by Jason Bodner
May 19, 2026
The Coelacanth is a fish declared to have gone extinct some 66-million years ago. Then, in 1938, a fisherman pulled one out of the Indian Ocean.
The fossil record said this was impossible, but the fisherman’s net said otherwise.
The lesson is simple: Evidence in your hands matters more than a scientific consensus written in books.
This week, the screaming headlines and the quiet money flows told two very different stories. For investors, the question is the same one those scientists faced: Which one will you believe?
Here’s What the Headlines Wanted You to Focus On
The mainstream narrative stitched five-major events last week into one bearish conclusion.
- Consumer inflation accelerated to 3.8%, the highest rate since May 2023.
- Wholesale prices ran even hotter, at 6% annualized, the worst reading in nearly four-years.
- Real wages turned negative for the first time in three-years.
- Kevin Warsh was confirmed as Fed chair by the narrowest margin in history.
- President Trump rejected Iran’s peace proposal, so the Strait of Hormuz remained shut.
Read those headlines in any order you wish and you would likely arrive at the same conclusion: Last week should have been a risk-off week, a time of retrenchment and fear of a market turn-down.
Instead, while headlines screamed danger, the longer-term flow trend kept grinding higher. The BMI climbed from roughly 41% in early April to 73% (now 70%), among the sharpest snap-backs in 36-years.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The ETF version of the BMI pushed to a fresh high above 83%. SPY also printed another all-time high. The VIX (volatility) stayed contained, near 18, despite all the noise. However, flows were virtually even:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Energy saw 15-inflows and zero outflows, and the AI infrastructure complex continued attracting capital.
Then, on Thursday, Cerebras Systems (CBRS) went public in the largest U.S. technology IPO since Uber. The deal was reportedly 20-times over-subscribed, priced well above the expected range at $185. It opened at near $350, and finished the session at $311, or 68% above expectations. This means institutional capital handed a Nvidia competitor a $95-billion valuation on the same day inflation data kept the Fed hawkish.
That is not how risk-off markets behave.
When the narrative turns uniformly bearish while smart money keeps buying, the flows are usually seeing something the headlines have not caught up to yet.
First, let’s look at what got bought. Energy dominated the inflow lists for the second-consecutive week. With the Strait of Hormuz closed and oil prices elevated, the energy sector is catching three tail-winds at once – an inflation hedge, a value rotation and the growing AI power-demand story.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Meanwhile, the AI infrastructure complex kept attracting capital across, including the picks-and-shovels of the build-out: semiconductor equipment, memory, networking, and data-center power.
The CBRS IPO reception only reinforced the theme.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Now look at what got sold…
The entire housing complex showed up on the outflow list. Twelve names. Builders, home improvement, pool and yard equipment, materials, online listings. Zero inflows across the category. IT services and consulting continued repricing for a fourth-straight week. The market is increasingly treating AI as a hardware and infrastructure story while viewing the implementation services as a disruption target.
Put it together and the call becomes clear. Capital is positioning for sticky inflation, a Fed that cannot ease aggressively, oil that stays bid, AI capex that keeps compounding, and a consumer getting squeezed.
The Historical Backdrop to the Current Situation
When something unusual happens, I go back through the data to see where else it showed up, and the current setup has a very specific fingerprint: SPY climbed 14.1% in the last 30-trading sessions while the 25-day BMI surged 28-percentage points over the same stretch: Price and flow data rallying together.
Going back to 1990, this pattern, of SPY up 10% or more while BMI rises at least 20-points in 30-sessions has appeared 24-times, and here is what happened next, compared to a random (normal) day baseline:
At every horizon, the signal materially outperformed the baseline.
But the more interesting observation comes from separating those signals by volatility regime. Eleven of the 24-signals fired with the VIX below 20, which is where we sit today, around 17.3.
Every single one of those calm-regime signals produced a positive return one-year later.
Ten out of ten with fully mature data and zero misses – with an average gain of 15.9%.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The failures in the broader sample mostly occurred during stress regimes when the VIX was already above 20 and markets were facing near panic conditions.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
These panic situations do not reflect today’s environment. Right now, flows are conviction-buying into a calm market which just absorbed the hottest inflation print-out in three-years without breaking.
That matters. Flow data isn’t infallible. Markets can stay irrational, and macro can overwhelm almost anything in the short term, but the clearest warning signs would be visible deterioration in the consumer, a further spike in oil if Hormuz remains closed, or widening credit spreads.
I’m watching the VIX. As long as it stays below 20, the calm-regime analog remains intact. Above 25, we enter a very different statistical neighborhood.
So, for now, the data says the rally still has legs.
Bottom Line: Ignore Screaming Headlines, Listen to Data Flows Whispering the Truth
The headlines this week told you the world is getting harder. But flows showed which trades might thrive in a harder world: energy, AI infrastructure, and the picks-and-shovels behind the build-out.
They also showed what is struggling: housing, consumer cyclicals, and businesses dependent on easy Fed policy and a strong consumer. So, the history is clear. When price and flows rally together this hard with a calm VIX, markets have historically continued higher. Ten times out of ten.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”
— Mark Twain
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Inflation (and GDP) Soared in April
Income Mail by Bryan Perry
Trump Trip Triggers a Rare Pullback in the Super AI Tech Sector
Growth Mail by Gary Alexander
Is China’s Growth Dynamo Now Running on Empty?
Global Mail by Ivan Martchev
Quantifying a “Normal” Correction
Sector Spotlight by Jason Bodner
Headlines Scream, While Money Flows Whisper
View Full Archive
Read Past Issues Here
Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation and distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner
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