West Texas Intermediate (WTI) closed at $73.84/barrel on Thursday, up 5.3% for the session. Oil has popped 11% from its October 1 intraday low of $66.33. Flaring tension in the Middle East is the obvious catalyst for the run higher. With the rally, WTI has broken some shorter-term bearish trendlines and is working on a bullish false breakdown. Yet the surge higher in oil is news-related and not based on supply and demand. And while no immediate end to Middle East tension is in sight, crude likely will fall back quickly when calm prevails. As we said before, the COT data for WTI is bullish, as is the COT data for gasoline and heating oil. We imagine there will be more volatility, with the potential for big moves up and down. The SPDR Gold Shares (GLD) ETF has moved sideways for seven days and appears to be tracing out another bull flag. Gold has benefited from a declining U.S. Dollar Index as well as declining yields -- although those trends have reversed, at least in the short term. So far, gold and silver have not been hurt by the pop in the greenback -- once again ignoring a rising currency. As we have been saying, the COT data on the dollar recently turned bullish, while the COT data on the metals is terrible (but has been so for many months). When markets don't do what they have done historically, we can surmise that something may be different this time. Silver (SLV) looks like it might be tracing out a bullish cup or a continuous inverse head-and-shoulders pattern. A break over the $30 level would complete these patterns. (Mark Arbeter, CMT)

If one were to ask the average investor to name the leading S&P 500 sector this year, Information Technology might very well be the most-common answer, even after the recent tough few months. But that answer would be wrong, as the Utilities (XLU) sector is leading the pack so far in 2024, with an incredible 26% return (which doesn't include dividends). Should the masses say that semiconductor stocks represent the leading industry, they would be correct. For 2024, XLU has soared 26%; Communication Services 20%; Financial 19%; Consumer Staples 18%; Healthcare, Industrials, Information Technology, and Real Estate about 15%; Materials 9%; Consumer Discretionary 8%; and Energy 4%. So there are very broad gains, unlike in recent years. One could try to make the case that the leadership leans defensive, but we disagree. Many stocks in Utilities have surged due to the coming increased power demand from the buildout in data centers and AI. Meanwhile, Healthcare, also considered defensive, has been boosted by weight-loss drugs, which reflects R&D as well as innovation. Strength in Utilities has been led by conventional electricity stocks the often have large capitalization, such as NEE (+44%), SO (+31%), CEG (+69%), AEP (+30%), and VST (+123%). Communication Services also is led by large-cap "utility type" issues such as VZ (+24%) and T (+35%). Unfortunately, Utilities make up a mere 2.5% of the S&P 500, Consumer Staples 6%, and Real Estate 2.4%. The monster in the room remains Information Technology, with a 32% weighting. That is almost equal to the next three largest sectors (Financial, Healthcare, and Consumer Discretionary) combined. (Mark Arbeter, CMT)

Monday Tee Up: Here Comes Walmart The focus this week flips back to inflation and the state of the consumer. Key inflation data will come out as will perhaps the most-telling earnings report related to the consumer -- Walmart. Wall Street is wondering if the Fed has been right on interest rates and can still achieve a soft landing and avoid recession. Last week, the Dow Jones Industrial Average ended down 0.6%, the S&P 500 lost 0.4%, and the Nasdaq fell 0.2%. Year to date, the Dow is higher by 5%, the S&P is up 12%, and the Nasdaq is higher by 12%. On the economic calendar, the big day is Wednesday, when inflation data comes out in the form of CPI. In June, CPI posted at 3.0%. Core CPI was 3.1%. We see July matching those rates. On Tuesday, wholesale inflation will grab the headlines when PPI is updated. On Thursday, Retail Sales, Industrial Production, and Capacity Utilization all will be released, and on Friday, Consumer Sentiment and Housing Starts come out. The earnings calendar is winding down but some big releases are due in this week. On Tuesday, Home Depot and On Holding report. On Wednesday, Cisco and UBS Group. And on Thursday, Walmart, Applied Materials, Alibaba, and Deere. Earnings are coming in 12.4% higher this quarter than a year ago (this after some 91% of S&P 500 companies have reported). Expectations were for 8%-12% earnings growth for 2Q. This follows 8% growth in 1Q and 10% in 4Q23. Last week, mortgage rates fell a big 26 basis points (bps) to 6.47% for the average 30-year fixed-rate mortgage. Gas prices fell four cents to $3.45 per gallon for the average price of regular gas. The Atlanta Fed GDPNow indicator is forecasting for 3Q and calls for expansion of 2.9%. The Cleveland Fed CPINow indicator forecasts 2.74% for August CPI. Looking ahead, the next Fed rate decision is on September 18, with odds at 100% for a rate cut. Of that, 51% expect a 25-bps cut and 49% expect a 50-bps cut. That data is according to the CME FedWatch Tool. There are then two more Fed rate meetings this year, on November 7, two days after the U.S. presidential election, and December 18.

Trane Technologies is a diversified large-cap industrial company headquartered in Ireland. The company provides climate control solutions for buildings, homes, and transportation. Trane has approximately 40,000 employees. TT shares are a component of the S&P 500.