Tuesday's rally, combined with last week's market response to a big jobs beat, is very encouraging for stock bulls. Bonds are selling off with conviction, stocks are holding firm as Nvidia (NVDA) breaks out, and crypto prices continue to struggle. That's about as close to a perfect message as the market can send. 

The stock market's relationship to Treasuries is still a very important thing as the trajectory for interest rates remains debatable given volatility in economic data. Lately that volatility has been positive, with data beating expectations again. In many instances over the last few years that was a problem for stocks, but as I've argued for months now, investors should be rooting for better-than-expected outcomes given all the trends and indicators that suggest the economy is slowing. The S&P 500 may be range bound, but at least it's not selling off as yields and the dollar bounce back. 

Nvidia is still the most important company and now that it's trading above its August highs you can easily imagine Nvidia getting back to a record. A sideways market with Nvidia going up is almost as reliable as an uptrending market because it limits the downside. The NVDA put is real and with the broad market indexes spinning their wheels, it's nice to have a hero out in front.

The third leg of the Perfect Market might seem a bit counterintuitive, but it's the absence of animal spirits. Crypto markets remain weak and small-caps continue to struggle. Bitcoin's chart looks a lot like the Russell 2000 right now and that's not a coincidence — cryptos don't make money, and many small-caps don't either. One could argue you want this cohort to be blasting off, but I'd argue crypto underperformance is a sign of a healthy market. Take out the trash, stick with the quality, and gains should be more sustainable. 

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