A Rorschach Test

A Rorschach Test August 12, 2026

TECHNICAL STRATEGY Today's Action Unlikely to Change Anyone's View Jonathan Krinsky, CMT WHAT YOU SHOULD KNOW: ( In the famous Rorschach test from the 1920s, different people look at the same inkblot and see completely different things — each projecting their own views onto it. That is likely how today's market is viewed by investors. A roughly in-line CPI print keeps odds for a Sep. hike around 40%. Bulls will cheer the fact that volatility continues to get crushed (VIX nearing YTD low - 14.49), and momentum is up over 5% as the semi/AI

This report is intended for Unauthorized distribution prohibited. trade bounces back. Bears will note the dollar has rallied back to the green, 30yr yields are now green, S&P 500 breadth is slightly negative, and the hyperscalers are down over 1%. While there is something for everyone, today's action does little to change our recent views, and we suspect most investors feel the same way. ■ Day 10 for Mo' Bounce. The most obvious standout today is that momentum is having a nice bounce back. Today is the 10th day post the recent low, and as we have discussed, median counter-trend rallies after the first impulsive decline off a boom/bust top is 12 trading days. We also felt mo' can still test the 50 DMA before turning down. That is another 3% higher, so we will see if we get that into the end of the week. ■ Spenders Punished Again. Like we saw in much of June as semis went vertical, it was at the expense of the hyperscalers, or the spenders. The UBS Hyperscaler Index (UBXXHYPE) is back into its gap from 8/3, with risk back to the 200 DMA below that. ■ Restaurants Got Hungry. One of the best days for R2K restaurants (+6.5%) in the last few years as it breaks a multi-year downtrend. Not super timely, but have to respect the breakout here. Texas Roadhouse (TXRH, Buy, PT $220; Analyst - Peter Saleh) somewhat timely here as it emerges from a multi-year base. ■ Dollar Bears Should Pause. DXY flipping back into the green as it attempts to hold its YTD uptrend. We don't have a strong call on the dollar here, but today's action should likely give Dollar Bears some pause. ■ Bonds Can't Budge. 30yr yields essentially flat on the day, but up nearly 4bps from the post CPI spike lows. While we felt the risk/reward into CPI was better for bonds than stocks, the action since 8:30 is a reminder that the path of least resistance is higher for rates.

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Source for all charts: BTIG and Bloomberg

BTIG, LLC Jonathan Krinsky, CMT (