The Indexes Hid The Action
Stocks spent last week repricing war, inflation, rates, and AI, then finished almost exactly where they started.
The S&P 500 gained 0.1%. The Nasdaq added 0.4%, the Russell 2000 rose 0.1%, and the Dow slipped 0.3%. Those quiet finishes concealed a violent sequence: renewed U.S.-Iran fighting pushed oil and bond yields higher early last week, Fed Governor Christopher Waller sparked a Thursday rally, and Friday’s payroll report pulled rate expectations back in the other direction.
The rotation underneath the indexes told the real story. Semiconductors gained about 2% last week while software fell roughly 4%. Energy led the market; consumer discretionary brought up the rear.
Oil And Payrolls Put The Fed On The Spot
Brent finished near $95 after gaining more than 6% last week. WTI rose nearly 9%, and U.S. diesel prices reached a record as the United States and Iran resumed heavy exchanges and shipping through the Strait of Hormuz remained depressed.
The inflation pressure reached well beyond oil. Japan’s 10-year yield touched 3% for the first time since 1996. The U.S. 10-year reached about 4.8%, while German and French yields hit their highest levels in years.
Waller offered markets some relief Thursday. He said another favorable inflation report would incline him to hold rates at the September meeting. He also left the door open to a hike if inflation heats up.
Friday strengthened the hawkish side of that argument. August payrolls rose by 162,000, far above the recent pace. Unemployment held at 4.1%, labor-force participation rose, and revisions added 55,000 jobs to June and July. Wage growth was 3.1% year over year. The report showed a labor market strong enough to give the Fed room to lean against inflation.
AI Held Up. Lululemon Tore At The Seams.
AI earnings supplied the market’s counterweight. Broadcom reported $29.6 billion of quarterly revenue, up 86% year over year. Its AI semiconductor revenue jumped 221% to $16.7 billion. Results like that kept the infrastructure trade alive even as higher yields raised the bar for expensive stocks.
Lululemon supplied the other side of the tape. Revenue fell 4%, the company cut its full-year outlook, and the shares collapsed about 20% Friday morning.
That split lined up with two open trades we wrote about Friday. We were long memory and short yoga pants while Michael Burry was positioned the other way. Micron traded above $1,000 intraday Friday.
LULU moved sharply toward the maximum-gain range of our bearish trade.
Our Market Watchers feed echoed the same split. MU drew 37 mentions in Friday’s ticker-post scan, more than any other name, while tankers were the strongest non-technology cluster. The market was paying for AI bottlenecks and geopolitical scarcity at the same time.
How We Traded It
Monday’s medical alert produced two fills from four proposed structures: an operating healthcare company from our Top Names and a precision-oncology name from our Market Watchers process. Two long-dated biotech retries expired unfilled.
All three of Tuesday’s trades filled. They gave us three different sources of alpha: a contrarian recovery from our Top Names, a profitable marketplace from one of our strict quality screens, and a fast-growing digital-health company from our Multibaggers list.
Stocks sold off Tuesday as oil and yields rose, so Wednesday’s alert focused on company-specific biotech catalysts. Two of three trades filled: one tied to commercial gene editing and another to cell-engineering tools. A rare-disease gene-therapy order expired unfilled.
Thursday put last week’s biggest themes directly into the portfolio. Our AI-compute, oil-and-gas, and copper trades all filled. Each company carried a 10 out of 10 technical rating and a fundamental rating of at least 7.
Both of Friday’s trades filled: a current Top Name tied to expanding government-services contracts and a commercial-stage biotech from our Multibaggers list.
Twelve of last week’s fifteen proposed structures filled, each within its published limit. The other three expired unfilled.
Ten Partial Exits, Two Full Winners
Last week’s Exits post recorded ten partial exits—seven profitable and three losing—plus two full exits, both winners. We’ll highlight three that illustrate our revised exit process.
First, TE: we closed the T1 Energy put spread for a 66% loss on maximum risk. The underlying stock was also held by Situational Awareness, Leopold Aschenbrenner’s AI hedge fund that suffered huge losses in July.
Our new weekly options reviews prompt us to act sooner when a position has no meaningful catalyst left. That may produce more losing partial exits between OpEx weeks, but taking those losses earlier should reduce their size and improve returns over time.
Then the full winners: HP and CF began as four-leg hybrid combos. After we closed their short calls and put spreads, their longer-dated calls ran uncapped. HP returned 91% on maximum risk and CF returned 98%; their returns on premium were 344% and 488%, respectively.
The year-to-date scorecard remains strong. Through September 4, our 206 fully exited 2026 trades had a 56.8% win rate and averaged 33.8% on maximum risk. The average winner returned 110%; the average loser fell 66%.
CPI Gets The Next Word
The Fed enters the next two weeks with a strong labor report, oil near $95, and inflation still above target. PPI arrives Thursday and CPI Friday, followed by the September 15–16 FOMC meeting.
The Market Ear highlighted the tension Friday: the September decision looks unusually uncertain, yet equity and tech volatility remain subdued. That gives us favorable raw material on both sides of the book—reasonably priced options for defined-risk trades and relatively inexpensive protection for investors who want to hedge.
We’ll keep looking for companies with strong operating evidence, supportive technicals, and option prices that preserve the asymmetry. Portfolio Armor Substack paid subscribers receive our exact trades, entry limits, and exit plans before the market opens. Investors who want to protect individual stocks and ETFs can calculate optimal hedges with the Portfolio Armor website or Portfolio Armor iPhone app.
