MDM will resume its BUY signal.
MDM switched to CASH shortly after today's open as the odds were good that the NASDAQ-100 being so extended above its major averages would use the very hot PPI number which followed the hot CPI number as an excuse to pull back.**Markets are rallying today despite the high PPI for these key reasons:**
### Main Drivers Behind Today's Rally
1. **AI Revenue & Monetization Narrative Still Dominating**
The market is prioritizing the **clear ROI** that is showing up from the massive AI capex. Recent earnings from Google, Microsoft, Amazon, Anthropic, and others have demonstrated accelerating revenue and massive backlogs tied directly to AI. Investors are treating the high PPI as a temporary shock rather than a structural breakdown.
2. **"Higher for Longer" Already Largely Priced In**
The market has accepted that the Fed will not cut rates aggressively in the near term. As long as AI growth remains strong and corporate earnings hold up, traders are willing to look past the inflation data.
3. **Liquidity Expectations Remain Supportive**
Record global debt levels + the enormous capital requirements of the AI buildout create a structural need for abundant liquidity. The market believes central banks (especially the Fed) will ultimately prioritize growth and financial stability over aggressively fighting inflation.
4. **Technical & Sentiment Factors**
- Short covering after recent weakness
- Rotation into AI infrastructure, memory, and related names that are showing real earnings traction
- Dip-buying in high-conviction growth stocks
### Bottom Line
This is a classic example of the market choosing **AI growth + liquidity needs** over near-term inflation fears. The hot PPI (driven heavily by energy and lagging shelter) is being viewed as transitory, while the AI supercycle is seen as a durable, multi-year driver.
The rally can continue as long as:
- AI-related companies keep delivering strong revenue and guidance
- Core inflation doesn’t accelerate meaningfully in the coming months
Suggested ETFs (Note: Many members buy the standard ETFs or their preferred ETFs. This list serves as a guide as to which ETFs we think may outperform, but the key point is to be on the right side of the market regardless of which ETF or ETFs one chooses.)
1-times
SPY (S&P 500)
QQQ (NASDAQ-100)
2-times
SSO (S&P 500)
QLD (NASDAQ-100)
3-times
UPRO (S&P 500)
TQQQ (NASDAQ-100)
TECL (Direxion Trust Technology)
NOTE: This is a suggested list. Investors may wish to become acquainted with the full range of available ETFs, and should make an effort to understand how these ETFs are created and what their components are, as well as being aware of the downside risks involved, especially with leveraged ETFs. Certain ETFs may be more appropriate depending on one's risk tolerance levels. Typing in keyword 'ETF' into the FAQ keyword search bar or going here https://www.virtueofselfishinvesting.com/faqs/search?p=1&q=etf and visiting this site https://etfdb.com/ can be instructive.