Midday Wave #120: Cracks Beneath the Rally: Breadth Warns as Sentiment Stays Bullish – Wednesday 9/30/2026

Welcome to Wave Rider Midday Wave, your mid-session market intelligence. Let's dive in. Cinnamon still says bullish at 4%, but 20 SMA breath just dropped three full points since yesterday. Something's not adding up. Let's find out what. Honestly, right. I mean, okay, so how's the regime shifted since the open? So basically the surface looks fine, but the internals are cracking. 40 SMA breath is at 17.39 down from 17.8 yesterday. Hmm, small slip. I mean, small, but the 20 SMA, that's down from 18 to 15, a three-point drop. Oh, wow. Wait, that's the short-term measure, right? Look, exactly. Short-term participation is thinning fastest. That's the warning. And the bear count fell to 137 down to 88. Doesn't that mean... It sounds bullish, I know, but honestly, that bear drop is noise. Bulls also cooled 158 to 152. The signal that matters is the 20 SMA. Right. Huh. So the crowd's cheering while the foundation cracks. You know what? That's exactly it. Yeah. What about the index levels? S-P-Y-Q-Q-I-W-M, date is unavailable at midday, so we're navigating by breath and single names today. Mm-hmm. I mean, flying without the altimeter. Pretty much, but we've still got instruments. Right, right. And sector rotation, any leadership change? Here's the thing. One pocket. Technologies at the 98th percentile. Up, 0.59. Meanwhile, financials, energy, staples, all near the bottom. Staples is literally zero-th. Oh, man. Oh, wow. That's a wide gap. Honestly, as wide as it gets. Yeah, totally. So basically, okay, so if breath is fading, which signals are still holding and which are cracking. Continuation-wise, USDEs the standout. Up 9.3% to 16.74, but R-Vall is on 0.8%. So, continuation without confirmation. Right. Movement, no gas pedal. Mm-hmm. What about soft? Holding green aligned with tech. S-N-P-S up 1.6 at 4.21.91. PLTR up 1.6 at 189.86. V-Eve up 2.9 at 286.53. Mm-hmm. But V-Eve and R-S-K-D. R-S-K-D's up 2.9 at 7.93. They're drifting on light R-Vall, 0.4 to 0.5. Follow-through without acceleration. Sure. Any fresh and... F-O-R-M clean bullish setup at 136.25 on an analyst by initiation. R-Vall 1.1. Nice. That's in chips, right? You know what? It is. And here's the tension. Same group, opposite signal. C-B-R-S is bearish, down 3.25 from the open to 194.95. Wait, what's dragging? A hardware headline, open AI choosing NVIDIA. So you've got two names in the same sector pulling opposite ways. Right. Which one do you trust? Honestly, forms the counterweight, but you respect the divergence. It mirrors the whole tape, bullish headline, weakening internals. Okay, and the 20% study? So this is the part that stands out. K-O-D alone. R-Vall 4.64, a 16.92 ATR multiple. Sitting just 4.86% below its 52-week high. Oh, wow. 4.64 R-Vall? That's a real money. Look, the only name at the party with cash in its pocket. CDNS and ONTO are both pressing into supply. Decision points, but no volume like K-O-D. So convictions narrowing to a handful of names. What changes for the after? For the afternoon, you shift from broad continuation exposure to selective high conviction setups. Stay in tech and software, lean on K-O-D type confirmation. And the single most important? Important level. CDNS supply zone, 336.22 to 342.375, about 2.5% overhead. Continuation or rejection there sets the tone for chips. And K-O-D? Its approach to the 52-week high is the cleanest breakout or blowoff call of the session. So watch. Watch both and keep size tight. The 20 SMA drop and those bleeding sectors demand respect. Right. Bullish sentiments masking thinning breath. That's the whole story today. So stay selective. Lean into tech and software. Watch K-O-D and CDNS into the close. Keep size tight. Watch those two levels and we'll have the close wrapped for you in the next update. That's all for today's episode of Wave Rider Midday Wave. Your mid-session market intelligence. See you next time.