The market chop is back, having started higher, but never gained traction, as most names continue to languish. The market has alternated for seven straight trading days.

Yesterday, the session was only off by 0.25%, as two of three growth sectors finished in the green.

Tiny gains in small-cap growth and momentum signal a slight rotation, but it was a wait-and-see day.

Crowd - But Who’s Leaving?

There are signs retail investors have been closing Artificial Intelligence (AI) trades, but fund managers have gotten long to the point that the trade is considered the “most crowded.”

Meanwhile, Commodity Trade Advisors (CTA) have raced with breakneck speed to catch up on the NASDAQ Composite trade they missed for weeks. 

Earnings Point to Greater Gains

This was a consequential earnings season, marked by massive top and bottom line beats, as well as higher revisions.

Consensus for the Consumer Price Index (CPI) Report:

Headline

• +0.24% m/m
• +2.8% y/y

Core

• +0.31% m/m
• +3.1% y/y

Last month, the number came in above the consensus, and headlines read like the worst inflation ever, even though the number missed in the prior four months.

There are folks on the Street looking for a higher number based on certain trends, including price changes in the U.S. Purchasing Managers’ Index (PMI) report.

Bank of America (BAC) is looking for numbers to match the consensus.

Today’s Session

This morning’s CPI results showed the annual inflation still at 2.7%, and below consensus of 2.8%. 

Price pressure increased for used cards, transportation services and new vehicles.

• Gas Utilities: +13.8%
• Electricity: +5.5%
• Used Cars: +4.8%
• Medical Care: +4.3%
• Food away from home: +3.9%
• Shelter: +3.7%
• Transportation: +3.5%
• Food at home: +2.2%
• New Cars: 0.4%
• Fuel Oil: -2.9%
• Gasoline: -9.5%

Despite increasing inflation, the Fed is expected to cut interest rates by 25 bps in September and another 25 bps in October.

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