📊 Score Drops to Cautious at 5.13 — While Markets Party, the Model Goes the Other Way
Friday I flagged that the score was "one bad day from going short." Well, it didn't even need a bad day. While the S&P rallied +1.01% and the Nasdaq popped +1.22%, the Edge Of Markets score quietly slipped from the weekend's 5.16-5.17 (Neutral) down to 5.13 (Cautious: 40% SQQQ / 60% Cash).
The intraday path tells the story: the score opened at 5.13 this morning, dipped to 5.12 at 10:52 AM, bounced back to 5.13 at 10:34, then kept ping-ponging between 5.12 and 5.13 all session. It never even attempted a return to 5.15 or higher. The model has made up its mind.
QQQ closed at $600.38 (up from Friday's $593.72), but it's still $9.58 below the 70-day EMA of $609.96. Below the EMA, no override — we follow the score.
Final Recommendation: 40% SQQQ / 60% Cash
The market rallied 1%. The model went more defensive. One of them is wrong. History says it's usually the one celebrating a one-day bounce in a downtrend.
🛢️ Oil Drops 5% to $95.50 — But "Relief" Is Relative When Gas Was $65 a Month Ago
The big catalyst for today's bounce: WTI crude fell 5.3% to $95.50 after Treasury Secretary Scott Bessent said the U.S. would allow Iranian oil tankers to pass through the Strait of Hormuz. Brent pulled back from $103 toward $99-100.
Sounds great, right? Let's zoom out. Oil was at ~$65 in late February before the Iran crisis. It's still up roughly 45% in three weeks. A 5% dip from $100+ doesn't fix the supply shock — it buys time. And time isn't a solution when only 5 ships are transiting the Strait of Hormuz daily versus a historical average of 138.
Trump is asking China, Japan, France, and the UK to help reopen the strait with naval escorts. So far? Crickets. Not one country has publicly committed forces. The Hormuz problem isn't solved — today was just the market deciding to take a breather from panicking about it.
Airlines and transports rallied hard on the dip: Boeing, American Airlines, and the broader transport sector caught a bid. But these are the same stocks that'll give it all back the minute oil ticks above $100 again. Which, based on current supply dynamics, could be tomorrow.
🤖 Jensen Huang Says $1 Trillion in AI Chip Revenue Through 2027 — The Market Ate It Up
Nvidia's GTC conference kicked off today with CEO Jensen Huang delivering his annual leather-jacket keynote in San Jose. The headline: Nvidia expects $1 trillion in cumulative purchase orders between Blackwell and Vera Rubin GPU architectures through 2027. That's up from the $500 billion projection the company shared last year.
The market loved it. Nvidia led the Nasdaq higher, and megacap tech broadly caught a bid — Meta and the AI infrastructure plays all rode the wave. When Jensen speaks, the market listens.
Here's the thing though: Nvidia posted $68.1 billion in Q4 revenue (up 73% YoY), and this quarter is tracking toward ~$78 billion (up 77%). The growth is real, it's staggering, and it's not slowing down. But a $1 trillion projection through 2027 is a forward promise, not a delivered result. We've seen this movie before — big GTC numbers, stock rips, then the market remembers that oil is at $95 and the Fed meets tomorrow.
The AI trade is the only thing keeping this market from looking much worse. Strip out Nvidia, Meta, and the semiconductor complex, and today's rally shrinks considerably. One sector can't carry a market forever — especially when the macro backdrop is this ugly.
🏦 Fed Meeting Starts Tomorrow — And Nobody Expects Anything Good
The FOMC kicks off its two-day meeting tomorrow, with the rate decision and updated dot plot dropping Wednesday at 2 PM ET. The consensus is locked in: rates stay at current levels. No cut. No hike. Just vibes and uncertainty.
But the real drama isn't the rate decision — it's the Summary of Economic Projections (the dot plot). This is the quarterly release where each Fed official shows where they think rates, inflation, GDP, and unemployment will be at year-end. Given that:
- Oil has surged 40%+ in three weeks, threatening to push inflation higher
- GDP just got revised down to 0.7%
- The jobs market shed 92K jobs in February
- Core PCE is already creeping higher before the oil shock's full impact
...the dot plot could get ugly. Some economists are now doubting the Fed will cut at all in 2026. If the dots shift hawkish — fewer cuts projected, higher inflation forecasts — Wednesday afternoon could erase today's entire rally and then some.
The Fed is stuck. Cut rates and risk reigniting inflation from the oil shock. Hold rates and watch the economy stall further. There's no good option, and Powell's press conference Wednesday will be an exercise in saying nothing while markets hang on every word.
🎯 My Take: The Rally Is Real. The Problems Are Realer.
I get it. After three straight weeks of losses and a 5% drawdown, a 1% bounce feels like oxygen. Oil dipping below $96, Jensen promising a trillion dollars of AI revenue, crypto catching a bid — it's a cocktail of dopamine for a beaten-down market.
But the score went the other direction today. From Neutral to Cautious. From 70% cash to 60% cash + 40% short. Let that register: the market's best day in a week, and the model added short exposure.
Why? Because the underlying economic data didn't improve today. GDP is still 0.7%. Oil is still at $95.50 — down from $100 but up 45% from a month ago. The Strait of Hormuz is still effectively closed. The Fed still can't cut rates. Consumer sentiment is still at its 2026 low. None of that changed because Jensen Huang wore a leather jacket in San Jose.
On Friday, I said "the biggest risk right now isn't being too cautious — it's jumping back in too early. The market dangled a 0.9% gain in front of dip-buyers, then ripped it away." Today the market dangled 1%. Let's see if tomorrow's a repeat.
The model is making a statement: this rally doesn't have legs. And with the Fed decision Wednesday, there's a clear catalyst for the next move. I'd rather be 60% cash and 40% short going into that than chasing a one-day bounce.
⚠️ Bottom Line: One-Day Bounces Don't Fix Three-Week Downtrends
Today was a relief rally. Relief rallies happen in downtrends — they're the norm, not the exception. The S&P is still down 4%+ from its highs. QQQ is still $10 below its 70 EMA. The score just crossed from Neutral to Cautious. And the biggest macro event of the month lands in 48 hours.
Key levels to watch:
- Fed dot plot (Wednesday 2 PM ET): If dots show fewer cuts and higher inflation projections, expect a selloff
- WTI $100: Today's dip was nice, but if oil reclaims $100 the relief trade is over
- QQQ $609.96 (70 EMA): Still $10 below — reclaiming this would be the first real bullish signal in weeks
- Score 5.15: The line between Cautious and Neutral — we're on the wrong side of it now
- S&P 6,600: Friday's close was 6,651 — a break below 6,600 and the correction talk gets loud
The score at 5.13 (40% SQQQ / 60% Cash) is telling you: enjoy the green day, but don't confuse a bounce for a bottom. The Fed has the next word, and the fundamentals still stink.