Stocks are ripping higher and a new Citadel note argues the recent pullback was a healthy reset, which is good news for investors who stayed in or bought the dip.

• A Citadel document says the messy selling in late July — the biggest week of retail selling since 2022 — was mostly forced deleveraging that is now behind us.
• Tech got hit hardest, with software seeing its largest one-day retail dump, dragging names like Palantir down before they snapped back sharply.
• The bounce looks powerful: the Nasdaq 100 jumped about 5% in a day and a half, and software and chip ETFs blew through key levels faster than expected.
• The rally is being fueled by people piling back into margin debt after getting squeezed out, plus a strong earnings season, with second-quarter S&P 500 profit growth revised up sharply.
• Supporting signs are stacking up: manufacturing hiring turned positive for the first time in almost three years, big tech keeps raising AI spending, and a company buyback window is now open.

Outlook: If this week's jobs data holds up, both hardware and software stocks could keep climbing toward new record highs, though the heavy use of borrowed money sets up sharper swings later.