Middle East ceasefire – S&P 500 bounces back – Quant Portfolio stocks rise – Update 08/10/26

Leopold Aschenbrenner and the Situational Awareness disaster

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• Quant Weekly – Up over 68% since June 2025

• Quant 30 – Up over 65% since June 2025

• Legacy – Up over 340% since April 2023

• Education – Leopold Aschenbrenner and the Situational Awareness disaster

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USA Stock market week ending 08/07/26

• SPY (S&P 500 ETF):+3.5% — Large-cap U.S. stocks posted a strong weekly gain, extending the broader market’s upward momentum.

• DIA (Dow Jones Industrial Average ETF):+2.8% — Blue-chip stocks delivered a solid advance, reflecting broad-based strength across established companies.

• ^IXIC (Nasdaq Composite):+5.2% — Technology and growth stocks led the market higher, making the Nasdaq the week’s top-performing major index.

• IWM (Russell 2000 ETF):+3.6% — Small-cap stocks participated in the rally, finishing the week with healthy gains.

• SPMO (Invesco S&P 500 Momentum ETF):+4.0% — Momentum stocks outperformed the broader market, highlighting continued investor interest in market leaders.

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Market Drivers this Week (08/10/26 – 08/14/26)

Monday, 8/10 — Quiet Start to the Week
No major U.S. economic reports are scheduled. Earnings from Simon Property Group offer a look at retail real estate.

Tuesday, 8/11 — Jobs, Housing, and AI Earnings
Investors will watch ADP employment data and Existing Home Sales. Earnings from Super Micro Computer, Lumentum, and Cardinal Health could provide insight into AI infrastructure demand and healthcare trends.

Wednesday, 8/12 — CPI Inflation Report
The July Consumer Price Index (CPI) is the week’s most important economic release and could influence expectations for future Federal Reserve interest rate decisions. Coherent also reports earnings.

Thursday, 8/13 — PPI, Jobless Claims, and Applied Materials
Markets will focus on the Producer Price Index (PPI) and weekly jobless claims for additional inflation and labor market signals. Applied Materials headlines earnings with an important update on semiconductor equipment demand.

Friday, 8/14 — Retail Sales and Consumer Sentiment
The week concludes with July Retail Sales and the University of Michigan Consumer Sentiment Index, providing a final read on consumer spending and confidence.

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The CNN Fear and Greed Index ends the week at 64, in the Greed area. This makes the first week in the last nine weeks where the indicator has closed the week in the Greed area. The last Greed reading was June 2, 2026. With the war in the Middle East still unresolved, it is premature to put much meaning on one reading. External events could easily send the market up or down depending on the news. But it is an encouraging sign.

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The Quant Model Portfolios were up this week mirroring the general rise in the market. Momentum stocks bounced back after being sold off in the last few weeks.

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Note: You are reading the free subscriber newsletter. Paid subscribers enjoy instant access to weekly Model Portfolio updates upon release. Free subscribers get access to Portfolio updates after a three-week delay. Want timely access to the new Adds/Removes?

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Model Portfolio Quant Alpha Weekly

Any newly added stock is being released to Paid Subscribers today. Below are the updates from three weeks ago. This Portfolio continues to significantly outperform its benchmark, 68% versus 25%. It has 28 members.

Top five Quant stocks in the Portfolio (Paid subscribers only).

Add (07/17/26) : None

Outperformers: SSRM (SSR Mining) up over +90%, MU (Micron Technology) up over +450%, TTMI (TTM Technologies) up over +120%, CLS (Celestica) up over +50%

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Model Portfolio Quant 30

This week’s new update, if any, is being released to the paid subscribers. Shown below is the update made three weeks ago. This Portfolio continues to beat its benchmark by a wide margin, 65% to 25%. It has 30 members in it.

Top five Quant stocks in the Portfolio (Paid subscribers only).

Add (07/17/26): None

Remove (07/17/26): None

Outperformers: MU (Micron Technology) up over +610%, LITE (Lumentum Holdings) up over +270%, TTMI (TTM Technologies) up over +90%, BTSG (BrightSpring Health) up over +180% and SNDK (Sandisk) up over +90%

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Model Portfolio Quant Alpha’s – Legacy

The portfolio is up over +340% since it began in 2023. It has 17 stocks in it. Powell industries is now a 10 bagger. Celestica is now a 12 bagger

Top five Quant stocks in the Portfolio (Paid subscribers only).

Remove (07/17/26): None

Outperformers: AGX (Argan) up over +700%, STRL (Sterling Infrastructure) up over +800%, POWL (Powell Industries) up over +1000% and CLS (Celestica) is up over +1200%

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Model Portfolio Quant Top Stock

This new Portfolio adds one new stock a week. A separate email is sent on Thursday morning detailing the selection, a shallow dive on the pros and cons of the stock and the criteria used for the Portfolio.

Add: NESR (National Energy Services) – Oil & Gas Equipment & Services

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Performance to 08-07-2026

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Top Quant Stocks for this week – (Paid subscribers only feature)

Paid subscribers were presented with a list of the Top 10 Energy Stocks today.

Top 10 Energy stocks were last presented on 5/22/26. Since then as a group they were up an average of +4%. The XLE Energy ETF had a loss of -3%.

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Leopold Aschenbrenner and the Situational Awareness disaster

Situational Awareness, the hedge fund launched by former OpenAI researcher Leopold Aschenbrenner, is scrambling to unwind a large portion of its portfolio after suffering heavy losses tied to AI stocks and a failed short bet against software companies, according to sources familiar with the situation.

People close to the matter say the fund’s prime brokers have been racing to raise cash in order to satisfy margin requirements. Citadel, the hedge fund run by Ken Griffin, has reportedly struck an agreement to purchase Situational Awareness’s publicly traded holdings.

The losses stemmed from two directions at once: the fund’s bets on AI infrastructure names like SK Hynix lost value, while its short positions against software companies such as Adobe moved sharply in the wrong direction, sources said.

At its peak in early July, the fund had swelled to roughly $45 billion in assets before the losses began mounting, according to a person with knowledge of the matter.

Major prime brokers — including Bank of America, Goldman Sachs, and JPMorgan Chase — have reportedly been assisting the fund in either meeting its margin calls or unwinding positions in a controlled manner.

The full picture remains unclear. It’s not confirmed whether asset sales alone have been enough to cover the fund’s margin obligations. There had also been talks to sell off the firm’s Anthropic stake, though it’s uncertain whether that deal closed — a spokesperson for the firm denied reports that an Anthropic stake sale was being marketed.

This episode marks an early and consequential challenge to the investment strategy that turned the 25-year-old Aschenbrenner into one of the most watched figures in AI investing — a thesis centered on the belief that increasingly capable AI systems would drive massive demand for chips, memory, data centers, and power infrastructure.

Regulatory filings show the fund’s biggest positions as of the end of Q1 included Nebius Group, SanDisk, Micron, and CoreWeave — all four of which have fallen more than 35% in July alone.

Leopold Aschenbrenner

Aschenbrenner first drew widespread attention in 2024 after publishing a series of essays arguing that AI’s rapid progress would demand a massive buildout of computing infrastructure, chips, memory, and energy capacity. That thinking became the founding premise behind Situational Awareness after he departed OpenAI.

A Columbia University graduate who finished as valedictorian at just 19, Aschenbrenner went on to join OpenAI’s Superalignment team before being dismissed in 2024. OpenAI cited an improper disclosure of internal information as the reason. Aschenbrenner has pushed back on that account, saying he merely shared a mostly non-confidential planning document with external researchers for feedback, and has suggested his firing was connected to concerns he raised internally about the company’s security practices — a claim OpenAI has denied, maintaining the two issues were unrelated.

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My View – Investment Lesson: Great Ideas Still Need Great Risk Management

The collapse of Situational Awareness is a reminder that having a strong investment thesis isn’t enough. Leopold Aschenbrenner correctly identified AI infrastructure as a major long-term trend, but heavy leverage and concentrated positions left the fund vulnerable when the market moved against it.

As AI-related stocks declined and the fund’s short positions in software companies rose, margin calls forced the liquidation of positions at exactly the wrong time. That’s one of the biggest dangers of borrowing to invest—you may be right in the long run but still be forced to sell before your thesis has a chance to play out.

For individual investors, the lesson is straightforward: protect your downside first. Diversification, reasonable position sizes, and avoiding excessive leverage may not produce the fastest gains, but they greatly improve your chances of surviving market corrections and benefiting from long-term compounding.

Successful investing isn’t just about finding the next great opportunity—it’s about managing risk well enough to stay invested when opportunities eventually pay off.

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