Here's a note I just sent out to my clients: The U.S. market remains in an uptrend, but the character of the advance is becoming increasingly complicated. The follow-through-day rally is now testing what I consider its last meaningful line of defense, while several major catalysts are converging at the same time. NVDA earnings, PCE inflation data, Jackson Hole, and a series of important software reports all have the potential to change the market narrative quickly. The follow-through-day pullback needs to hold here. SPY 760 is the logical line in sand—a break below that level would constitute an FTD failure and add pressure to the technical picture. There are plenty of catalysts that could force or settle the issue. NVDA, PCE, Jackson Hole and several important software earnings reports all hit this week. Any one of them could change the current narrative quickly. The bigger-picture risk remains a potential regime change toward financial repression, which historically tends to emerge alongside financial stress. The massive amount of capital being committed to AI infrastructure is an obvious area to watch. NVDA and the roughly $500 billion alternative-asset financing story have become the market's best guess for where the epicenter of the next financial problem could develop if the AI/datacenter boom runs into trouble. Anti-datacenter sentiment is also building and could intensify heading into the midterms. Jackson Hole could provide more clarity on the Fed's function, but regardless, hard assets are back on the radar. GLD, SLV and COPX continue to show strength. Software looks to be transitioning from a laggard rally to potential leadership. PLTR has shown some recent power, which could be a tip off of a rotation from semiconductors into software. Several software companies report this week, so we should get more evidence very soon. Bottom line: The uptrend is still intact, but the FTD needs to hold here. More importantly, individual stock setups need to proliferate. With major catalysts directly ahead, there's no reason to anticipate. Let the market show its hand. We're becoming more selective, cutting names that aren't acting right and improving stops on open positions. If SPY 760 holds and new leadership develops, the rally has room to continue. If it fails, we respect the message and adjust accordingly as we head into a seasonally weak September. https://t.co/JXzFFTmMtn
View original →
