Weekly Drawdown Report: May 2, 2026

Microsoft is Down 23% in 129 Days. Is a Deeper Sell-Off Ahead?

The market landscape shifted significantly as of May 2, 2026, with the average Drawdown Severity Score™ across our tracked universe climbing to 5.3. This metric signals that the typical asset is now firmly entrenched in what we define as the "Red Zone," a state where price action deviates sharply from historical recovery norms. Our data indicates that 42.7% of all tracked assets are currently experiencing high-severity drawdowns, reflecting a broad-based erosion of price support across multiple sectors.

We monitor 754 total assets to identify when pullbacks transform into long-term structural declines. As of May 2, 2026, the distribution of these assets shows a market under considerable stress. There are 322 assets in the Red Zone with a Drawdown Severity Score™ of 5 or higher. The "Yellow Zone," representing moderate pullbacks with a severity score between 2 and 5, contains 199 assets or 26.4% of our universe. Only 233 assets, representing 30.9% of the total, remain in the "Green Zone" with a severity score below 2.

Major Shift: TeraWulf and Xylem Cross into the Red Zone

The most notable movement this week involves TeraWulf Inc. (WULF), which bypassed the transition phase entirely. Our data shows TeraWulf Inc. (WULF) moved from the Green Zone directly to the Red Zone, currently carrying a Drawdown Severity Score™ of 6.0. This rapid escalation suggests that the velocity of the current decline is outpacing historical recovery attempts for the stock.

Similarly, Xylem Inc. (XYL) crossed the critical threshold from the Yellow Zone into the Red Zone. As of May 2, 2026, Xylem Inc. (XYL) holds a severity score of 5.1. While Wheaton Precious Metals Corp. (WPM) and Tapestry, Inc. (TPR) have not yet reached the Red Zone, both moved from Green to Yellow this week. Wheaton Precious Metals Corp. (WPM) now carries a severity score of 4.0, while Tapestry, Inc. (TPR) sits at 2.0.

Other assets remained trapped in deep Red Zone territory without signs of recovery. Zoom Video Communications, Inc. (ZM) maintains a Drawdown Severity Score™ of 13.3, and Zscaler, Inc. (ZS) remains at 10.7. The persistence of these high scores indicates that despite any short-term price bounces, the underlying drawdown trend remains firmly intact. Teladoc Health, Inc. (TDOC) continues to show extreme distress with a severity score of 16.1.

Highest Severity: The Market's Deepest Drawdowns

The highest severity scores in our database represent assets that have not only fallen significantly from their peaks but have remained in a state of decline for extended periods. Nano Dimension Ltd. (NNDM) currently tops our list with a Drawdown Severity Score™ of 19.5. Our data shows the stock is down 97.8% from its peak, a decline that has lasted 3,651 days as of May 2, 2026.

American International Group, Inc. (AIG) follows closely with a severity score of 18.8. While the stock is down 93.6%, the duration of this drawdown is the longest in our tracked universe at 9,263 days. This highlights how a Drawdown Severity Score™ accounts for the "time underwater" just as much as the percentage lost. PayPal Holdings, Inc. (PYPL) also remains a point of concern for investors. PayPal Holdings, Inc. (PYPL) is down 83.7% over 1,687 days, resulting in a severity score of 18.4.

Rounding out the top five are PG&E Corporation (PCG) and EPAM Systems, Inc. (EPAM). PG&E Corporation (PCG) carries a severity score of 18.2, having fallen 76.6% over 3,107 days. EPAM Systems, Inc. (EPAM) shows a Drawdown Severity Score™ of 18.0, with a price decline of 84.3% spanning ,1588 days. These assets represent the most extreme examples of capital impairment in the current market.

Stocks Approaching the Red Zone Threshold

We are closely monitoring several prominent stocks that are on the verge of entering the Red Zone. A Drawdown Severity Score™ of 5.0 serves as our primary alert level for structural trend breakdowns. Royal Caribbean Cruises Ltd. (RCL), Autodesk, Inc. (ADSK), and Inter & Co, Inc. (ISBA) all sit exactly at a severity score of 5.0 as of May 2, 2026.

Royal Caribbean Cruises Ltd. (RCL) is currently down 27.2% from its high, a move that has developed over the last 199 days. Autodesk, Inc. (ADSK) has a similar severity score but a much longer duration, down 28.6% over 1,701 days. Inter & Co, Inc. (ISBA) reached the 5.0 threshold much faster, falling 27.6% in just 90 days.

Several other stocks are within a fraction of a point of the Red Zone. Shopify Inc. (SHOP) and Omnicom Group Inc. (OMC) both carry a Drawdown Severity Score™ of 4.9. Shopify Inc. (SHOP) is down 28.7% in 128 days, while Omnicom Group Inc. (OMC) has declined 24.5% over a much longer 515-day period. Nutrien Ltd. (NTR) also sits at a 4.9 severity score, down 26.2% over 1,450 days.

Mega-Cap Check: Microsoft and the 5.0 Boundary

The most significant development for index-tracking investors is the status of Microsoft Corporation (MSFT). As of May 2, 2026, the tech giant is approaching the Red Zone with a Drawdown Severity Score™ of 4.9. Our data shows the stock is down 23.5% from its peak. This decline has materialized over 129 days, making it one of the more rapid corrections for the stock in recent years.

When a mega-cap stock like Microsoft Corporation (MSFT) nears a severity score of 5.0, it often correlates with broader index volatility. Also in this category is Amentum Holdings, Inc. (AMTM), which carries a 4.9 severity score. Amentum Holdings, Inc. (AMTM) has seen a sharp 31.6% decline in just 58 days. The speed of these declines in high-market-cap names contributes heavily to the current average severity score of 5.3 across all assets.

What to Watch Next Week

Heading into the second week of May, our focus remains on the 4.9 severity cluster. If Microsoft Corporation (MSFT), Shopify Inc. (SHOP), and Nutrien Ltd. (NTR) continue their current trajectories, the percentage of the market in the Red Zone could rise from 42.7% toward the 45% mark. This would represent a significant expansion of the current sell-off.

We are also watching the recovery potential for Wheaton Precious Metals Corp. (WPM). Having just entered the Yellow Zone with a Drawdown Severity Score™ of 4.0, the next few trading sessions will determine if it stabilizes or follows the path of Xylem Inc. (XYL) into high-severity territory. Our data indicates that assets crossing from Green to Yellow often see a volatility expansion before either finding support or accelerating toward a score of 5.0.

Finally, we will monitor the "Deep Red" names like Atlassian Corporation (TEAM) and Viavi Solutions Inc. (VIAV). Atlassian Corporation (TEAM) currently holds a severity score of 14.2, while Viavi Solutions Inc. (VIAV) is at 15.5. For these stocks, the story is no longer about the percentage drop, but whether the duration of the drawdown will continue to push their severity scores toward the levels seen by PayPal Holdings, Inc. (PYPL) and EPAM Systems, Inc. (EPAM).