Yesterday, we discussed the correlation breakdown between equities and oil prices. Today, we’re seeing a continuation of this trend as the S&P 500 rallies despite a hike in Brent oil prices. The S&P 500 is up 1.3%, with both the SPY and QQQ closing at their lowest RSI reading since Liberation Day. Meanwhile, yields continue to retrace lower, providing a significant support to equities.

Notable de-correlation of equities from Brent today, as oil prices rally back to intraday Middle East conflict highs. President Trump has reiterated in a Truth Social post that he may withdraw from Iran without reopening Hormuz, the second such hint after yesterday’s post and a WSJ article reporting the same. This is catalyzing a reversal of Monday’s 2.5-sigma Momentum unwind, with the group up 2.5% today.

There’s a risk-on rotation underway, with lower quality volatile stocks leading the charge. Speculative Growth is up 3%, while Cyclicals vs. Defensives is up 2%. Quality is for sale, down 2%, and the US dollar is weaker.

AI Winners {UBXXAIW} are at the helm of the rebound, up 3%. Memory {UBXXMEMO} is recovering, up 4%. This rotation is also evident in the performance of different sectors, with Technology and Finance leading the way.