Hi YXI friends,

The July CPI ended up as a catalyst to the upside for equities. While journalists interpret this as “equities rallying on Fed cut bets”, the reality is that the rates market hardly moved after the news. The Fed was not significantly more likely to cut more rates due to this print.

So why did the market rally?

Liquidity, positioning, and the removal of uncertainty.

Due to the straight up nature of the market recovery since late April, a lot of investors got left behind, hesitant to chase after new highs. They kept looking for the next economic data / geopolitical news for the potential dip buying opportunity.

We had that brief dipping moment at Nonfarm. But the higher the market goes, the more anxious investors get about their underperformance, and the more eager they are to join the rally when a piece of uncertainty (like inflation data) gets removed. CPI could have surprised to the upside modestly and investors would still have bought the initial dip.

Thankfully, we have kept our opinions unbiased and caught the risk-on trend back in April and May to avoid the conundrum that the sideline money has to face.

Table of Contents

• 1. July CPI

• 2. SPY, QQQ

• 3. FOMC Projections

• 4. Summary Of Today’s 4-3-2-1 Ratings

• 5. USO

• 6. 30-Year Treasury Yield & TLT

• 7. Bitcoin (BTC)

• 8. Gold (GLD, GDX)

• 9. Magnificent 7 Stocks

  • Apple

  • Amazon

  • Alphabet

  • Meta

  • Microsoft

  • Tesla

• 10. Other

  • SOXX

  • PLTR

• 11. Trade Updates & Monitoring

• 12. Notable ETF Flows From Previous Day

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

Please check out our glossary for explaining the acronyms, financial terminology, and economic data.

1. July CPI

Headline and Core CPI

Both the Headline and Core CPI figures came in line with consensus in their MoM changes. However, the YoY was a tick lower than expected for the Headline and a tick higher than expected for Core.

In the grand scheme of things, this is not a dramatic drift from June.

The Headline CPI reads 2.7% YoY, flat from June and stopping an upward trend since April, thanks to lower oil prices in July.

Core CPI is 3.1% higher YoY. It’s still higher than what the Fed is comfortable with, so unlikely pushes the Fed to cut on its own merit.

A breakdown in the MoM figures suggest that Medical Care services and Transportation services both went up significantly in the past month, driving the Core CPI higher. Shelter costs have remained the same pace overall as June.

On the back of the CPI, we actually saw very little movement in rates - the Fed funds futures only added 5bp of rate cut bet for 2026.

Equities, however, rallied strongly, most notably for IWM. IWM closed up 3% on Tuesday, a 2-standard-deviation move.

SPY and QQQ are at their all time highs, while META also showed up with a strong move.

(Click here for the past YXI article explaining many of the components of the dashboard.)

2. SPY, QQQ

SPY Intraday

The chart above highlights all of the intraday returns of the past 20 trading sessions. The orange line is yesterday’s behaviour. We observe that SPY initially actually sold off after a high open, but buyers definitively stepped in at exactly 10am to push the rest of the day higher.

Intraday 5-min returns in past 20 sessions

The chart above aggregates the average returns of each 5-minute slots during the regular market hours of SPY to show when the buying interest is at its strongest.

There seems a strong buying interest right after 11:40, a hump you could also observe via the individual intraday returns in the first chart. There could be some systematic accumulation in this period.

SPY intraday volume in 5-min windows, past 20 sessions

The volume for SPY typically spikes right in the final 30 minutes before the close thanks to market on close orders and closures of day-positions.

SPY (https://www.tradingview.com/x/aSge6udc/)

Looking at the price technicals, SPY is pushing through a bigger extension in wave 3, now towards the 200% extension of wave 1 at $659 as the first target.

QQQ (https://www.tradingview.com/x/vLR8Os72/)

QQQ has now achieved the powerful wave 3 target of 200% extension of wave 1 at $580.

A lot of investors are feeling FOMO at these highs, which is why we see laggards starting to pick up speed in recent days. People don’t like buying at new highs, but feel its “safer” to buy names that are still below their February highs and have room to chase.

3. FOMC Projections

We use the Fed Funds futures market to understand the market expectations of future FOMC interest rate decisions.

Futures priced in another 5bp of cuts into 2026 following the CPI. The market now leans towards 5 cuts in the next 12 months.

4. Summary Of Today’s 4-3-2-1 Ratings

SPY, QQQ, BTC, AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA, PLTR, TLT

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