Situation Awareness: Bullish. Markets are tracking towards fresh record highs as mega-cap technology and AI infrastructure leadership overwhelmingly offsets concerns from hotter-than-expected inflation data. Trade mode: aggressive breakout on dips, with a focus on earnings-driven momentum. The tape is driven by a “buy the dip” mentality following yesterday’s PPI shock, where investors prioritized corporate earnings beats over macro headwinds. Regime context — 49.93% of stocks trade above their 40-day SMA, a contraction from yesterday’s 53.46%, indicating a narrowing of participation despite the index highs. The 4% Bull/Bear gauge shows 0 bulls vs. 0 bears, suggesting a pause in extreme sentiment readings. The 5-day trend turned up 4 of 5 days, confirming upward momentum is intact despite volatility.
SIP: CSCO BIIB AVAH DOCS
- What’s working: Continuation signals are active with 15 signals, led by medical and software sectors, validating the “earnings over macro” narrative.
- Leading sectors: Information Technology (driven by CSCO, NVDA), Communication Services (GOOG, META), and Healthcare (BIIB, CELIA study results); leading themes: AI Infrastructure, Alzheimer’s Treatments, and Semiconductor Supply Chain normalization.
- Key event: President Trump and Chinese President Xi summit concluded with agreements on the Strait of Hormuz remaining a free waterway and a commitment to strategic stability, easing geopolitical risk premiums.
- Market read: Yesterday’s tape saw a violent V-shape recovery where mega-caps absorbed the PPI sell-off, proving that earnings quality currently trumps inflation fears. The Dow lagged due to broader breadth weakness, but the S&P 500 and Nasdaq closed at record highs.
- DEP watchlist: BIIB, CSCO, TSEM, NVDA, AVAH
- SIPS: BIIB, CSCO, ARGX