Disappointing news from the Middle East… quantum computing in the crosshairs… the answer to “buy and hold” today… how high will the bond vigilantes push the 10-year?… Luke Lango’s counterintuitive suggestion
As I write on Thursday, the markets are digesting a handful of headlines. Let’s do a brief recap.
West Texas Intermediate crude is up nearly 3% – back above $100 a barrel. This comes after Reuters reported that Iran’s Supreme Leader has ordered the country’s enriched uranium to stay inside the Islamic Republic – a direct obstacle to any deal with Washington.
The news suggests that despite President Donald Trump’s comment yesterday that “we are going to end that war very quickly,” the gap between negotiators remains wide.
In the meantime, the Strait of Hormuz stays severely disrupted, and the International Energy Agency warned today that global oil stockpiles will hit a “red zone” this summer if it doesn’t reopen before seasonal demand picks up.
This is hitting bond yields, which we flagged in yesterday’s Digest as the one variable that could derail the bull market. The 10-year Treasury yield is up 5 basis points to 4.62% as I write.
Meanwhile, quantum computing stocks are surging on news that the U.S. government will award $2 billion in grants to nine firms in the space – and take equity stakes in return. International Business Machines Corp. (IBM) is the biggest beneficiary, receiving a reported $1 billion from the Commerce Department.
Turning to AI, President Trump postponed a planned executive order on AI this afternoon, telling reporters he didn’t want to sign anything that “could have been a blocker” to U.S. leadership in the space. For now, Washington remains firmly in the AI camp – which matters for the long-term bull case, even if the market isn’t celebrating today.
Finally, Nvidia (NVDA) posted a blowout fiscal Q1 report last night – massive beats on revenue and earnings, an $80 billion buyback, and data center revenue up nearly 100% year over year. Plus, a slew of Wall Street firms raised their price targets. And yet, the stock is down 2% as I write.
Now, that’s not a bearish signal about Nvidia. But it is a telling reflection of today’s market – its sky-high expectations, and how even blowout performances can fall flat when $100 oil and rising yields are bearing down on sentiment.
In a market like this, buy-and-hold alone leaves you entirely at the mercy of the next headline.
Which brings us to how smart investors handle such market environments…
The AI trade is real…as is the risk – here’s how to navigate the tension
The AI bull case is intact – Nvidia’s earnings last night make that clear.
Hyperscaler capex keeps climbing. Morgan Stanley estimates that nearly $3 trillion in AI-related infrastructure investment will flow through the global economy by 2028, with more than 80% of that spending still ahead.
But as we’ve covered here in the Digest, the market risks are real and getting harder to dismiss.
The S&P 500’s CAPE ratio sits at its second-highest reading in 140 years…
Our macro expert Eric Fry has been warning that too many investors are crowded into the same top AI names – a situation that, historically, rarely ends well…
And even our technology expert Luke Lango – as committed an AI bull as you’ll find anywhere – has flagged a concern worth taking seriously: the political winds could shift around the 2028 presidential election, bringing anti-AI legislation that kneecaps the AI trade.
That puts buy-and-hold investors in a genuine bind.
The Dot-Com crash is a useful reminder that even though the broad market has always recovered, investors who held through that collapse waited more than a decade just to get back to even. And that assumed the companies they held survived at all – which is in jeopardy if Luke’s fear about anti-AI legislation materializes.
The answer isn’t to abandon buy-and-hold but to pair it with something that turns volatility from an enemy into an edge – a trading approach where you stay active in the market, but with a known, defined risk you set before you ever enter the trade.
That’s the idea behind an event our trading expert Jonathan Rose is hosting next Thursday, May 28, alongside Marc Chaikin, the legendary market technician and founder of Chaikin Analytics.
How Jonathan and Marc are solving today’s late-cycle buy-and-hold problem
For newer readers, Jonathan is a trading veteran who’s pulled millions out of the market over the last 10 years, while building one of the more impressive track records in our industry.
Marc needs little introduction to serious market watchers – his Power Gauge indicator has been helping investors identify institutional money flows for decades, and his analytical tools are used by some of the biggest names on Wall Street.
Jonathan isn’t a buy-and-hold investor. But he isn’t a market-timing tactician either.
He prefers defined-risk trading – capturing short-term moves in both directions with the risk clearly established before the trade is placed.
Think of it this way: while a traditional AI portfolio is entirely at the mercy of the next headline, a trading approach lets you stay active in the market while keeping every single position’s maximum loss known in advance.
The numbers show how effective this approach is…
At his Masters in Trading: Advanced Notice service, Jonathan has posted an all-time average gain of 95% across all trades – winners and losers – in an average hold of just 46 days. And since volatility spiked in the wake of Liberation Day last April, that number has climbed to a 233% average gain across all trades.
Now he and Marc are combining their two flagship “smart money” signals for the first time ever.
Both systems follow institutional money. But from different angles – Jonathan’s quantitative tool reveals what big players are doing before the move happens. Chaikin’s Money Flow measures the actual flow of capital in or out of a stock in real time.
Together, they create a more complete picture of where institutional money is really going. And when both signals align on the same trade, the results from nearly 200 back-tested trades are striking: an 81%-win rate and a 147% average gain. And critically, the combined signal helped avoid two out of every three losing trades.
For more details, put next Thursday, May 28 at 8 p.m. ET on your calendar. That’s when Jonathan and Marc will walk you through their “Convergence Trigger.” It’s a free event; you just need to .
We’ll bring you more on this over the coming days.
Speaking of risks to the AI bull market, the bond vigilantes may already be sending Warsh a message
As noted earlier, the 10-year Treasury yield is back up to 4.62% as I write.
This is a level that our technology expert Luke Lango, editor of , characterizes as, “uncomfortable but still manageable.”
But a runaway 10-year Treasury yield is the single biggest risk to today’s bull market.
In yesterday’s Digest, I described Luke’s yield roadmap, which connects potential yield levels to the associated market pullbacks.
In short, things start getting serious above 4.8% to 5%, and a break above 5.25% begins to short-circuit the broader economy.
The question is what’s driving the recent 10-year climb – and Luke’s read goes beyond the Iran conflict.
The bond market, he argues, is delivering a pointed message to incoming Fed Chair Kevin Warsh – widely seen as Trump’s rate-cut ally – that dovishness right now would be a serious mistake.
Luke notes that inflation is tracking toward 5% on a six-month trend basis, which puts Fed already behind the curve. So, the bond vigilantes are stepping in to do the Fed’s job, pushing real-time rates higher to combat inflation the Fed won’t touch.
But his counterintuitive conclusion is that a rate hike may actually be the cleanest exit from this mess.
From Luke:
If I’m Warsh, I’m hiking as soon as possible.
Raise the short end of the curve to save the long end.
A credible inflation-fighting posture from Warsh satisfies the bond market, the vigilantes stand down, and long-term yields stabilize.
In other words, a painful short-term move prevents an even worse long-term move.
But what about the AI trade? Do higher rates pop “the bubble”?
Back to Luke:
This isn’t the end of the AI bull market. This is what the AI bull market looks like when it takes a breath…
The Summer of AI doesn’t end because the 10-year is at 4.7%. It pauses, consolidates, finds support at the major moving averages, and resumes when Warsh establishes credibility and yields stabilize.
Now, while a hike could rattle the market, Luke’s action step wouldn’t be “the crash is here! Take cover!” It’s the opposite:
– in AI infrastructure. The fundamentals have never been more intact.
So, if you have the stomach for it, Luke’s roadmap says the AI bull continues on the other side of whatever volatility exists between now and then.
But if you’re nervous about that volatility and want more downside protection without stepping away from the AI trade entirely – well, that brings us back to .
AI upside, defined-risk downside.
Have a good evening,
Jeff Remsburg
