Situation Awareness: Cautious. Market character is defined by a “buy-the-dip” mentality clashing with a hawkish Fed reality. Investors are digesting encouraging Iran negotiations which have capped oil prices, while simultaneously recalibrating expectations for a restrictive rate environment under Chair Warsh. Trade mode: Selective and defensive. The tape is waiting for the PCE data later in the week to confirm if inflation is truly cooling or if the “higher for longer” narrative will persist. Regime context — 56.78% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 558 bulls vs. 194 bears. The 5-day trend turned up 3 of 5 days, signaling early recovery after the mid-week FOMC selloff, though the 20-day SMA participation has contracted significantly from 104% to 81%.
SIP: SPCX KR ACN MU
- What’s working: Continuation signals are rich with 17 active setups, indicating resilience in specific pockets despite the macro headwinds.
- Leading sectors: Semiconductors (driven by Intel/AI news), Defense (geopolitical stability), and Home Construction (rate-sensitive rebound). Leading themes: AI Infrastructure, Geopolitical De-escalation, and Housing Affordability.
- Key event: The 60-day memorandum of understanding between the U.S. and Iran, which has stabilized energy markets and removed an immediate risk premium.
- Market read: Yesterday’s tape showed a classic “FOMC hangover” where the initial hawkish shock was quickly absorbed by buyers betting on a peace deal and AI earnings strength. The market is now in a consolidation phase, looking for confirmation on inflation before the next leg up.
- DEP watchlist: TSM, SMCI, ALGM
- SIPS: BE, COMP, DIOD