Sunday said the week turned on whether ES could take back our pivot. It did. ES dipped to 7,651.75 Sunday night, a couple of points over our defensive line, and that’s still the low of the week. Monday’s open took the pivot back. Tuesday paid at the first hurdle. Wednesday’s Fed rally ran into the second hurdle and stalled there. Four of Sunday’s levels got tested, and all four did their job.
The Fed held at 3.75% to 4.00% in a 10 to 2 vote. Cook and Hammack wanted a hike. The statement upgraded growth to “strong,” and the market now prices about an 80% chance of a December hike. The 10-year went back over 5%. The S&P 500 still closed up 0.3% at 7,743.98. A hawkish hold that stocks take in stride says growth is winning the argument with rates, for now.
Then the two clouds reported. Microsoft (MSFT) beat on every line that counts: earnings of $4.89 a share against $4.72 expected, Azure up 48%, spending a bit lighter than feared, and $18.6 billion of free cash. It rose about 3% after hours. Alphabet (GOOGL) doubled its cloud business to about $31 billion and still missed earnings by almost a dollar a share, because it spent $51.4 billion in the quarter and burned $9.1 billion of cash. It fell about 9%.
ES spiked to 7,819.50 on Microsoft, dropped to 7,743.25 on Alphabet, and sits near 7,752. Same AI demand, opposite cash. The market has stopped asking whether the spending pays. It’s asking who turns it into cash.
Below the line: Sunday’s map graded, the score, the new box for Thursday and Friday, the three paths into Friday and what we do in each, the two ways Thursday’s data can go, three options ideas on the box, the setups re-marked, and a 3-minute video.
