Breadth Blows Out, Bulls In Charge

Another fantastic day for markets!

CPI fears were quashed yesterday, even though the print was in-line with expectations and services came in spicy.

Fed cuts are fully priced for September, let it ride until the music stops…

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Blowout Breadth as CPI Fuels Rally

Yesterday’s session was a market bull’s dream.

CPI delivered “good enough” data to greenlight September rate cuts, sending stocks surging in a spectacularly broad rally.

More than three-quarters of S&P 500 names closed green, with gains stretching across sectors: comms, tech, discretionary, and industrials, pretty much universal sector gains.

The risk-on mood was so pervasive that stock selection barely mattered - nearly everything went up.

Macro: Inflation Cooperative, Fed Cuts on Deck

Core and headline US inflation prints relieved policy hawks, coming in soft enough for markets to double down on September cut odds.

The slight stickiness in core services and shelter was offset by a lack of alarming details in goods data, and PPI is on tap tomorrow for further confirmation.

Debate lingers on whether rate cuts should be more than 25bps at a time & whether the Fed is easing with inflation still above target.

Weakness in the US labour market justifies a move, but the case for deep cuts is limited unless labour deteriorates faster.

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Flows & Sector Moves: Risk On, Trends Confirmed

Trend is king!

Bloom Energy extended its relentless run, as did Palantir, while Tesla and Meta delivered strong breakouts and new highs.

Intel merits a watch for White House-driven headlines; CEO risk and Trump commentary could swing the outlook, but price action is improving.

No rush, but it’s looking up again.

Micron’s raised guidance and premarket push confirm AI memory’s tailwind.

Meanwhile, Dell’s pushing on, Reddit remains a persistent outperformer, and American Eagle’s ad campaign has drawn trader attention, although the bounce has stalled for now.

Even Oklo bounced back on government funding news, despite the ‘earnings’ miss.

Earnings Recap: On and Oklo in the Spotlight

On Holdings caught a post-earnings bid, a surprise given the ambiguous numbers. Guidance was good, though premarket weakness reminds traders that competition still dogs the sector.

Oklo’s whipsaw on US government selection is another reminder that even revenue-light, speculative names can get headline-driven boosts.

Meta’s post-earnings breakout and Palantir’s all-time highs highlight that the market rewards strong guidance and follow-through, with prior momentum names (Reddit, Tesla) leading the pack.

Strategy: Don’t Fight the Tape, Beware Complacency

With breadth this wide and trend this durable, fading the rally is fighting the market’s current.

The biggest risk is not being in the game as FOMO ramps. Sideline risk is growing for both retail and professional money missing their year-to-date targets.

However, chasers should stay vigilant: the rally is built on “good enough” rather than “great,” and sudden news shocks or a yield curve steepening from deeper-than-expected cuts amid higher inflation could spark volatility.

Positioning Pulse: Pervasive Greed, Manage the Risks

Buyback windows, strong corporate flows, and residual CTA length offer ammunition for further upside, though tailwinds are gradually diminishing.

Keep riding trend leaders, but avoid getting over-leveraged.

Volatility is always one bad headline away. Stay nimble. Stay flexible.

Core positions in dominant winners like Meta, Tesla, Palantir, Bloom & Micron remain justified.

This daily note is only a glimpse of what we talk about every single day in the Fink Community.

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