Friday, September 11, 2026
Today delivered the response Thursday’s breakdown needed to avoid becoming something more serious.
The S&P 500 rallied 0.86% to 7656.98, reclaiming the 7620 August breakout level after spending only one session beneath it. Russell 2000 also recovered 2900, nine of eleven S&P 500 sectors advanced, semiconductor and AI-infrastructure stocks reasserted leadership, and volatility fell sharply.
That means the latest attempt to establish a bull trap above the August breakout failed to produce sustained downside follow-through.
But the test is far from being over.
The S&P 500 still needs to hold the reclaim, get back above 7700, and ultimately push through the 7770–7816 area before the short-term structure is convincingly repaired.
Meanwhile, the macro setup increasingly has become more challenging: real: Brent is still above $100, the 10-year Treasury yield finished around 4.98%, core CPI ran hotter than expected and markets now assign roughly an 85%–90% probability to a Fed hike next Wednesday.
So Friday improved the technical picture. But, only slightly.
It did not remove the challenging macro setup.
In other words, my friends, to be continued!
Executive Read
VIX: 15.88: -11% Friday; +9% for the week
2-year Treasury: 4.64%: +9 bps Friday; +26 bps for the week
10-year Treasury: 4.98%: +3 bps Friday; +20 bps for the week
WTI: $100.08: -2.3% Friday; +10% for the week
Brent: $104.49: roughly -3% Friday; still sharply higher for the week
August CPI: +0.4% month over month; +3.4% year over year
Core CPI: +0.3% month over month; +2.4% year over year
Fed: roughly 86.5% probability of a 25-basis-point hike next Wednesday.
Bias: Friday slightly improved the short-term technical picture, but the weekly numbers show why caution remains appropriate. The S&P 500 recovered well, while small and midcaps still suffered weekly losses and Treasury yields rose sharply.
Main Market Message
The most important development Friday was not simply that stocks rallied.
It was where they rallied from.
Thursday’s close below 7620 gave sellers another opportunity to prove that the August breakout had trapped buyers. Instead, the breakdown lasted one session before buyers pushed the S&P 500 back above the old breakout level.
That is exactly why a break should never be confused with confirmation.
The sequence was:
Break 7620 → sellers fail to generate follow-through → buyers reclaim 7620
That raises the possibility that Thursday trapped sellers, not buyers.
But a true bear-trap reversal still needs follow-through of its own. Holding 7620 is step one. Reclaiming 7700 is step two. A move through 7770–7816 would provide much stronger evidence that the latest correction has run its course.
Friday also reinforced the macro framework we have used all week.
For several sessions:
oil ↑ + yields ↑ = equity pressure
Friday finally interrupted that combination.
Treasury yields remained elevated, but oil fell almost 3%. That was enough relief for investors to buy stocks despite CPI increasing the probability of another Fed hike.
The market is telling us that oil remains the variable most capable of changing the tone quickly.
Market Snapshot
Friday’s rebound was much healthier internally than Thursday’s decline.
Nine of eleven S&P 500 sectors advanced, communication services and technology led, industrials and consumer discretionary also gained more than 1%, and advancing stocks outnumbered decliners by more than two to one within the S&P 500.
But one strong session should not obscure what happened during the week.
The S&P 500 lost 0.8%, Nasdaq fell 0.7%, Dow declined 1.6%, Russell 2000 dropped 2.4%, and the S&P MidCap 400 fell 1.9%. Oil surged roughly 10% and the 10-year Treasury yield climbed about 20 basis points to 4.98%.
Friday therefore repaired some of the deterioration.
It did not erase it. Far from it as the 5-day, 30 minute chart clearly shows.
Key Takeaways
1) The latest bull-trap attempt was rejected
Thursday’s break beneath 7620 did not produce sustained downside follow-through.
Friday reclaimed the level.
That changes the immediate sequence to:
Hold 7620 → reclaim 7700 → attack 7770–7816
If that happens, the path toward 8003 begins reopening.
If price loses 7620 again, the path toward 7462 begins again.
2) Breadth is damaged—but also extremely oversold
Only 37.7% of S&P 500 stocks were above their 50-day moving averages and 55.5% were above their 200-day moving averages heading into Friday. Short-term breadth had deteriorated to its weakest levels since spring.
But the other side of that story is important.
The 10-day advance/decline line reached the 3rd percentile Thursday, its first oversold reading in more than four months. Historically, extremely weak breadth has often been followed by better-than-normal forward S&P 500 returns, not necessarily additional immediate deterioration.
And the longer-term breadth trend remains above its 200-day moving average.
So breadth should increase selectivity.
It should not become a mechanical sell signal.
3) CPI was sticky—but the composition was less alarming than the headline reaction
Headline CPI rose 0.4%, while core CPI increased 0.3% versus 0.2% expected.
Yet 60% of the monthly core increase came from less than 5% of the Core CPI basket, with wireless telephone services alone accounting for roughly one-third of the move. Strip that category out, and core CPI rose about 0.2%. Core CPI excluding shelter was running at 2.0% year over year.
That does not mean inflation is solved.
It does mean the report was more nuanced than “inflation is reaccelerating everywhere.”
4) Consumer inflation expectations are the more uncomfortable signal
September University of Michigan sentiment fell sharply to 47.8 from 51.7, while one-year inflation expectations climbed to 4.6% from 4.0% and five-year expectations moved to 3.4%.
That creates a genuine Fed credibility problem.
Even if some CPI components are behaving better beneath the surface, policymakers cannot comfortably ignore rising public inflation expectations while oil remains above $100.
5) AI infrastructure remains one of the strongest areas of economic demand
Oracle’s cloud infrastructure revenue grew 121%, it signed more than $30 billion of new AI-cloud contracts, and maintained its large capital-spending plans.
Oracle itself fell 1.82%, but DELL jumped 11.95% and HPE 12.42% as investors pushed capital toward the companies supplying servers, networking and storage into the buildout.
That price action may be more informative than Oracle’s headline numbers.
The market believes the spending is real.
It is still debating who ultimately earns the best return from it.
AI and Technology
The AI trade remains intact, but it is becoming increasingly discriminating.
Build
Friday reinforced the strength of physical infrastructure.
DELL and HPE were among the clearest beneficiaries of Oracle’s cloud-capacity plans, validating continued demand for servers, networking, storage and other data-center hardware.
Memory and semiconductors also bounced, but neither group has completely repaired its summer correction. Both memory and SOX are still confronting important resistance near their 50-day moving averages and prior downtrend lines.
That argues for respecting the rebound without chasing it.
Connect
The Connect layer remains one of the best places to continue deeper research:
QCOM, GLW, LITE, COHR, CIEN, HPE
This week gave the theme meaningful fundamental confirmation through Corning’s multibillion-dollar Verizon agreement and Oracle’s continued infrastructure spending.
The question remains:
Who supplies what is required to connect millions of processors efficiently?
Power
The bottleneck does not end with electricity generation.
It increasingly includes:
generation → transmission → land → permitting → cooling → community acceptance → data centers
The faster AI capacity is announced, the more valuable the constrained pieces of that chain potentially become.
Software
Software remains much more complicated.
The semiconductor index gained 0.8% for the week, while the software ETF fell 2.9%.
That divergence supports one of the most useful AI questions we have developed:
Does AI create more demand for what this company sells—or make the product easier to replace?
Within software itself, the market is differentiating aggressively. Cybersecurity and IT-operations names have been among the strongest rebound leaders while legacy and more vulnerable application software has struggled.
Full-Stack AI Economics
The strongest full-stack candidates remain MSFT, GOOGL and AMZN, with META and ORCL offering somewhat different versions.
Oracle is especially instructive.
The company can show extraordinary AI demand and still have its stock fall because investors are simultaneously asking:
What happens to margins?
How much capital must be raised?
When does free cash flow recover?
What return will the spending ultimately earn?
That is where the AI debate is heading.
Important Stock Moves
Dell Technologies (DELL): +11.95%. Oracle’s extraordinary cloud infrastructure growth provided direct confirmation that AI-server demand remains powerful. The move deserves respect, but an 11% one-day surge is better treated as a breakout to monitor than one to chase.
Hewlett Packard Enterprise (HPE): +12.42%. HPE provided another strong read-through from Oracle’s spending plans, with its networking exposure making it particularly relevant to both Build and Connect.
Oracle (ORCL): -1.82%. The most interesting reaction of the day. Cloud demand was extraordinary, but the stock erased a double-digit early gain as investors returned to the questions surrounding capital intensity, negative free cash flow and eventual return on invested capital.
Apple (AAPL): +1.75%. Apple extended the post-event recovery and helped support mega-cap growth. The stock has now cleared shorter-term resistance following the launch of the foldable iPhone Duo.
Alphabet (GOOGL): +1.53%. Alphabet participated in Friday’s broad technology recovery after being pressured earlier in the week by another substantial AI-infrastructure spending commitment.
The larger takeaway is straightforward:
Investors are still paying for AI demand—but they are increasingly distinguishing between the companies spending the money and the companies collecting it.
Sector Leadership
Friday’s leadership was broad enough to matter.
Communication services, information technology, industrials and consumer discretionary all gained more than 1%, while healthcare and utilities were the only sectors to finish lower.
The weekly picture is less attractive.
Energy was one of just two meaningful winners for the week, while healthcare fell 3.6%, financials declined 1.5%, consumer discretionary lost 1.2%, industrials fell 1.1% and real estate dropped 1.1%.
Friday therefore looks like early repair, not repaired breadth.
One particularly encouraging point is that mega-cap leadership never completely broke. The Magnificent 7 (MAGS) finished the week just below new highs, with most of the trillion-dollar technology names still above their 50-day moving averages.
That continues giving the capitalization-weighted indexes an important source of support.
Leaders are holding the markets up while the rest wallow from interest rate, slowing growth fears.
Rates / Fed / Volatility
The 10-year Treasury finished around 4.98%, up roughly 20 basis points for the week, while the 2-year ended at 4.64%.
5% is now the most important macro threshold in the market.
But the bond selloff deserves more nuance than simply blaming inflation or government debt.
Much of the 2026 yield increase has been driven by higher expectations for the policy rate and higher real yields, reflecting stronger economic and labor-market expectations. Longer-term breakeven inflation expectations have remained comparatively subdued. Government debt supply still contributes to the term premium, but the evidence does not yet resemble a classic buyers’ strike or debt crisis.
There is nevertheless a structural fiscal problem behind the market. The fiscal-year-to-date deficit remains close to a record $1.97 trillion, while federal interest costs are up 13% year over year.
So the rates picture now has several components:
Fed expectations + real yields + stronger growth expectations + Treasury supply + inflation risk
Next Wednesday’s decision matters, but the message may matter more.
A quarter-point hike alone is probably manageable.
A Fed signaling the beginning of another sustained tightening cycle is much more difficult.
There is some useful historical perspective here. In the five recent hiking cycles that began with a 25-basis-point increase, stocks were lower one month later every time—but never lower one year later.
So a hike may create volatility without automatically ending the larger bull market.
Commodities and Dollar
Friday finally brought meaningful oil relief.
Brent retreated from an intraday weekly high near $110 to roughly $104.49, while WTI settled at $100.08. The decline followed reports that Gulf states and Iran may discuss shipping through the Strait of Hormuz.
But oil still gained roughly 9%–10% for the week.
And the geopolitical risk is broader than Hormuz alone. The Bab el-Mandeb and Saudi Arabia’s East-West pipeline have also become part of the supply-risk equation, meaning alternative routes themselves cannot be treated as completely secure.
The working framework remains:
Below $100 Brent: meaningful relief
$100–$105: elevated but manageable pressure
$105–$110: increasingly problematic for inflation and yields
$110–$120: materially stagflationary
Friday moved us in the right direction.
It did not solve the problem. Not by a long shot.
The dollar was little changed, while gold recovered modestly despite elevated real yields. The dominant cross-market signal remains oil + Treasury yields, not the dollar or gold.
Crypto
Bitcoin remained in the upper-$77000 area and did not provide strong confirmation of Friday’s equity rebound.
78000 remains the first reclaim, with 75000–76600 the more important support zone and 80000 followed by 81200–82000 as resistance.
Bitcoin recently produced its first golden cross since May 2025, but prior golden crosses have not consistently generated unusually strong forward returns.
Meanwhile, Ethereum (ETHA) finished its fourth straight week higher, testing a key level of resistance on an inverse H&S pattern.
Technical Picture
S&P 500 / SPY
Close: 7656.98
Primary support zone: 7580–7620
First reclaim: 7700
Stronger confirmation: 7770–7816
Major breakout: 7816
Measured objective: 8003
Failure zone: 7550–7500
Friday changed the technical interpretation considerably.
Thursday created another potential bull trap by closing below the August breakout.
Friday rejected it.
But the bear-trap reversal still needs confirmation.
Bullish path
Hold 7580–7620 → reclaim 7700 → push through 7770–7816 → 8003 returns to the roadmap
Bearish path
Lose 7620 again → fail the next reclaim → sustained downside follow-through → 7550–7500
The next test is therefore no longer simply 7620.
It is whether buyers can turn Friday’s reclaim into continued progress.
A break is not confirmation. Follow-through is confirmation.
Nasdaq 100 / QQQ
Close: 29368.44
Immediate reclaim: 29400–29500
Support: 29000–29200
Major resistance: 30000
Nasdaq 100 gained 0.91% Friday but still finished below the 29400–29500 area.
That leaves its repair slightly behind the S&P 500.
A move above 29500 improves the setup.
A break through 30000 would provide much stronger confirmation that growth leadership has regained control.
Russell 2000 / IWM
Close: 2903.94
Critical support: 2900
First reclaim: 2950
Major resistance: 3000
Russell 2000 reclaimed 2900 by only a few points.
That is better than Thursday.
It is not enough to declare small-cap participation repaired.
2950 is the next meaningful step.
Quality of the Move
Friday was more than a narrow mega-cap bounce.
Nine of eleven sectors advanced, market breadth was better than two-to-one positive, Russell 2000 and S&P 500 both reclaimed important levels, semiconductor and infrastructure leadership recovered, and VIX dropped back below 16. (Reuters)
But the weekly breadth damage remains substantial.
Only 37.7% of S&P 500 stocks were above their 50-day moving averages, the cumulative breadth trend has broken below its shorter-term trend, and small and midcaps still substantially underperformed for the week.
There is also a positioning wrinkle. Systematic and volatility-targeting strategies have been running moderately above normal equity exposure. That can provide incremental buying support if Friday’s reversal continues, but it can also accelerate selling if volatility rises and momentum rolls over again.
So the message is balanced:
short-term breadth is extremely oversold
but
the intermediate breadth picture still needs repair.
For next week:
Price first. Breadth second. The Fed is the catalyst.
Research
This is one of the more interesting studies I came across this past week.
Rapidly rising interest rates negatively impact many securities.
On the NYSE, there was a big jump in issues falling to 52-week lows, despite the S&P 500 holding up pretty well.
Similar spikes in net new lows (i.e. new highs minus new lows) while the S&P was still within 5% of its high have preceded weak returns. The biggest negative impact was focused within the first 2 months.
The S&P 500 is down this week, but the equal weighted index (RSP) took the brunt of the weakness, closing below its lower Bollinger Band for 3 straight days.
Short term was bumpy, but 2 and 3 months later, RSP was higher in 13 of 16 prior cases.
