Situation Awareness
Situation Awareness: Cautious. Market character is defined by a fragile ceasefire agreement between the U.S. and Iran, with doubts emerging about its longevity given continued tensions in the region and the closure of the Strait of Hormuz. Trade mode: selective and defensive. Today’s specific context involves cautious optimism balanced against geopolitical uncertainty and a full slate of economic data releases, including the February PCE Price Index. Regime context — 51.69% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 0 bulls vs. 0 bears. The 5-day trend shows data unavailable.
SIP: GLMD MRVL NUAI CCCC
- What’s working: Continuation breakouts and Delayed 9M continue showing strong setups.
- Leading sectors: Utilities’ ATR shows a currentValue of 2.01 with a rising trend; Technology with a currentValue of 0.97 and a rising trend; Financials with a currentValue of 0.72 and rising trend. Leading themes: (Market closed — no live data).
- Key event: Tensions around the U.S.-Iran ceasefire and the continued closure of the Strait of Hormuz.
- Market read: Yesterday’s risk-on rally was triggered by ceasefire news, but today’s market is exhibiting more caution as geopolitical risks linger.
- DEP watchlist: AVGO, INTC, FLY, KOS
- SIPS: AMAT, AME, ARW
Today’s Market Narrative
Equity futures point to a modestly lower opening this morning as investors cautiously monitor the tenuous ceasefire agreement between the U.S. and Iran. The initial euphoria from yesterday’s two-week ceasefire has faded, with concerns arising that the Strait of Hormuz remains closed, which the WSJ reports is causing concern among officials that the ceasefire could be upended. Overnight, equity indices in the Asia-Pacific region ended Thursday on a lower note: Japan’s Nikkei -0.7%, Hong Kong’s Hang Seng -0.5%, and China’s Shanghai Composite -0.7%. Major European indices also traded mostly in the red, with Germany’s DAX down -1.0%. Crude oil is up $4.09 (+4.3%) to $98.50 per barrel after retreating more than 16% yesterday, adding to inflationary pressure.
The market is set to receive a full slate of economic data this morning, including the February PCE Price Index, the Fed‘s preferred inflation gauge (Briefing.com consensus 0.4%). Investors are also weighing corporate news, including Constellation Brands (STZ) beating EPS expectations by $0.19 but guiding FY27 EPS below consensus. Meta Platforms (META) and CoreWeave (CRWV) expanded a $21 billion AI infrastructure deal, while Walt Disney (DIS) is planning layoffs according to the WSJ.
The S&P 500 futures are down -19 at 6,805, the DJIA futures are down -174 at 47,970, and the Nasdaq futures are down -50 at 25,025, reflecting the cautious sentiment. Sector rotation may be driven by the uncertainty in the energy markets and the shift in risk appetite.
Macro & Policy
The overnight Treasury market summary shows the 10-Yr yield up +2/32 to 4.284%, reflecting concerns about inflation. The market continues to monitor the U.S.-Iran ceasefire situation and its implications for oil prices and inflation. The Bank of England’s Financial Stability Board noted that some stresses may be emerging in private credit. G7 finance ministers will meet in Washington this weekend.
The overall macroeconomic picture remains clouded by geopolitical factors. While earnings estimates have continued to rise (the forward twelve-month earnings estimate for the S&P 500 is now $329.02), doubts are surfacing about their achievability amid supply chain disruptions and higher energy costs. The market is trying to balance the potential for further rate hikes (37% probability of a 25-basis-point hike at the December FOMC meeting) with the hope of a swift resolution to the conflict.
Economic Calendar Today
- 08:30 ET: Personal Income for Feb — Expected: 0.5% | Prior: 0.4% — Tracks consumer financial health.
- 08:30 ET: Personal Spending for Feb — Expected: 0.6% | Prior: 0.4% — Key for assessing economic growth trends.
- 08:30 ET: PCE Prices for Feb — Expected: 0.4% | Prior: 0.3% — The Fed‘s preferred inflation gauge.
- 08:30 ET: PCE Prices – Core for Feb — Expected: 0.3% | Prior: 0.4% — Core inflation trends.
- 08:30 ET: Initial Claims for Apr 4 — Expected: 215K | Prior: 202K — Indicates labor market health.
- 08:30 ET: GDP – Third Estimate for Q4 — Expected: 0.7% | Prior: 0.7% — Final revision of Q4 GDP.
- 10:00 ET: Wholesale Inventories for Feb — Expected: -0.2% | Prior: NA — Reflects supply chain dynamics.
- 10:30 ET: EIA Natural Gas Inventories for Apr 4 — Expected: NA | Prior: +36 bcf — Influences energy prices.
- Earnings reporting today (pre-market): NEOG, SMPL
- Earnings reporting today (post-market): WDFC
Earnings & Corporate News
Constellation Brands (STZ) beat EPS expectations by $0.19 but guided FY27 EPS below consensus, leading to a slight gap down. Meta Platforms (META) and CoreWeave (CRWV) expanded their AI infrastructure deal, demonstrating continued investment in AI. Walt Disney (DIS) is planning to lay off as many as 1,000 workers, according to the WSJ.
Analyst upgrades include Alcoa (AA) upgraded to Overweight from Equal Weight at Morgan Stanley, tgt $80 and Marvell (MRVL) upgraded to Overweight from Equal Weight at Barclays, tgt $150. Downgrades include Assertio (ASRT) downgraded to Neutral from Buy at H.C. Wainwright, tgt $18 and Kosmos (KOS) downgraded to Sell from Neutral at Goldman, tgt $2.25.
WaveFinder Signal Summary
The scan environment shows moderate signal volume. The Continuation scan has 117 signals, indicating reasonable opportunity for breakouts, while the Delayed 9M scan shows 69 signals, pointing to potential longer-term plays. With the overall mood cautious, delayed trends appear stronger.
Top setups worth watching include AMAT and AME from the Continuation scan. Breadth is contracting, with 38% of stocks above their 20 SMA compared to 68% yesterday, while 51.69% of stocks are above their 40 SMA vs 51.26% yesterday.
Today’s Watchlist
- AMAT — 2LYNCH breakout in the CHIPS sector.
- AME — 2LYNCH breakout in the MACHINE sector.
- STZ — Post-earnings gap down after beat, reversal setup potential.
- CRWV — Rising on partnership news / momentum in Software sector, watch for continuation.
- INTC — D9M signal in Chipes, catalyst upgrade may spur sustained trend.
- DAL — Affirming demand despite headwinds, watch as airlines outperform.
Action Codes of the Day
- CRT Calculated risks within system, choppy markets [Due to the fragile geopolitical situation and mixed economic signals, taking controlled risks within a well-defined system is prudent.]
- BTFD Buy The Dip [Given the market’s reaction to any news in the Iran war, buying pullbacks related to ceasefire concerns can be an effective strategy.]