Yo Pit Crazies,

Last week I went live to explain why I thought the SPDR S&P 500 ETF Trust (SPY) could moon 3% in a couple of days. The market was so on edge from oil prices and the AI Doomsday scenario that any good news, like the Fed saying things are rosy and not cutting rates, would send stocks flying.

Well… some of that happened.

The SPY did move 3% in 4 days trough to peak.

Oil prices dropped for some inexplicable reasons, likely the Houthis and Iran wanting to talk again.

The Fed did say things are strong from AI growth but inflation is still a thing. Rates went up and likely will rise another tick by year end.

But they might not.

Here is what happened no one thought of

The FOMC setting a clear, non-stimulating policy is what traders want to hear.

Stocks like to rally off a stable horizon. And Fed Chair Warsh did that.

President Trump said no deal in Iran is likely before the midterms. That means he is staying the course and keeping the pressure on. Markets can understand that.

The trade that surprised me was that most of the Mag 7 was unchanged for the year going into Friday. Microsoft (MSFT), Alphabet (GOOGL) et al were going nowhere fast in 2026. Apple Inc (AAPL) was doing ok but they are mostly out of the AI game.

See the two charts below:

MSFT 1-Year Chart

GOOGL 1-Year Chart

AI is the big growth story.

The Iran Conflict is the big wild card. Having the Mag 7 on wait and see mode the big investors got a second boost of confidence. My guess? It was from the latter as the AI unfolds mostly in the right direction.

All of those will need energy.

The Perfect Storm came and went and the skies look clear.

Frank Gregory is looking into that. He has some ideas. Maybe Frank can help.

Hope this was helpful,

Andrew Giovinazzi