Markets Update - 8/11/26

Quick Summary

• US equity indices started Tuesday modestly higher after Pakistan’s defense minister said signals in recent days suggest the US and Iran are “close to some sort of arrangement.”
• Crude initially pulled back on those reports, but oil reversed higher later in the day as Iran reiterated conditions that must be met before the Strait reopens which as discussed in the Week Ahead are generally all red lines for the US. WTI finished up more than 1%. Still Treasury yields fell back after the 10 and 30-year yields tested Friday’s highs (the highest closes since January 2025 and 2007 respectively) giving some space for equities.
• And while the small cap Russell 2000 capitalized holding early gains to end +0.3% higher on the day, the large-cap indices were choppy and deteriorated for most of the session. The Nasdaq Composite lagged at -0.6%, and the S&P 500 and Dow Jones Industrial Average both fell -0.3%. Positively the equal-weighted version of the S&P 500 though edged up +0.2% to a record high.
• The index weakness Tuesday was driven by megacap growth and software, with Communication Services the worst-performing sector as Alphabet remained under pressure, while Amazon weighed on Consumer Discretionary and Oracle/AppLovin pressured software. Nvidia gave back an early gain tied to its AI infrastructure financing initiative discussed in the morning update and finished basically flat.
• Traders were also likely cautious ahead of Wednesday’s July CPI report (discussed in more detail in the subscriber section), which is the first of three key data prints (in addition to next month’s employment and CPI reports) that will determine whether we get a September rate hike.
• In Tuesday’s economic data, as discussed in the morning update, the ADP weekly job growth number fell to the lowest since January. In addition July existing home closings fell back for a second month from the highs of the year in May, although remained up from a year ago. Sale prices hit a new record high for July, but affordability nevertheless improved for the first time since January.

Traders were also likely cautious ahead of Wednesday’s July CPI report (discussed in more detail in the subscriber section), which is the first of three key data prints (in addition to next month’s employment and CPI reports) that will determine whether we get a September rate hike.

In Tuesday’s economic data, as discussed in the morning update, the ADP weekly job growth number fell to the lowest since January. In addition July existing home closings fell back for a second month from the highs of the year in May, although remained up from a year ago. Sale prices hit a new record high for July, but affordability nevertheless improved for the first time since January.

US equity indices started clustered with mild gains but diverged from the open, with RUT pushing higher and holding into the close +0.3%, while large caps were choppy but deteriorated most of the session. Nasdaq moved off the lows but still lagged -0.6%; SPX/DJIA -0.3%.

Market commentary

On the upcoming CPI print

On the upcoming CPI print

“I expect the CPI report to continue its downward trend which will further support the case for the Federal Reserve to hold rates steady rather than hiking them, even with last Friday’s weak jobs report,” said Dennis Follmer, chief investment officer at Montis Financial. “Services inflation could continue to be a sticky problem, but that sector is not very sensitive to interest rates, so it shouldn’t really damage the case for holding steady,” he added.

“If we get a July CPI report anywhere near my forecast, the balance of the committee is going to look right through the supply shock, and the FOMC will remain on hold for the remainder of the year,” said Joe Brusuelas, chief economist at RSM. The data, he added, will provide “something of an assist” for Fed Chairman Kevin Warsh, who has faced stiff policy challenges since taking the post in May.

Even as price pressures ease in some areas, Vanguard economist Adam Schickling expects some of June’s “unusually large declines” across several categories to return to recent trend levels in July. Overall, “inflation has been stickier and persistent,” he says. However, “we think it is trending in a positive direction, moving gradually closer toward [the Fed’s] 2% target.” Schickling says the July jobs report, combined with what he expects will be improved inflation news, will strengthen the case for the Fed staying on hold through year-end.

I expect the CPI report to continue its downward trend which will further support the case for the Federal Reserve to hold rates steady rather than hiking them, even with last Friday’s weak jobs report,” said Dennis Follmer, chief investment officer at Montis Financial. “Services inflation could continue to be a sticky problem, but that sector is not very sensitive to interest rates, so it shouldn’t really damage the case for holding steady,” he added.

“If we get a July CPI report anywhere near my forecast, the balance of the committee is going to look right through the supply shock, and the FOMC will remain on hold for the remainder of the year,” said Joe Brusuelas, chief economist at RSM. The data, he added, will provide “something of an assist” for Fed Chairman Kevin Warsh, who has faced stiff policy challenges since taking the post in May.

Even as price pressures ease in some areas, Vanguard economist Adam Schickling expects some of June’s “unusually large declines” across several categories to return to recent trend levels in July. Overall, “inflation has been stickier and persistent,” he says. However, “we think it is trending in a positive direction, moving gradually closer toward [the Fed’s] 2% target.” Schickling says the July jobs report, combined with what he expects will be improved inflation news, will strengthen the case for the Fed staying on hold through year-end. “We expect the Fed’s focus is starting to shift to a more balanced weight of labor and inflation data vs. six weeks ago, when inflation was front and center,” he says. “Our conviction in the Fed holding rates constant through year-end has only grown in light of recent data releases.”

On the Iran conflict

“We see crude oil prices driving the war narrative, with price swings likely to dictate the pace of escalation and de- escalation,” said Elias Haddad at Brown Brothers Harriman & Co.

On the Iran conflict

“We see crude oil prices driving the war narrative, with price swings likely to dictate the pace of escalation and de-escalation,” said Elias Haddad at Brown Brothers Harriman & Co.

“A resolution to the Middle East conflict could provide an additional boost to sentiment,” said Jeffrey Roach at LPL Financial. “One particularly encouraging observation from the report’s summary was the reminder that ‘the world has plenty of oil.’ Economic conditions are favorable for risk appetite.”

“Investors have been awaiting a [U.S.-Iran] deal for a few weeks, and tangible progress is likely required for yields to fall significantly and stocks to rally further at this juncture,” said José Torres, senior economist at Interactive Brokers.

On oil

“Our year-end West Texas Intermediate oil price forecast of $80-$90 per barrel incorporates a geopolitical risk premium reflecting higher shipping and insurance costs, periodic logistical disruptions and stronger inventory rebuilding demand,” said Ian Mikkelsen, equity sector analyst for energy at Wells Fargo Investment Institute.

“A resolution to the Middle East conflict could provide an additional boost to sentiment,” said Jeffrey Roach at LPL Financial. “One particularly encouraging observation from the report’s summary was the reminder that ‘the world has plenty of oil.’ Economic conditions are favorable for risk appetite.”

“Investors have been awaiting a [U.S.-Iran] deal for a few weeks, and tangible progress is likely required for yields to fall significantly and stocks to rally further at this juncture,” said José Torres, senior economist at Interactive Brokers.

On oil

“Our year-end West Texas Intermediate oil price forecast of $80-$90 per barrel incorporates a geopolitical risk premium reflecting higher shipping and insurance costs, periodic logistical disruptions and stronger inventory rebuilding demand,” said Ian Mikkelsen, equity sector analyst for energy at Wells Fargo Investment Institute.

In today’s Markets Update:

A deeper look at Tuesday’s stock and sector breakdown, including megacap growth pressure, stronger small-cap and equal-weight performance beneath the surface, and BTIG’s Jonathan Krinsky on Energy strength.

In today’s Markets Update

• A deeper look at Tuesday’s stock and sector breakdown, including megacap growth pressure, stronger small-cap and equal-weight performance beneath the surface, and BTIG’s Jonathan Krinsky on Energy strength.
• A look at selected corporate headlines from Bloomberg and CNBC including after-hours movers.
• Updated technical charts across the SPX, Nasdaq, Russell 2000, and equal-weighted SPX, including BTIG’s Jonathan Krinsky on the broader market setup.
• A review of market breadth, participation, and sentiment, including large individual winners and losers, Nasdaq positive volume, MarketWatch on equal-weight performance, Schwab on retail trading activity, Morgan Stanley on margin debt, and Bloomberg/Authers on AI infrastructure investment.
• A look at US economic data and the CPI setup, including NFIB small-business sentiment and Goldman’s preview of Wednesday’s CPI report.
• A look at the rates and Fed backdrop, including Treasury yields, updated Fed hike expectations, Beth Hammack’s hawkish speech, and AAII members on the Fed decision.
• A look at volatility, options, and market structure, including VIX, VVIX, 1-day VIX, Goldman on call activity and put-call skew, Goldman/DailyChartbook on Nasdaq futures positioning, and MarketWatch/Schaeffer’s on options-market sentiment.
• A review of cross-asset trends, including WTI crude, EIA on the oil outlook, CNBC on the SPR, the dollar, gold, copper, natural gas, and bitcoin.
• A wrap-up on the near-term setup into CPI.
• A look ahead to Wednesday’s calendar, including US economic data, the Fed calendar, Treasury auctions, SPX earnings, and ex-US highlights.

A look at selected corporate headlines from Bloomberg and CNBC including after-hours movers.

Updated technical charts across the SPX, Nasdaq, Russell 2000, and equal-weighted SPX, including BTIG’s Jonathan Krinsky on the broader market setup.

A review of market breadth, participation, and sentiment, including large individual winners and losers, Nasdaq positive volume, MarketWatch on equal-weight performance, Schwab on retail trading activity, Morgan Stanley on margin debt, and Bloomberg/Authers on AI infrastructure investment.

A look at US economic data and the CPI setup, including NFIB small-business sentiment and Goldman’s preview of Wednesday’s CPI report.

A look at the rates and Fed backdrop, including Treasury yields, updated Fed hike expectations, Beth Hammack’s hawkish speech, and AAII members on the Fed decision.

A look at volatility, options, and market structure, including VIX, VVIX, 1-day VIX, Goldman on call activity and put-call skew, Goldman/DailyChartbook on Nasdaq futures positioning, and MarketWatch/Schaeffer’s on options-market sentiment.

A review of cross-asset trends, including WTI crude, EIA on the oil outlook, CNBC on the SPR, the dollar, gold, copper, natural gas, and bitcoin.

A wrap-up on the near-term setup into CPI.

A look ahead to Wednesday’s calendar, including US economic data, the Fed calendar, Treasury auctions, SPX earnings, and ex- US highlights.

SPX sector breadth deteriorated to just 3 of 11 sectors higher, although still did have two over 1% (Energy for a second day, up +5.7% the past two sessions and Utilities), but we also had the larger Comm Services sector falling over 2% (dragged lower by Alphabet’s 3.8% drop) and the other heavyweight growth sectors, Tech and Consumer Discretionary, also finishing in the red.

While there were pockets of weakness throughout the broader market, losses were more pronounced across mega-cap technology names, with the Vanguard Mega Cap Growth ETF retreating 0.7%. The communication services sector (-2.1%) finished as the worst-performing S&P 500 sector as Alphabet (GOOG 343.00, -12.84, -3.61%) was a particular laggard, while weakness in Amazon (AMZN 272.27, -5.82, -2.09%) weighed on the consumer discretionary sector (-0.8%).

Within the information technology sector (-0.3%), software names such as Oracle (ORCL 145.44, -5.60, -3.71%) and AppLovin (APP 318.68, -20.32, -5.99%) added pressure following yesterday’s rally. Semiconductor stocks were a relative bright spot, though the PHLX Semiconductor Index (+0.9%) finished well off its earlier highs. NVIDIA (NVDA 217.48, -0.07, -0.03%) gave back the entirety of a strong opening gain that followed yesterday’s late selloff on news of its initiative with several major asset managers to mobilize up to $500 billion for AI compute infrastructure. KKR (KKR 111.02, +7.18, +6.92%) and Apollo Global Management (APO 140.24, +8.22, +6.23%) both participants in the initiative, were among the day’s best-performing S&P 500 components.

Elsewhere, the industrials sector (+0.6%) followed the semiconductor group higher, with the usual collection of electrical equipment names outperforming, while Axon (AXON 636.31, +39.98, +6.70%) was an S&P 500 standout as it recovered some of its sharp post-earnings slide from last week.

The defensive utilities sector (+1.1%) tied the energy sector for the day’s top performance amid the weakness in mega-cap technology stocks.

[Note: % changes above may differ from chart as chart uses futures.] The number of large SPX winners (up over 3%) fell back to ~20 Tuesday from to ~50 Monday, but large losers (down over 3%) also fell to 14.

MarketWatch: Krinsky is though close to throwing in the towel on his cautious outlook for energy shares:

"Getting bullish on energy stocks after a rally is always risky given it's so headline driven, and thus vulnerable to a shakeout at any point," wrote Jonathan Krinsky, technical analyst at BTIG, in a note to clients. "With that said, there's no denying the energy complex has been basing for the better part of the last four-months."

Any further strength, and Krinsky said he would have to concede that "a new leg higher" was coming.

After-hours movers

Super Micro Computer rallied more than 8% after issuing rosy guidance for first quarter earnings and revenue, in addition to exceeding fourth quarter estimates. The company expects adjusted earnings in the range of $1.01 to $1.10 per share, far above the LSEG consensus estimate of 76 cents. Revenue guidance in the range of $14.5 billion to $15.5 billion also topped the anticipated $11.68 billion.

CoreWeave shares gained 14%. Second quarter adjusted operating income margin came in at 5% compared to the StreetAccount consensus estimate of 2.7%. Revenue of $2.58 billion was up 112% from the year-ago period, and it came in ahead of the $2.56 billion expected.

Lumentum Holdings shares were marginally lower even after the maker of optical and photonic products posted fourth quarter adjusted earnings and revenue that exceeded expectations. The AI beneficiary has tumbled more than 22% over the last three months, though it’s up more than 120% year to date.

H&R Block shares surged 15% after issuing an upbeat forecast for the 2027 fiscal year. The company sees adjusted earnings in a range of $6.04 to $6.24 per share on revenue of $4.11 billion to $4.16 billion, compared to the LSEG consensus estimate of $5.86 per share and $4.05 billion.

Cava Group shares jumped almost 7% after reporting second quarter earnings of 19 cents per share, topping the LSEG consensus estimate of 18 cents a share. Revenue of $368.4 million topped the anticipated $361 million.

Biggest after-hours movers from CNBC:

• SpaceXAI is rolling out new artificial-intelligence software that’s designed to act like a team of AI agents fielding assignments throughout the day, marking the latest bid by Elon Musk’s company to keep pace with Anthropic PBC and OpenAI.
• Apple Inc.’s Jennifer Bailey, the longtime head of Pay and Wallet services, is retiring after more than two decades at the company, adding to a sweeping changing of the guard at the iPhone maker.
• Anthropic PBC struck a $9.1 billion deal with Riot Platforms Inc., a Bitcoin mining company that recently began selling AI data center capacity, people familiar with the matter said.
• Fermi Inc. announced its first binding lease with TensorWave Inc. for its massive data center campus under development in West Texas.
• On Holding AG posted disappointing second-quarter sales as the Swiss brand held off from discounting older shoe models ahead of product updates in the highly promotional US market.

Other corporate news

SpaceXAI is rolling out new artificial-intelligence software that’s designed to act like a team of AI agents fielding assignments throughout the day, marking the latest bid by Elon Musk’s company to keep pace with Anthropic PBC and OpenAI.

Apple Inc.’s Jennifer Bailey, the longtime head of Pay and Wallet services, is retiring after more than two decades at the company, adding to a sweeping changing of the guard at the iPhone maker.

Anthropic PBC struck a $9.1 billion deal with Riot Platforms Inc., a Bitcoin mining company that recently began selling AI data center capacity, people familiar with the matter said.

Fermi Inc. announced its first binding lease with TensorWave Inc. for its massive data center campus under development in West Texas.

On Holding AG posted disappointing second-quarter sales as the Swiss brand held off from discounting older shoe models ahead of product updates in the highly promotional US market.

Guess people have moved on from Cloudracers and Cloudblooms as Swiss shoe maker On Holding is down 20%, worst day in its (short) history Tuesday after earnings.

Note on all charts the colored lines are moving averages (the average price over the lookback period (days on the daily charts, weeks on the weekly charts)): 20 = green, 50 = purple, 100 = blue, 200 = brown. Exception is monthly charts where blue is 10-month moving average and brown is 20-month moving average.

MACD = Moving average convergence/divergence line, a measure of momentum that compares longer term and shorter term momentum to gauge if a move is strengthening or weakening. RSI = Relative Strength Index, which compares gains and losses over the given lookback window (standard 14 periods).

Note on all charts the colored lines are moving averages (the average price over the lookback period (days on the daily charts, weeks on the weekly charts)): 20 = green 50 = purple 100 = blue 200 = brown

Exception is monthly charts where blue is 10-month moving average and brown is 20-month moving average.

MACD = Moving average convergence/divergence line, a measure of momentum that compares longer term and shorter term momentum to gauge if a move is strengthening or weakening. This is probably my favorite individual indicator (it’s also the favorite of Katie Stockton, a very fine technician).

RSI = Relative Strength Index (basically what it sounds like) = measures the strength of the move comparing gains to losses over the given lookback window (I use the standard 14 periods).

Turning to the charts, the SPX remains just a little below Tuesday’s all- time high. Otherwise chart looks very solid (perhaps a bull flag?), so as I said Monday “some momentum behind it.”

Turning to the charts, the SPX remains just a little below Tuesday’s all-time high. Otherwise chart looks very solid (perhaps a bull flag?), so as I said Monday “some momentum behind it.”

Nasdaq eased further back from the highest close in two months. Otherwise similar to the SPX.

Nasdaq eased further back from the highest close in two months. Otherwise similar to the SPX.

The Russell 2000 (RUT) finished higher so remains just under its all-time high.

The Russell 2000 (RUT) finished higher so remains just under its all- time high.

The equal-weighted SPX reasserted its relative strength pushing to an all-time high. Technicals also strongest here.

The equal-weighted SPX reasserted its relative strength pushing to an all-time high. Technicals also strongest here.

MarketWatch said the Invesco S&P 500 Equal Weight ETF had outpaced the cap-weighted S&P 500 by 1.75% year to date, the first time it had outperformed this late in the year since 2022. Given that, 45% of stocks in the index were outperforming, the highest share since 2022.

Yields eased back across the curve Tuesday

Two-year Treasury yields continued their chop back and forth over the past week ending at 4.22%. They are down 21 basis points from the peak close July 23rd, which was the highest since February of last year and remain over the nearly three year downtrend line that they’ve been over for the most part for the past three weeks.

They are approximately 56 basis points above the Effective Fed Funds rate (red line), continuing to call for rate hikes. These should see the most movement tomorrow following the CPI print.

Yields eased back across the curve Tuesday:

Two-year Treasury yields continued their chop back and forth over the past week ending at 4.22%. They are down 21 basis points from the peak close July 23rd, which was the highest since February of last year and remain over the nearly three year downtrend line that they’ve been over for the most part for the past three weeks.

They are ~56 basis points above the Effective Fed Funds rate (red line), continuing to call for rate hikes.

These should see the most movement tomorrow following the CPI print.

If you thought the weak NFP print Friday might soften 2026 FOMC voter Beth Hammack’s desire for rate hikes, think again.

In a Yahoo Finance interview Hammack says “I’m still not seeing a problem” with the job market while she likewise mostly dismissed the cool June CPI print. “Nothing would make me feel better than to be wrong, that we need to change the stance of policy to help bring inflation back to target,” Hammack said. “But from where I sit, I just don’t see it coming back [to 2%] on its own.”

The basis for that comes from Hammack’s firm belief that current policy rates are not “meaningfully restrictive”: “When I’m talking to businesses, I’m not hearing that they’re sensing any restraint from investments in growth based on where interest rates are,” Hammack said. “So to me that says that now is the time to act.”

And when she says “act” Hammack doesn’t mean a “one-and-done” but “some number of [hikes]. But I don’t want to prejudge what that number is going to be.” She said she does not think interest rates in the range of 3.5% to 3.75% are “meaningfully restricting” the economy right now.

She cautioned that the longer the Fed waits, the longer it misses its inflation goal of 2% and the harder inflation will be to bring back down.

In the special question this week AAII asked “What do you think about the Federal Reserve’s decision to keep interest rates unchanged?” A majority (55%) said it was “the right move.” Of the rest the bias was “they should have raised rates” at 30.6%. Just 5.6% said they should have cut.

Ten-year yields were little changed at 4.70% after earlier testing the July 31st highs (the highest close since January 2025).

10-year yields were little changed at 4.70% after earlier testing the July 31st highs (the highest close since January 2025).

Thirty-year yields similarly little changed at 5.25%, also after testing the highs from July 31st (the highest level since 2007).

30-year yields similarly little changed at 5.25%, also after testing the highs from July 31st (the highest level since 2007).

Volatility, options, and market structure

VIX edged back to 15.3 just above the lowest close since early January on Friday. The indicator remains in its “normal” range post-GFC, consistent with approximately 0.96% average daily moves in the SPX over the next 30 days.

VIX edged back to 15.3 just above the lowest close since early January on Friday.

The indicator remains in its “normal” range post-GFC, consistent with ~0.96% average daily moves in the SPX over the next 30 days.

The VVIX (VIX of the VIX) though also edged back to 90.9.

Options and market sentiment

More on the piling into calls last week: “The one-month put-to-call skew on the benchmark gauge fell to the lowest level since April 2025, signaling traders fear missing out on a stock market rally and are not looking for the same amount of shielding for their portfolios.”

“Skew shifted fairly notably on a week over week basis; away from the downside puts and toward the upside calls,” wrote Christopher Jacobson, co-head of derivative strategy at Susquehanna International Group. He added that investors who were potentially “underweight” stocks last week turned to call options to “regain upside exposure.”

Goldman: “Desk flows have seen clients use options to chase the market higher with this week’s US option volumes averaging nearly 10% above the 50dma, and calls representing over 58% of total listed contracts – the broader options complex is signaling any residual panic from last week has been eradicated.”

In that regard, Goldman’s Panic Index (measure of pressure for downside protection) fell to the least since pre-2024.

Goldman also notes that Monday and Tuesday of last week “brought a historic flattening in Put-Call Skew. The cumulative 2d change in near-term SPX Normalized Put-Call Skew was the second largest in magnitude that we’ve seen in the last 20 years.”

The VVIX (VIX of the VIX) though also edged back to 90.9.

The VVIX (VIX of the VIX) though also edged back to 90.9.

The current level is consistent with “moderate” daily moves in the VIX over the next 30 days (historically, normal is 80-100, but we’ve been above 90 most of the time since July ‘24). Above 100 is the level flagged by Charlie McElligott as indicating higher stress.

The current level is consistent with “moderate” daily moves in the VIX over the next 30 days (historically, normal is 80-100, but we’ve been above 90 most of the time since July ‘24). Above 100 is the level flagged by Charlie McElligott as indicating higher stress.

But the 1-day VIX jumped to 12.5 with the upcoming CPI report, although relatively tame given that consistent with a move of just 0.78% in the SPX next session.

WTI up another 1% (now nearly 12% from Wednesday’s close).

But the 1-day VIX jumped to 12.5 with the upcoming CPI report, although relatively tame given that consistent with a move of just 0.78% in the SPX next session.

WTI up another 1% (now nearly 12% from Wednesday’s close).

Cross-asset trends

The DXY dollar index (which is fixed weighted with a heavy (57%) weighting vs the euro) remained just a little above the lowest close since mid-June Friday, hanging on to its trendline from the January lows.

The daily MACD, as noted two weeks ago, flipped to quite negative while the RSI is at 40. As I said then, “clearly consolidating, but too early to call it a downtrend. But if it resumes its decline, that might be enough for me.”

EIA: “reduced oil shipments through the Strait of Hormuz [will] lower global oil inventories further in the coming months and keep crude oil prices near levels from the first week of August.”

“We now forecast the Brent crude oil spot price to average around $85 per barrel (b) in the third quarter of 2026 (WTI $81/b). As inventories rebuild, with most production expected to recover by early 2027, we expect the Brent spot price to gradually fall to an average of $69/b in 2027 (WTI $65/b).”

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The SPR fell by 6.1 million barrels to 298.7 million barrels last week, according to data released by the Department of Energy on Monday. The reserve, created in 1975, is at its lowest level since January 1983.

The SPR stood at around 415 million barrels on Feb. 28th but will fall to around 243 million barrels when the current release President Trump ordered is completed.

The minimum amount of oil needed to safely operate the SPR is about 70 million barrels, an Energy Department spokesperson told CNBC in July. There is enough oil left in the SPR to do another release if needed, said David Goldwyn, who served as a State Department special envoy for international energy affairs under President Barack Obama.

However, the SPR’s operational capability is at risk due to aging infrastructure, according to a May report from the Government Accountability Office. More than a quarter of its inventory was “not available for drawdown due to a combination of construction outages and cavern outages” as of December 2025, GAO investigators found.

That implied that a minimum of 103 million barrels in the SPR today are not available for use, according to a July analysis by Rapidan Energy.

"I'm not worried about the stability of the reserve or our ability to do another drawdown, if we needed to," Goldwyn told CNBC.

The DXY dollar index (which is fixed weighted with a heavy (57%) weighting vs the euro) remained just a little above the lowest close since mid-June Friday, hanging on to its trendline from the January lows.

The daily MACD as noted two weeks ago flipped to quite negative while the RSI is at 40. As I said then, “clearly consolidating, but too early to call it a downtrend. But if it resumes its decline, that might be enough for me.”

Gold futures (/GC) was higher but well off the highs of the day after being rejected on its first test of the key 200-DMA. Still the highest close in over two months. As noted Thursday “still has a good technical setup with positive daily MACD and RSI,” with the latter now the strongest since January.

Gold futures (/GC) was higher but well off the highs of the day after being rejected on its first test of the key 200-DMA. Still the highest close in over two months. As noted Thursday “still has a good technical setup with positive daily MACD and RSI,” with the latter now the strongest since January.

US copper futures (/HG) modestly higher but like gold well off the highs of the session. It continues though to have “supportive technicals,” with positive daily MACD and RSI. I remain bullish long term.

US copper futures (/HG) modestly higher but like gold well off the highs of the session. It continues though to have “supportive technicals,” with positive daily MACD and RSI. I remain bullish long term.

US natural gas futures (/NG) eased back -1.6% after their best day since May Monday, remaining at the top of their range over the past couple of weeks. The daily MACD though as mentioned Monday has flipped to more bullish while the RSI is not far from 50.

US natural gas futures (/NG) eased back -1.6% after their best day since May Monday, remaining at the top of their range over the past couple of weeks. The daily MACD though as mentioned Monday has flipped to more bullish while the RSI is not far from 50.

Bitcoin futures continue to trade in their range over the past month+, also at the same levels they were at in early June. As I mentioned over a month ago, “the daily technicals continue to look better than the price action, so maybe there’s a chance?” That never translated into more than a modest move higher, and now they are starting to turn more negative. I would though still probably be a buyer if they saw a strong move above $67,500.

Bitcoin futures continue to trade in their range over the past month+, also at the same levels they were at in early June. As I mentioned over a month ago, “the daily technicals continue to look better than the price action, so maybe there’s a chance?” That never translated into more than a modest move higher, and now they are starting to turn more negative. I would though still probably be a buyer if they saw a strong move above $67,500.

Other research

Other research

US economic data

NFIB’s small business sentiment index jumped 2.4 points to 99.8 in July, the highest level since August 2025, with 8 of the index’s 10 components improving from June.

• A net 20% of owners plan to create new jobs over the next three months, up 9 points from June, to the highest level since October 2022, 9 points above the historical average.
• 25% of small business owners plan to make capital outlays in the next six months, up 5 points from June and the highest reading since December 2024.
• There was a significant decline in the full suite of inflation metrics, led by the percentage of owners raising their average selling prices, which while still elevated fell 7 points to 31% the least since April as did the share who plan to increase prices.
• Fourteen percent of business owners cited inflation as their single most important business problem, down 7 points from June’s highest reading since October 2024. Inflation now ranks as the third top problem.

Some notables:

CNBC: BTIG’s Jonathan Krinsky also is bearish on the broader market comparing the current run to that which occurred in late 2021, when the S&P 500 was able to come out of trading in a “sideways” range for a number of months with a 6% rally to a new 52-week high. That rally took place as high-beta momentum stocks were already in a drawdown of 25%, which is “similar to what we are seeing right now,” he said.

“While history doesn’t repeat, it often rhymes, and we think this recent ‘breakout’ is also likely to falter,” Krinsky wrote in a note dated Sunday.

Krinsky extended that to the $RSP equal-weight S&P 500 index: “Our sense is a lot of buying has been done and the risk of an air-pocket is now much higher for the RSP. In other words, we don’t see much juice left to squeeze,” he wrote.

Schwab: “Schwab investors continued to buy in July despite a choppy market backdrop, lifting the Schwab Trading Activity Index (STAX) for a third straight month to its highest level since January 2022.”

“Options were another area of strong activity in July, with trading again skewing toward put selling, particularly in technology stocks and the chip and memory industries.”

“The strongest buying interest came from two clear groups: Gen X clients, who continued to lead net buying by age cohort, and self-directed traders, whose bullish activity accelerated during the month. Bullish activity and sentiment among traders outpaced investors by the widest margin since March.”

Couple of interesting Goldman charts in the @dailychartbook nightly email show that during Nasdaq’s 7.1% rally from July 28–August 4, non-dealers sold $21.6B of Nasdaq futures, with shorts accounting for 72% of the flow.

This left non-dealer Nasdaq futures positioning net short for the first time since May 2025, so there appears to be fuel for a positioning-driven squeeze higher if the rally continues.

MarketWatch: Todd Salamone, senior vice president of research at Schaeffer’s Investment Research, said equity options buyers on S&P 500 component stocks are “usually positioned wrong” at key turning points. The current setup suggests that the S&P 500’s rally to record highs still has legs.

“The sentiment in the options market looks more like a market that is breaking below support than breakout out to an all-time high, suggesting there is fuel to sustain the rally,” Salamone wrote in a note to clients.

Y/y change in margin debt has been at or over 55% for over a year, something we haven’t seen previously going back to 1998.

Bloomberg’s Authers: Columbia Business School’s Stijn Van Nieuwerburgh estimates AI infrastructure investment at roughly 2.8% of GDP — significantly larger than the railroad boom — and it’s projected to keep rising.

Wrap-up

So will the now “on again” AI trade continue? The evidence is there, with momentum building, expected earnings continuing to ratchet higher, and positioning not yet “extreme” according to DB.

And the overall setup remains favorable as well, with systematics biased to buy according to BofA, discretionary and hedge fund positioning light according to DB and Goldman, buybacks almost back to full strength, retail re-engaging, the economy remaining resilient even if pay growth continues to ease, and earnings growth spectacular.

Sentiment is not really a tailwind but not yet a headwind — “it takes bulls to have a bull market” — seasonality is not great, and rates are pushing up toward levels that may cause some indigestion, but none of those are yet at levels that I would consider “red flags.”

And as discussed at the top, it appears from the most recent indications that President Trump has no appetite for dialing things up militarily at this point, which means it’s likely things will drag on with little change through the midterms unless or until Iran decides it wants to reopen the Strait.

I had said last Sunday I was becoming more constructive, and that continues into the coming week.

The good news is we certainly didn’t break down, but we also certainly didn’t extend as I thought might happen to start the week. The Iran conflict appearing to become even more never-ending, which pushed up oil prices and Treasury yields, certainly didn’t help. And perhaps traders are unwilling to step in front of Wednesday’s CPI report.

If that’s the case, we could very well get another session like today, particularly with no economic or earnings catalysts to really propel things in either direction ahead of that. So, no surprise, we did in fact “get another session” like Monday. We’ll get our clearing event tomorrow morning which should give us a better feel on near-term direction thereafter.

Wrap-up

As I wrote Sunday:

So will the now “on again” AI trade continue? The evidence is there, with momentum building, expected earnings continuing to ratchet higher, and positioning not yet “extreme” according to DB.

And the overall setup remains favorable as well, with systematics biased to buy according to BofA, discretionary and hedge fund positioning light according to DB and Goldman, buybacks almost back to full strength, retail re-engaging, the economy remaining resilient even if pay growth continues to ease — something we’ll need to keep an eye on — and earnings growth spectacular.

Sentiment is not really a tailwind but not yet a headwind — “it takes bulls to have a bull market” — seasonality is not great, and rates are pushing up toward levels that may cause some indigestion, but none of those are yet at levels that I would consider “red flags.”

And as discussed at the top, it appears from the most recent indications that President Trump has no appetite for dialing things up militarily at this point, which means it’s likely things will drag on with little change through the midterms unless or until Iran decides it wants to reopen the Strait.

I had said last Sunday I was becoming more constructive, and that continues into the coming week.

And as I said Monday:

the good news is we certainly didn’t break down, but we also certainly didn’t extend as I thought might happen to start the week. The Iran conflict appearing to become even more never-ending, which pushed up oil prices and Treasury yields, certainly didn’t help. And perhaps traders are unwilling to step in front of Wednesday’s CPI report.

If that’s the case, we could very well get another session like today, particularly with no economic or earnings catalysts to really propel things in either direction ahead of that.

So, no surprise, we did in fact “get another session” like Monday. We’ll get our clearing event tomorrow morning which should give us a better feel on near-term direction thereafter.

The Day Ahead

The Day Ahead

US economic data brings us our highlight of the week in July CPI. While we will get another one plus another employment report before the September meeting, another cool report likely sets the table for a September hold while the opposite is probably true as well. We’ll also get weekly mortgage applications and US petroleum inventories.

In terms of Fed speakers nobody on the calendar again.

US Treasury auctions continue for non-Bills (>1yr in maturity) with a 10-yr auction.

In terms of SPX Q2 earnings as noted in the Week Ahead we’re very much in the windup phase now with just five SPX components reporting Wednesday but we do get just one over $100B in market cap in CSCO.

Ex-US highlights include CPI from Germany, Italy, and India and IEA and OPEC monthly oil-market reports.

US economic data brings us our highlight of the week in July CPI. While we will get another one plus another employment report before the September meeting, another cool report likely sets the table for a September hold while the opposite is probably true as well. We’ll also get weekly mortgage applications and US petroleum inventories.

In terms of Fed speakers nobody on the calendar again.

US Treasury auctions continue for non-Bills (>1yr in maturity) with a 10-yr auction.

In terms of SPX Q2 earnings as noted in the Week Ahead we’re very much in the windup phase now with just five SPX components reporting Wednesday but we do get one over $100B in market cap in CSCO.

Ex-US highlights include CPI from Germany, Italy, and India and IEA and OPEC monthly oil-market reports.

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Goldman Sachs CPI preview

Goldman: We expect a 0.19% increase in July core CPI (vs. +0.2% consensus), corresponding to a year-over-year rate of +2.47% (vs. +2.5% consensus). We expect a 0.05% increase in headline CPI (vs. +0.1% consensus), reflecting lower energy prices. Our forecast is consistent with a larger 0.26% increase in core PCE in July, reflecting a large increase in its portfolio management component.

We highlight three key component-level trends we expect to see in the report.

• We expect mixed autos inflation, reflecting a 0.5% increase in used car prices, a 0.1% increase in new car prices, and a 0.5% decline in the auto insurance category.
• We forecast benign readings for the shelter categories, a 0.23% increase in the OER category and a 0.16% increase in the rent category, reflecting the continued slowdown in their underlying trends.
• We expect mixed travel services categories (airfares: +2.0%; hotels: -1.0%), reflecting signals from alternative price data.

Looking beyond July, we expect monthly core CPI increases of around 0.2% over the next couple of months, reflecting the continued slowdown in the shelter categories, shrinking contributions from tariff-related price increases, and the reversal of upward pressure on airfares from higher jet fuel prices, though risks are tilted to the upside if disruptions to oil markets and associated oil price increases prove more persistent than expected.

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CPI report release date and time: Wednesday, Aug. 12, at 8:30 am ET.

• CPI is forecast to rise 0.1% in July after decreasing 0.4% in June.
• Core CPI is forecast to increase 0.1% for the month after remaining flat in June.
• CPI is forecast to rise 3.4% after increasing 3.5% year over year in June.
• Core CPI is forecast to increase 2.5% after rising 2.6% from year-over-year levels.

Wednesday August 12

Data: US July CPI, Japan July M2, M3, machine tool orders, Germany June current account balance, Canada June building permits.

Earnings: Tencent, Cisco, Commonwealth Bank of Australia, Coherent, Cerberus, Vestas.

Auctions: US 10-yr Notes ($42bn).

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