can we trend again pls

Two down days got the bears excited. Monday got the bulls back involved.

Then yesterday they both set off for the beach…

Turn that uptrend back on!

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Consolidation After the Rally

Markets showed typical post-bounce behaviour yesterday with minor weakness early on, giving way to a little more weakness on ISM services data that briefly rattled sentiment.

The S&P remains well above key support levels, and any serious bearish case would require breaks of recent lows and the 50-day moving average…

That’s a high bar given current conditions.

Small caps are quietly outperforming, which could signal healthy market broadening if it continues.

With liquidity seasonally lower and Trump policy crosscurrents, this consolidation feels normal rather than concerning.

Fed Path Clears as Data Softens

The ISM services reading showed expansion slowing to 50.1, with the employment component contracting for the fourth time in five months.

However, digging beyond headlines, some comments reveal that the employment weakness could be about difficulty finding qualified workers rather than demand destruction.

Labour issues potentially linked to immigration policy may be a factor in keeping the labour market balanced.

This nuanced ‘weakness’ still supports the Fed’s dovish tilt, with September cut odds holding near 85%, despite another new high in the prices paid metric (69.9).

More Fed speakers today should cement expectations for policy support…

AI Capex Story Intact Despite Mixed Signals

AMD fell 5% pre-market after solid but unspectacular results, highlighting the challenge of living up to AI hype when new chip launches haven’t had time to generate meaningful revenue.

The data centre GPU battle with Nvidia remains in its very early innings.

Meanwhile, Arista Networks surged 13% on strong networking equipment demand, showing the AI infrastructure build-out continues across multiple layers.

Caterpillar’s 28% jump in power generation sales reinforces the broad capex theme from a different angle.

Earnings Divergence: Quality Rewarded, Hype Punished

Post-earnings moves remain polarised, with genuine surprises getting sustained momentum while story stocks face reality checks.

Super Micro got hammered after a disappointing quarter, ending its short-squeeze narrative.

Snap continues its tradition of permanent disappointment, down another 15% after earnings.

Idexx’s 27% pet healthcare surge yesterday looks to be fading, suggesting sector-specific beats lack staying power without broader thematic support.

The market is increasingly selective about which earnings surprises deserve sustained premiums.

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Trend Following Still Pays, But Pick Your Spots

AMD’s pullback despite decent fundamentals & guidance highlights how even quality names can disappoint when expectations run ahead of delivery timelines.

The key lesson remains: don’t fade genuine earnings momentum (like Reddit’s continued strength), but be wary of chasing yesterday’s surprise without broader sector tailwinds.

Companies with AI & infrastructure exposure continue to work better than those merely riding the hype wave.

Position Sizing and Sector Focus Critical

With earnings season highlighting the gap between genuine growth stories and overhyped themes, stock picking matters more than broad market timing.

Focus remains on established AI infrastructure plays rather than speculative adjacencies.

Context Matters

Buyback headlines touting record levels are misleading.

Strip out three banks’ Basel III-related announcements and buybacks are simply, normal.

Stay disciplined on position sizing as market breadth improves but individual stock dispersion remains high.

The market’s showing healthy consolidation rather than distribution, with the Fed backstop increasingly likely.

Pick quality over hope, and let the strong trends do the work for you.

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