——If you followed on Friday, the next three minutes are worth watching.
I won't add positions on Monday, and I won't make a move before 20:30 on Tuesday—wait until the April CPI is released. The reason is that the new high candle in US stocks last Friday (S&P 7398, Nasdaq 26247, SMH +3.43%) priced in a scenario of inflation not causing trouble, but the time for this scenario to be revealed is Tuesday night. If you chased any high-valuation tech stocks on Friday, in the next three minutes, I'll tell you—what you're actually betting on, and whether you should reduce your position first.
1. The logic behind last Friday's rise is sound
Let's finish what the bulls have to say first, because these reasons are true.
Non-farm payrolls added 115K in April vs. an expected 55K. Unemployment rate 4.3%. Hourly earnings YoY +3.6% (expected +3.8%). Combined: stable economy, declining wage pressure—this is the lukewarm situation the Fed most wants to see.
AMD's data center revenue +57% YoY tells the market that the money from AI capex isn't just being earned by NVIDIA. Microsoft's capex guidance of $190 billion means someone has to take the orders. The semiconductor sector SMH rose +3.43% on Friday. (capex = capital expenditure, money companies spend on long-term assets)
VIX only at 17.19, clean market sentiment. This means the market thinks there's no near-term risk.
2. The problem is, these three things are all based on the same assumption
CPI doesn't cause trouble on Tuesday.
Tuesday (5/12) 20:30, the US Bureau of Labor Statistics releases April CPI. Market consensus YoY +3.73.8%, previous +3.3%—a jump of 0.40.5 percentage points at once. MoM expected +0.550.7%.
The market treats this as within expectations, but two details haven't been fully priced in by positions:
Oil prices aren't a one-time event; they're a persistent condition. WTI Friday $100.10 (+4.9%), Brent $105.66. Day 73 of the US-Iran war, Trump rejected peace talks over the weekend. Oil prices enter CPI not only through gasoline but also through transportation, airfare, and energy services channels.
The market has already priced in no rate cuts at 82.2%. But tail scenarios like CPI breaking +3.9% haven't been priced—VIX at 17.19 is the evidence.
3. Three CPI scenarios, three actions
My own estimated probabilities, for your reference—
Scenario 1: YoY ≤ +3.6% (I estimate 25%). Mild positive surprise, Nasdaq may surge again. Your action: Maintain position, don't chase highs. The Cleveland Fed Nowcast model gives 3.56%, supporting this path.
Scenario 2: YoY +3.73.8% (I estimate 50%). In line with expectations, VIX may fall then rise. Your action: Do nothing. Reactions in this range are usually digested within a day.
Scenario 3: YoY ≥ +3.9% (I estimate 25%). Oil price pass-through exceeds expectations + tariff effects. Your action: If high-valuation tech stocks make up a large portion of your account, consider reducing some before Tuesday's market open.
If the third scenario happens, Nasdaq will at least give back Friday's gains that night. A 25% probability isn't small, but market positions are configured as if it's almost 0%—this is the source of asymmetric risk-reward.
4. How this relates to you
If your account is full of high-valuation tech stocks (the kind with PE 30+), reducing some before Tuesday won't hurt. It's not about being bearish, it's acknowledging that CPI is a binary event; the cost of giving back 1-2 points is much more severe than betting wrong.
If you have energy stocks (XLE) or commodities (oil, copper) in your account, you've actually partially hedged inflation risk. You can stay put.
If you just chased in on Friday, the most worthwhile thing to do now isn't to close your position, but to look back—when you bought, did you believe in the AI story, or did you believe CPI wouldn't cause trouble? These two things are not the same. Once you see clearly, you'll know what to do next.
In a sentence
A scenario with a 25% probability is being priced by the market at 0%. That's why I'm not making a move.
We'll talk after 20:30 on Tuesday. If you're still holding high-valuation tech stocks, just look back at your buying logic.
$VanEck Semiconductor ETF(SMH.US) $Cboe Volatility Index(.VIX.US) $AMD(AMD.US)
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