📰 Two Hours Later: The CPI Calm Is Already Gone
This morning's post at 10:45 AM ended with: "The CPI monster didn't bite today. But it's still in the room. And it's hungry."
It didn't take long. Two hours after the market exhaled on tame core CPI, the University of Michigan dropped its preliminary April consumer sentiment reading: 47.6. That's not just bad. That's a record low. Lower than COVID. Lower than the 2008 financial crisis. American consumers haven't felt this miserable about the economy since they started asking the question.
Meanwhile, the Dow is down 0.5%. The S&P is flat. Only the Nasdaq is hanging on, up 0.2%, propped up by a semiconductor surge — Broadcom +5%, NVIDIA +2.4%. The CPI relief rally lasted about as long as a ceasefire in the Middle East. Which brings us to...
📊 Score: 4.95. One Tick From the Nuclear Button.
The morning post called it: "If QQQ keeps rallying, the score will subtract more points — pushing toward 4.95." QQQ pushed to $612.60 at 11:00 AM, and the score obliged.
Here's the two-hour slide:
- 8:49 AM: Score 5.02 (post-CPI, unchanged from ref)
- 10:47 AM: Score 4.96 — QQQ at $612.60. Price levels doing their thing.
- 11:48 AM: Score 4.95 — QQQ at ~$611. The floor of High Risk.
Ref: Still 5.02 (Apr 9, 2:50 PM). No rebalance — 4.95 is a 0.07 move from ref, but it's still inside the High Risk range (4.95–5.04), so the 0.07 rule doesn't trigger. The allocation hasn't changed.
But here's what matters: The Extreme Risk-Off gateway sits at 4.94. One tick below current. If the score drops one more notch, the gateway fires — 100% SQQQ, the most aggressive short signal the model has. That's the nuclear option, and we're standing at the launch console.
Next up: 5.09 (ref + 0.07 into Cautious). Next down: Below 4.95 — Extreme Risk-Off gateway, fires on contact. The asymmetry is brutal: 0.14 to ease up, 0.01 to go all-in short.
🛡️ EMA Override: Still the Bodyguard
The raw signal says 50% SQQQ / 50% Cash. The score is one tick from saying 100% SQQQ. And the final recommendation? 100% QQQ.
QQQ at $611.27 (11:30 AM). EMA 70 at $601.83. That's a $9.44 cushion — actually wider than yesterday's $8.83. The override doesn't care that the score is screaming. It cares about one thing: is price above the 70 EMA? Yes. Then stay long. Backtesting says uptrends are uptrends until they aren't, and the EMA says this one isn't over.
But think about what's happening here. The score — which balances macro and price — is at its most defensive reading since the 5.05 gateway fired on Wednesday. The trend filter — which only reads price — says everything is fine. One of them is going to be wrong. The EMA override has been right for eight straight days. The score is saying those eight days have made QQQ expensive relative to reality. This tension resolves one of two ways: QQQ pulls back to justify the score, or the macro improves to justify QQQ. Something has to give.
🇮🇷 Iran: Vance Heads to Pakistan, Trump Rattles the Saber
The ceasefire theater continues. VP Vance is leading a US delegation to Islamabad this weekend for what's being framed as high-stakes peace talks. Meanwhile, Trump accused Iran of "doing a very poor job" of reopening the Strait of Hormuz and threatened military action if talks fail. Classic good cop, bad cop — except both cops are from the same administration.
The Strait remains effectively closed. Only 22 ships have passed since Tuesday versus hundreds per day normally. Iran is charging $1 million per ship in tolls. Israel and Hezbollah exchanged strikes overnight, which Iran says violates the ceasefire. Oil is back at $99 WTI.
This is the backdrop against which QQQ is trading above $611. The market has decided the war premium is priced in. The score disagrees. Consumer sentiment at a literal record low disagrees. At some point, the market runs out of things to ignore.
🎯 My Take: The Market Is Running on Fumes and Semiconductors
Strip out Broadcom and NVIDIA, and today is red across the board. The Dow is down half a percent. Small caps are mixed. Insurance stocks are getting hammered on private credit warnings. And consumers just told the University of Michigan they're more pessimistic than they were during a literal pandemic.
But Broadcom is up 5% and NVIDIA is up 2.4%, and that's enough to keep the Nasdaq green and the vibes positive. This is a one-sector market right now. Semis are carrying everything on their back, and when the rest of the market looks like this, that's not strength — that's concentration risk.
The morning post was right that the CPI core number (2.6%) was a relief. But the market moved on fast — too fast. Consumer sentiment at 47.6 is genuinely alarming. People don't spend when they feel this bad about the economy. And if spending slows, corporate earnings slow, and then we find out whether QQQ at $611 was justified or just momentum masquerading as conviction.
The score at 4.95 is saying what the consumer sentiment number is screaming: the vibes are terrible. The EMA override is saying: but the chart looks fine. I know which one I'd trust on a six-month horizon. But right now, today, the trend is the trend. 100% QQQ until $601.83 breaks. Just don't confuse the override for confidence.