Situation Awareness
Situation Awareness: Bullish. This morning, futures point toward fresh record highs for the S&P 500 and Nasdaq, buoyed by easing geopolitical tensions and renewed momentum in AI-related stocks. Mega-caps continue to lead the charge. Trade mode: Aggressive breakout. Easing geopolitical tensions between the U.S. and Iran, coupled with positive sentiment around AI partnerships, are driving the market, with weekly jobless claims data due later this morning. Regime context — 64.37% 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: CDNA GEVO QDEL BNAI
- What’s working: Delayed 9M with 105 signals.
- Leading sectors: Financials (ATR: 1.7), Technology (ATR: 2.66), Communication Services (ATR: 0.71). Data shows Consumer Staples (ATR: -1.93) and Energy (ATR: -0.54) are lagging.
- Key event: Weekly initial jobless claims report this morning.
- Market read: Yesterday’s tape saw mega-cap and tech strength push the S&P 500 to new closing highs, a trend likely to continue.
- DEP watchlist: AUR, BTDR, CLSK
- SIPS: AMAT, CURV, CVLT
Today’s Market Narrative
Equity futures signal a modestly higher open, following yesterday’s record highs for the S&P 500 and Nasdaq Composite. The rally was fueled by mega-cap strength, particularly in tech, while the DJIA lagged. Optimism persists around a potential longer ceasefire between the U.S. and Iran, stabilizing oil prices around $90 per barrel. AI partnership announcements are also supporting market sentiment.
Earnings season is underway, with big banks delivering solid reports. Attention now shifts to reports from outside financials. Asian markets rallied overnight, with Japan’s Nikkei reaching a record high, while European markets are also trading in the green.
Investors will be watching the weekly initial jobless claims report and other economic data, as well as monitoring developments in the U.S.-Iran peace talks. The market seems to believe that the geopolitical risks are receding and the impact on global economy will be mild, paving the way for new highs.
Macro & Policy
The bond market is anticipating a slightly higher start, with shorter tenors poised to recover some of yesterday’s declines. The 10-year Treasury yield sits around 4.27%. Overnight, positive economic data from China (in-line Q1 growth of 1.3% qtr/qtr) and the U.K. (upside GDP surprise for February at 0.5%) supported treasury futures. In FX the USD/JPY is at 158.96 and EUR/USD is at 1.1783.
Geopolitically, China’s President Xi is increasing cooperation with Russia, and Putin is expected to visit China in late May. European Central Bank officials remain skeptical about an April rate hike. The market appears to pricing in a benign outcome as tensions ease and oil prices stabilize around $90.
Economic Calendar Today
- 08:30 ET: Philadelphia Fed Index for Apr — Expected: 12.7 | Prior: 18.1 — A lower reading could signal a slowdown in manufacturing, potentially influencing rate cut expectations.
- 08:30 ET: Initial Claims for Apr 11 — Expected: 215K | Prior: 219K — Higher-than-expected claims could pressure the Fed to consider earlier rate cuts.
- 09:15 ET: Industrial Production for Mar — Expected: 0.1% | Prior: 0.2% — Positive reading could ease recessionary fears, and supports risk-on asset prices.
- Earnings reporting today (pre/post market): ABT, BK, SCHW, CFG, IIIN, KEY, MAN, MRSH, PEP, TRV, USB / AA, NFLX. Numerous earnings reports across diverse sectors creates potential for sector-specific volatility.
Earnings & Corporate News
Abbot Laboratories (ABT) beat EPS expectations by $0.01 but guided Q2 and FY26 EPS below consensus, resulting in a -2.5% pre-market drop to $99.05. Conversely, PepsiCo (PEP) beat EPS expectations by $0.07 and reaffirmed its FY26 guidance, leading to a 1.1% gain to $156.48. Travelers (TRV) beat EPS by $0.64 but missed revenue expectations, resulting in a -1.5% decline to $295.00.
Analyst activity includes an upgrade of Equitable Holdings (EQH) to Strong Buy at Raymond James with a target of $58 and a downgrade of Ambev (ABEV) to Sell at UBS with a target of $2.65. Caterpillar (CAT) is reportedly looking to acquire startup Monarch Tractor. CareDx (CDNA) issued upside Q1 revenue guidance.
WaveFinder Signal Summary
The scan environment reveals a mixed picture, with a relatively stronger indication for Delayed 9M signals at 105 while the 2LYNCH continuation scan provides 63 signals. The most compelling continuation setups include AMAT, CVLT, and OSIS given relative low risk. Overall market breadth indicates more cautious environment after yesterday, as % of stocks trading above 20SMA declined from 100% to 71%. Meanwhile, the 40SMA % rose slightly from 64.35 to 64.37%.
Today’s Watchlist
- CDNA — Upside Q1 revenue guidance and closing a deal – trading at a gap, look for range expansion at the open.
- CURV — Continuation breakout signal: a potential strong move at cheap risk.
- PEP — Beat and raise: A relatively stable large-cap name showing strength; watch for continuation.
- AMAT — Continuation/2LYNCH setup in the tech sector.
- BTDR — D9M setup in Financials (high ATR% and acceptable risk parameters.
Action Codes of the Day
- 2LYNCH The volume breakout scan produced over 60 signals, suggesting good opportunities for following momentum.
- T3A Numerous earnings and data releases create 3-day catalyst opportunities, and the market will react accordingly.