Situation Awareness
Situation Awareness: Cautious. The market remains cautiously optimistic on a potential peace deal between the U.S. and Iran, keeping the S&P 500 just 0.5% below its all-time high of 7,002.28. Trade mode: selective and watchful. Optimism surrounding ceasefire negotiations battles with the lingering impacts of the conflict with Iran and mixed earnings reports. Economic data is light today. Regime context — 63.79% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 0 bulls vs. 0 bears. The 5-day trend turned up 3 of 5 days, signaling early recovery.
SIP: STNE NKE AVGO NET
- What’s working: Reversal strategies are showing the most signals, with 107, but the absence of bull/bear signals suggests caution.
- Leading sectors: Technology (3.03), Financials (1.25), Industrials (1.52); leading themes: data unavailable.
- Key event: Potential resumption of ceasefire negotiations between the U.S. and Iran.
- Market read: Yesterday’s tape saw gains, fueled by a retreat in oil prices and leadership from mega-cap stocks. Today, the market seeks confirmation and consistency in the peace narrative.
- DEP watchlist: DELL, IREN, LEG
- SIPS: AMZN, AXSM, DKS
Today’s Market Narrative
Equity futures are stable this morning, signaling a flattish open after two sessions of gains, as optimism surrounding a potential ceasefire agreement between the U.S. and Iran tempers recent volatility. The gains of the prior sessions have left the S&P 500 just 0.5% below its all-time high of 7,002.28. Overnight, Asia-Pacific markets saw strength, while European markets were mixed.
The market’s upward momentum is supported by strong earnings reports from major banks like Morgan Stanley (MS 188.30, +4.96, +2.7%), which beat expectations. However, this is counterbalanced by the persistent presence of lingering concerns stemming from the conflict involving Iran and mixed signals from earnings reports.
The energy sector is underperforming this week, reflecting the market’s optimism about the potential for a lasting ceasefire agreement. Conversely, mega-cap stocks are showing leadership, contributing to the broad-based gains in the major averages. The market is currently pricing in the potential end of the Iran war, seemingly overlooking the long-term implications should negotiations stall. The focus stays on a ceasefire and lower oil prices.
Macro & Policy
Treasury Secretary Bessent indicated that growth in 2026 could easily exceed 3.0% and that tariffs could be restored to their prior levels by July. Meanwhile, China’s Foreign Ministry vowed countermeasures if the U.S. raises tariffs due to the Iran conflict. European Central Bank President Lagarde acknowledged the ECB is prepared to respond to the Iran conflict but cautioned that it’s too early to assess the full impact of the energy price shock.
The Bond Market Update shows U.S. Treasuries are on track for a slightly lower start after recent gains. The 10-year Treasury is currently yielding 4.27%. Overnight data showed strong export growth in South Korea, while Eurozone Industrial Production slightly exceeded expectations but remained down year-over-year. Crude oil is hovering just below $92/bbl, signaling stability following recent volatility.
Economic Calendar Today
- 07:00 ET: MBA Mortgage Applications Index for Apr 11 — Prior: -0.8% — Influences housing sector sentiment and mortgage rates.
- 08:30 ET: Empire State Manufacturing for Apr — Consensus 0.0; Prior -0.2 — Gauges manufacturing activity in New York.
- 08:30 ET: Import Prices for Mar — Prior 1.3% — Tracks inflation at the import level.
- 08:30 ET: Export Prices for Mar — Prior 1.5% — Tracks inflation at the export level.
- 10:00 ET: NAHB Housing Market Index for Apr — Consensus 38; Prior 38 — Reflects homebuilder sentiment.
- 10:30 ET: EIA Crude Oil Inventories for Apr 11 — Prior +3.08M — Impacts oil prices and energy sector.
- 14:00 ET: Beige Book — Provides anecdotal evidence on economic conditions across the U.S.
- 16:00 ET: Net Long-Term TIC Flows for Feb — Prior $15.5B — Measures international capital flows.
Earnings & Corporate News
Morgan Stanley (MS 188.30, +4.96, +2.7%) reported earnings this morning, topping estimates and making a notable move higher. Bank of America (BAC 53.84, +0.49, +0.9%) also beat EPS expectations by $0.10 and beat revenue expectations. ASML (ASML 1,495.39, -22.91, -1.5%) beat EPS expectations, but guided Q2 revenues below consensus.
Analyst upgrades include Alector (ALEC) upgraded to Overweight at Cantor Fitzgerald and American Tower (AMT) upgraded to Outperform at Mizuho, tgt $205. Downgrades include BRP Inc. (DOO) downgraded to Hold from Buy at TD Cowen, and SolarEdge Technologies (SEDG) downgraded to Sell from Neutral at Goldman, tgt $31. BRP Inc. (DOO) is gapping down -13.3% after suspending FY27 outlook citing tariff changes and cost impact.
WaveFinder Signal Summary
The scans today are slightly dry, with only a few continuation signals (101 signals), suggesting selective opportunities. Technology has the highest sector ATR, but there are no bull/bear 4% signals today. AMZN, AXSM, and DKS are the interesting names from the Continuation scan. The percentage of stocks above their 40-day SMA increased slightly to 63.79% from 63.49% yesterday.
Today’s Watchlist
- MS — Strong earnings beat and positive price action; potential continuation trade.
- AMZN — 2LYNCH setup, driven by meta news and technical strength; watch for breakout above $250.
- NET — Piper Sandler upgrade and high ATR sector, but -3.36% below change from open suggest weakness.
- AVGO — Extended Meta chip partnership; volume/price action, strong longer term trend.
- DELL — D9M setup, showing potential for rebound after recent pullback; consolidation near key SMA levels.
- STNE — Approved extraordinary cash dividend; may experience volatility; gap fills often present opportunities.
Action Codes of the Day
CRT Controlled Risk Taking — The absence of bull/bear 4% signals on the 4% Bull/Bear gauge suggests the market is in a more mixed or choppy mode, requiring a controlled approach.
T3A Think 3 Days Ahead — The market’s focus on ceasefire negotiations and the potential resumption of talks means anticipating the outcome of those talks could drive informed positions in related assets like oil and energy stocks.