The market had every excuse to break.
CPI ran hot Tuesday at 3.8%. PPI came in Wednesday at 6% year-over-year, the biggest monthly jump since March 2022, triple what economists expected. ES sold off on the print, then reversed every tick and closed at a new all-time high.
That is not bearish price action. Not yet. Above pivot worked again. That is the nature of a strong bull move: it does not let you in.
The problem is not price. The problem is positioning. Gross leverage is in the 98th percentile. IV is in the 16th percentile. Breadth is fading. And OPEX is two sessions away.
So the plan is simple: stay with the winners, stop chasing strength, and own cheap protection while the market is still offering it.
Two things drove the Wednesday reversal. Trump and Xi shook hands as this post goes to press, ES trading at 7,480 (lets see if anything signficant). The Beijing delegation (Jensen Huang, Elon Musk, Tim Cook, and Larry Fink) is the catalyst the market was pricing, and it just arrived. Cisco reported after the bell with record revenue of $15.84 billion, 12% growth, beat on revenue and earnings. CSCO jumped 12% in after-hours trading. Paul Tudor Jones said this week he is buying more AI baskets and compared the setup to Q4 1999 with another year or two of runway.
Our regime score, The Lie, stays at +1: cautiously constructive. Unchanged from Sunday. The Lie measures whether the price action is telling the truth or hiding stress underneath. Right now, price is strong but the internals are narrowing.
Below the fold: the updated ES level map, the exact support that flips the view, the hedge setup we still like, and the themes we would buy only on a pullback.
