The raw score has spent another morning warning us away from risk. The portfolio has spent the morning making money anyway. That is not a contradiction. It is the reason the system has more than one signal.
🧾 Wholesale Inflation Handed Tech Another Green Slip
June producer prices fell 0.3% month over month after rising 0.6% in May. The cleaner measure excluding food, energy, and trade services increased just 0.1%. Add that to Tuesday's cool CPI and the market has two straight inflation reports saying the same thing: last month's pipeline pressure eased.
QQQ traded near $724 shortly after the open, up roughly 0.6% from Tuesday's close. TQQQ was up about 1.4%. Even with another overnight round of U.S.-Iran strikes, lower inflation still won the opening vote.
Do not turn one friendly print into a victory parade. Headline PPI is still 5.5% higher than a year ago, and June's drop leaned heavily on a 6.4% fall in energy prices. The disinflation is real. So is the rearview mirror.
🏁 The Overlay Is Beating Both the Score and QQQ
The economic score rose from 4.51 at 6:01 AM ET, with QQQ near $722.96, to 4.56 at 8:35 AM ET, with QQQ near $723.16. That is still Extreme Risk-Off and still not a new score trade. The base ref remains 4.60 from July 6 at 8:31 AM ET; the live position ignores it while the trend override is active.
QQQ is above EMA60 at $704.10, so the actual allocation remains 75% QQQ / 25% TQQQ. The broker was aligned at 9:46 AM ET. No EMA25 stretch, bear-stretch bonus, or rebound lockout altered the book. The next real decisions are a break below EMA60 or an upside score gateway at 5.35.
Now the only grade that matters. When the 75/25 book was re-established on July 8 at 9:01 AM ET, QQQ was $703.92 and the tracked portfolio was worth $795.91. This morning QQQ was near $724 and the portfolio was about $827.12. That is roughly 3.9% for the system versus 2.9% for QQQ—an outperformance of about 1.1 percentage points.
The raw score is losing this trade. The portfolio is not. If a system cannot survive one input being wrong, it is not a system; it is a horoscope with decimals.
🛢️ June Energy Relief Just Met July's Blockade
The U.S. reimposed its blockade on Iranian ports and intensified strikes overnight. Iran's Revolutionary Guard answered by threatening to halt energy exports across the Middle East. This is not diplomatic theater around a minor shipping lane: roughly one-fifth of global oil and gas trade normally moves through Hormuz.
Brent traded near $85.36 this morning, while Nasdaq futures rose and Morgan Stanley reported record quarterly revenue and profit. That mix tells you why the tape keeps leaning toward tech: inflation data and earnings are immediate, while the oil shock is still being priced as a threat rather than a full economic hit.
I think that patience is rational—for now. But June PPI got its biggest help from gasoline falling 12%. If Brent stays in the mid-$80s or the strait loses more traffic, July's producer-price report will not arrive carrying the same gift basket.
🎯 My Take: The Best Signal Is Currently a Veto
I am not going to pretend the raw score deserves credit for this rally. It does not. Extreme Risk-Off while QQQ gains nearly 3% is a losing call. The composite system deserves the credit because its trend layer vetoed that call, stayed long, and added enough TQQQ to beat the benchmark.
That distinction matters more than any single score tick. Good portfolio construction is not about finding one indicator that never misses. It is about making sure a miss cannot hijack the whole book. Right now EMA60 is doing exactly that job.
Stay long while trend holds, but keep the celebration honest. The portfolio is winning. The raw score still owes us an explanation.