Sunday’s research showed three things that did not line up with a market sitting under resistance. Semis were already at highs. Cyclicals were leading defensives. Earnings estimates were up 8% while the index was down 5%. Every other time that gap opened since 1990, price closed it higher. Funds were light, shorts were heavy, and the positioning stack was the cleanest since February. We wrote: “Either estimates are wrong or price is wrong. The bet here is that price catches up.”
Monday dipped, we bought it, and it never looked back. Tuesday cleared 7,000. Wednesday printed a new all-time high at 7,073, up 208 points from Sunday. The leaders gave the clue. They usually do.
The Lie moves to +3 (weak dips). Was +2 Sunday. Software just posted its best week of the year. The asterisk: equal-weight lagged cap-weight by 75 bp Wednesday. The rally is real but narrow at the margin.
The scorecard, the game plan, and five updated levels are below the fold.
