Market digest: what moved this week
Inflation cooled, stocks rallied. July CPI eased to 3.4% annually, cooling fears of aggressive Fed hikes.
SPY hit a new all-time high. Record close of $777.88 on Wednesday, easing to $776.34 by Friday — a +0.4% week.
AI financing, GM’s supply deal, and swinging oil prices also drove the tape.
The budget deficit widened to its highest since early 2021.
Watch item: the AI leaders haven’t confirmed the SPY high. SPY is at a record, but the Nasdaq (QQQ) is still ~2% below its June 2 peak, and semiconductors (SMH) — the leading indicator for the AI trade — are ~12% below their June 22 peak, even after this week’s modest bounce. Since AI capex has been the engine of this bull market, a broad index high that isn’t confirmed by its own leadership group is worth watching, not ignoring. The signal doesn’t act on this — it reads price, not narrative — but it’s the kind of divergence that’s often present before a trend loses steam.
Where the signal stands
The Patala signal remained a BUY all week — no flip, no drama, just the system continuing to ride a trend now well past the four-month mark.
Look at the last 8 weeks: the panic dip in late July, the snapback into month-end, and this week’s push to a fresh record before easing back into the close.
The signal has been green the entire time — a continuous BUY since April 2, now 134 days running.
Why the record high doesn’t change anything
Last week’s letter made the point that the system doesn’t chase good news to get more aggressive. This week proves it again: a soft CPI print, a fresh record close, an AI-financing headline cycle — none of it moves the model.
It was a BUY before the inflation data and it’s a BUY after it. The signal reads price behavior, not headlines, in either direction.
Guidance for the week ahead
The signal is a BUY, so the system says stay invested — same message as it’s been since April.
Next scheduled signal update: Saturday, August 22, 6:00 AM ET, right on the usual weekly clock. Between now and then, the plan doesn’t change based on inflation prints, AI-financing headlines, or a new record close. That’s the discipline.
As always: this is not investment advice, and I’m not telling you what to do with your money. What I can tell you is what the discipline of the system calls for — follow the signal, don’t front-run the next update, and don’t let a record high talk you into “adding more” outside the plan any more than a bad week should talk you into bailing. The whole 26-year edge comes from doing what the signal says and nothing more.
The bigger picture: this is what “staying invested” looks like over time
Here’s the signal on SPY over the last 10 years — green means invested, red means in cash.
Find 2020. Find the 2022 bear market. The red bands cluster exactly where the real damage happened — and notice how much green there is everywhere else, including the push to a fresh record on the right edge of the chart this week.
The last 10 flips
Full transparency, as always — every confirmed flip, with the SPY move captured or avoided during each:
A few honest observations:
The current BUY has held since April 2 — 134 days now — and is up +18.38%. That number keeps growing, and it’s the clearest illustration of why the long holds are where the system makes its money.
This week isn’t in the flip table because the signal didn’t flip — same as the last several weeks. The best weeks for a timing system are often the quiet ones, whether the market is drifting or setting new records.
Full update next weekend.
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Disclaimer: This is not investment advice or a recommendation, and I am not a registered investment adviser. This publication is for informational and educational purposes only. The signal reflects a backtested and now live-tracked quantitative model; past performance, backtested or live, does not guarantee future results. Markets involve risk, including loss of capital. Consult a qualified financial adviser before investing. You are solely responsible for your own decisions.