average two Fridays ago, but in eight of the past 13 trading days it has touched the level that coincides with the 2024 close at 5,882, as it trades in a sideways grind. 

Bulls might find frustration in the lack of upside movement the past several sessions, especially after the bullish “outside day” on May 19 that has historically produced bullish price action two weeks after a signal.

Bears might be frustrated too, as neither the stock nor bond markets have responded negatively to non-supportive macro headlines during the past couple of weeks. This includes the U.S. losing its top credit score, a spending bill proposal that is generating deficit worries, ongoing tariff uncertainty related to the Justice Department, trade talks with China stalling, and accusations of China’s non-compliance. 

Such headlines could have easily sent bond yields higher and stocks back below the 2024 close for a sustained period, but that has not yet been the case.

We enter the first week of the month and final month of the quarter with the SPX trading roughly 89 points below resistance at the round 6,000-millenium mark, which is also in the vicinity of the pre-Inauguration close in January. 

Plus, this level is 128 points above support at 5,783, the site of its 200-day moving average and the November Election Day close. As such, the technical backdrop in the short-term is neutral, given the index enters the week above its 2024 close but has slightly more downside potential to support at 5,783 than upside potential to 6,000. 

On the sentiment front, two options-related indicators favor the bears. This suggests that a portfolio hedge might be worth considering, with the CBOE Volatility Index (VIX – 18.57) trading in the vicinity of its March low, indicating options are relatively cheap when compared to portfolio protection prices in April.

The first is the 10-day, buy-to-open put/call volume ratio on SPX components that is currently turning higher from a level indicative of extreme optimism. The recent low in this ratio marked short-term peaks for the SPX on multiple occasions during the past couple of years, as seen on the graph immediately below. 

The second indicator is related to whether a predominance of put or call activity is occurring on the SPDR S&P 500 ETF Trust (SPY – 589.39) for those with a one-week or less time frame. Last Tuesday’s post-Memorial Day gap spurred heavier call activity than put activity on the SPY among those focusing on the just expired May 30 options (see first chart below).

During periods of market strength, we usually see an abundance of put activity relative to call activity, as put sellers establish a floor and put buyers bet against the market, which eventually leads to short covering as those puts expire.

Countering the bearish interpretation is short interest, which for the past couple of years has been the biggest risk to short- and long-term bears.

Per the second chart below, short interest on SPX components continues to build, with the SPX still in a longer-term uptrend. In fact, it rose nearly 3% in the first half of May and is up 33% year to date, with the SPX roughly flat for the year.

Short interest represents future buying activity; therefore, it is generally viewed as bullish when at high levels amid an uptrend. If short covering or continued short interest accumulation is occurring amid a major technical breakdown, it would be viewed differently.  But for now, a multi-year high in short interest amid a long-term uptrend should be considered bullish for short- and long-term investors.

Todd Salamone is Schaeffer's Senior V.P. of Research

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Subscribers to Schaeffer's Weekend Trader options recommendation service received this BWXT commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Nevertheless, short interest rose 38.7% in the last two reporting periods, indicating an unwinding of this pessimism could generate tailwinds for BWXT. Plus, aggressive put sellers are now showing up at the June 105-strike to buy the June 120- and 130-strike calls. It’s also worth noting that the equity's gamma-weighted Schaeffer's open interest ratio (SOIR) ranks at 1.23, which has previously been indicative of bottoms in price in the past.

The equity's Schaeffer's Volatility Index (SVI) of 29% that ranks in the 26th percentile of its annual range, meaning options traders are now pricing in low volatility expectations. Our recommended call option has a leverage ratio of 6.4 and will double on a 16% gain in the underlying security.

The Dow Jones Industrial Average (DJI), S&P 500 Index (SPX), and Nasdaq Composite Index (IXIC) are modestly lower midday, though all three are still on track for weekly gains. Investors are unpacking this morning's cooler-than-expected inflation data, as well as the U.S. trade deficit, which narrowed by a sharp 46% in April, and consumer sentiment, which rose to 52.2 from 50.8 in early May. Of course, trade tensions are also in focus, after President Trump said China violated its preliminary trade agreement. 

Continue reading for more on today's market, including:

• Cloud stock has short squeeze potential amid 3-year highs. 
• Behind Gap stock's post-earnings plummet. 
• Plus, options traders target DELL; and two biotech stocks making outsized moves.

Options traders are targeting Dell Technologies Inc (NYSE:DELL) today, with 65,000 calls and 46,000 puts exchanged so far -- already 5 times the overall volume it typically sees in an entire session. The weekly 5/30 120-strike call is the most popular, with new positions being sold to open there. The company reported a first-quarter earnings miss, beat revenue estimates, and lifted its annual forecast on artificial intelligence (AI) demand. Several analysts lifted their price targets after the event. Still, DELL is down 1% at $112.45, with firm resistance at the 320-day moving average.

Biotechnology stock BioLine RX Ltd (NASDAQ:BLRX) was last seen up 94.1% at $7.36, soaring back out of penny stock territory, where it has resided since January. The company announced promising data from a pilot phase trial of its pancreatic cancer treatment, after which JonesTrading upgraded the stock to "buy" from "hold." Year-to-date, the equity is still down 14.7%.

On the other hand, sector peer Regeneron Pharmaceuticals Inc (NASDAQ:REGN) is down 18% at $496.50, hitting four-year lows as it heads for its worst single-day percentage loss since 2011. The company's experimental drug, itepekimab, failed in a late-stage trial for the treatment of "smoker's lung," though it met another goal of the study. Since the start of the year, REGN is down 30.7%.

Cloud stock Zscaler Inc (NASDAQ:ZS) was last seen up 7.6% at $270.32, after the company posted strong fiscal third-quarter results and raised its full-year forecast once again. Separately, the firm also announced the appointment of Kevin Rubin as the new Chief Financial Officer. The positive momentum has ZS brushing off a downgrade from Piper Sandler to "neutral" from "overweight," though no fewer than 18 analysts also lifted their price targets on the stock. 

Today's pop has ZS trading at three-year highs and jumping above the $260 level, which rejected the shares earlier this week. The stock has been on a tear since late April, and is now up 50% in 2025. 

Over in the options pits, 16,000 calls and 9,868 puts have been exchanged so far, which is quadruple the overall options volume typically seen at this point in a session. The weekly 5/30 275-strike call is the most popular, followed by the 300-strike call in the same series, with new positions opening at both. 

During this rally, short interest has been building, up 21% in the two most recent reporting periods. The 8.73 million shares sold short now represents 9% of the stock's available float and it would take shorts 3.5 days to cover, at ZS' average pace of trading. 

Gap Inc (NYSE:GAP) stock is freefalling, last seen down 19.7% to trade at $22.49, after the apparel retailer issued lackluster current-quarter guidance. The company forecast flat sales for the current quarter, falling short of Wall Street’s modest growth expectations.

The weak outlook is overshadowing what was otherwise a strong first-quarter. Gap beat earnings and revenue estimates, reporting 51 cents per share on $3.46 billion in revenue. However, executives warned that President Donald Trump’s proposed tariff hikes could carry a $250 million to $300 million price tag -- though mitigation efforts may reduce that impact to $100 million to $150 million.

At least four analysts cut their price targets in response, with Jefferies and UBS lowering their targets to $26 and $17 from $29, respectively. There is still plenty of room for bear notes, as GAP's 12-month consensus target price is a 22.6% premium to current levels.

Today’s selloff erased the year-to-date gains, with the stock now down 4.4%. Shares are also pacing for a fifth consecutive daily loss and the worst weekly performance since 2021. The $22 level is acting as support, but the security is eyeing a close firmly below its 20-day moving average. 

Options traders are reacting swiftly. More than 32,000 calls and 30,000 puts have crossed the tape so far — 14 times the average intraday volume. Leading the charge is the weekly 5/30 22.50-strike put, with new positions opening there and also expiring at today’s close.

Costco Wholesale Corp (NASDAQ:COST) stock is up 3.4% to trade at $1,042.50 at last check, after the company reported an earnings and revenue beat for its fiscal third quarter, as well as an 8% sales jump.

The equity attracted no fewer than four price-target hikes in response, with Morgan Stanley raising its objective to $1,225 from $1,150. There is plenty of room for more bull notes, too, as COST's 12-month consensus target price of $1,067.88 is only a slim 2.5% premium to current level.

Shares are today pacing for their first gain in three sessions, and earlier surged to their highest level since March, though overhead pressure at the $1,050 level remains. Pacing for its fourth monthly win in five, the security also boasts a healthy 27.9% year-over-year lead.

Overall options volume is running at 5 times the intraday average amount, with 41,000 calls and 29,000 puts traded so far today. The most popular contract is the expiring weekly 5/30 1,050-strike call call, where positions are being opened.