The equities right-tail (i.e., crash-up risk) was back in play on Wall Street, where US stocks looked poised for new all-time highs to start August.

In terms of fundamental catalysts, robust earnings and, more immediately, optimism around a deal to re-open the Strait of Hormuz were the most obvious bullish tailwinds.

Brent was back below $80 on Tuesday, helpful for a jittery USD rates complex that scarcely needed another irritant following last week’s FOMC-inspired tumult.

But the interesting wrinkle in what might be a burgeoning equities force-in is the extent to which the long-short extremes observed in the lead-up to Leopold’s momentum unwind (known derisively on finance-focused social media as “baby’s first margin call”) ironically helped set the stage.

“Perversely, we got here off the back of the past 4-6 weeks’ pain,” Nomura’s Charlie McElligott wrote Tuesday, reminding investors that the main “problem” with the consensus trade that was long AI-enablers and semi “bottleneck” plays versus short cash-burning hyper-scalers, was that the latter’s weight at the index level meant “broad equities couldn’t make new highs.”

“The hyper-scaler, mega-cap, Mag8+ names had been relegated to ‘funders’ status, hence the sideways-to-down ‘chop’ in spot index for [most] of the past three months,” McElligott said, adding that since late-June, sundry manifestations of that same market-neutral trade have been absolutely destroyed. On the reversal, the hyper-scalers rallied sharply, which is what ultimately matters for “stocks” as a cap-weighted asset class.

The figures above give you a sense of things. In the same note, Charlie cited an even more poignant example of the reversal: A variant of the same trade that was long DRAM plays and short Mag10 names is down more than 33% in five or so weeks.

“[A]s those prior dynamics got rinsed in a biblical momentum unwind,” equities index quietly rallied 4% on the back of the hyper-scaler recovery, McElligott went on. Now, everyone’s “chasing back in [and] netting-up as we rally back into long-forgotten calls.”

Have a look at the hilarious figures below, which McElligott went out of his way to highlight in a second Tuesday note.

Suffice to say the left-tail’s suddenly dead and the right-tail’s Lazarus on biker speed.

“Calls are now picking up alllllll the delta,” Charlie said. “There’s bunches of real and synthetic negative gamma out there and [the] market’s forced to front-run it without enough net on.”