Since late May, 94 of the 106 levels we’ve published and graded did what the note said they’d do. Last week added 6 for 6. Sunday’s pivot at 7,750 was reclaimed Tuesday, on the rule. Wednesday’s note said the stops sat under 7,704.50, and Thursday ran them. It said 7,650 was the best-priced buy if it held, and Friday’s low was 7,648.50, with a 45-pt bounce. We never got a fill we liked, so we were flat all week. In a week where the index gave back everything it made, flat was the trade.
The week itself: ES settled 7,669 Friday, down 32. The S&P 500 lost 0.5%, its second straight losing week. Three straight higher closes into Wednesday, then Thursday took it all back: the Nasdaq fell 2.6%, its worst day since June, while the Dow finished the week up 0.4%. Money rotated. It didn’t leave.
What did it: Meta (META) raised its spending floor and lost 7% Thursday. Lam Research (LRCX) beat and raised and lost 12%. Tesla (TSLA) cut its spending plan. Brent settled $116.72, its highest since April, and the 10-year closed the week at 5.00%. The AI buyer got sold for spending, the AI supplier got sold for depending on it, and oil put a floor under yields.
The second-level read is in numbers nobody’s trading on. With a quarter of the S&P 500 reported, 83% have beaten, earnings are growing about 29%, and the index net margin is the second-highest in at least 15 years. The forward P/E has slipped to 18.7, under its 5-year average. Earnings aren’t the problem. The market is paying less for them, and that’s a vote on rates and on who finances the AI build. Wednesday answers both at once: the Fed at 2:00, Microsoft and Alphabet after the close.
The plan’s simple this week. One line decides it, and we don’t trade until it does.
Free chart of the week: the least long in 5 years. Hedge funds that pick stocks have cut their net exposure to the lowest reading in 5 years, while their gross keeps climbing. Low net with rising gross means they’re adding shorts. That’s fuel, and it’s why we won’t be shorting a calm index at a line.
Below the line: last week graded on both maps, the score, this week’s levels and the 3 paths, the playbook, the setups, what the Fed and the hyperscalers are really a vote on, and the bigger picture on holding ideas longer with the index as the hedge.
