Situation Awareness
Situation Awareness: Bullish. Stocks continue to push into record territory in the wake of easing geopolitical tensions and a resilient earnings outlook. Broad participation suggests underlying strength, though the recent rally warrants vigilance. Trade mode: Aggressive breakout. The market remains optimistic as U.S. and Iran are likely to resume talks over the weekend and Israel and Lebanon agreed on a 10-day ceasefire. Regime context — 66.31% 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 a consistent up sequence, confirming upward momentum.
SIP: ALLY BMI ZSPC SNAL
- What’s working: Trending sector rotation and momentum names; reversals triggering late-stage shorts.
- Leading sectors: Communication Services (1.26), Financials (1.69), Technology (2.45); leading themes: (Market closed — no live data)
- Key event — No significant market-moving events scheduled.
- Market read: Yesterday’s broadening participation confirmed the rally’s health, suggesting further upside potential today, though overbought conditions call for selective entries
- DEP watchlist: BULL, COIN, CONL
- SIPS: ACH, AMD, ANET
Today’s Market Narrative
Equity futures indicate another higher open this morning, extending the S&P 500 and Nasdaq Composite’s record-setting streak. Yesterday saw both indexes reach new all-time highs for the second consecutive session, accompanied by broader market participation, a bullish sign. Early tech weakness was quickly bought, fueling a 12th straight session of gains for the Nasdaq Composite. The optimism hinges on a constructive geopolitical backdrop, with potential U.S.-Iran talks resuming over the weekend and a ceasefire holding between Israel and Lebanon.
President Trump’s remarks that the Iran war “should be ending pretty soon” further boosted sentiment, minimizing selling pressure. Attention now shifts to corporate earnings, though the news flow remains relatively light this morning. Economic data is absent from today’s agenda, leaving the market to further digest recent reports and focus on individual company performances.
Overnight, Asia-Pacific markets saw a mixed performance, with Japan’s Nikkei pulling back from record territory by -1.8% due to receding expectations for a Bank of Japan rate hike. European indices are mostly higher, influenced by a 30% drop in French train manufacturer Alstom after withdrawn free cash flow guidance. WTI crude oil has declined -$3.21 (-3.5%) to $87.96 per barrel.
The market’s focus will be on earnings releases and any updates regarding the geopolitical situation in the Middle East. Despite the lack of economic datapoints, investors remain optimistic, looking for confirmation of earnings strength and a swift resolution to the war in Iran.
Macro & Policy
The bond market is expected to open modestly higher following previous losses. The 10-year Treasury yield currently sits at 4.30%, down 1 bp overnight. The 2-year Treasury yield is at 3.77%, down 1 bp. The market will be closely watching U.S.-Iran negotiations. President Trump mentioned potential talks resuming this weekend but expressed uncertainty regarding extending the ceasefire agreement.
Fitch noted that China’s credit outlook remains bogged down by weak domestic demand. The People’s Bank of China has increased the cap on bank lending to offshore entities. European Central Bank policymaker Muller suggested that the energy shock might not be temporary, not ruling out a rate hike this month.
The market awaits further clarity on the trajectory of interest rates and geopolitical stability. Stable Treasury yields have been a source of support for the recent rebound, alongside falling oil prices and better-than-expected earnings results.
Economic Calendar Today
- No economic data releases scheduled for today. This means the market’s focus will be primarily on company-specific news and earnings reports, potentially leading to higher volatility in individual stocks.
- Earnings reporting today (pre-market): ALLY, ALV, ERIC, FITB, RF, STT, TFC
Earnings & Corporate News
Netflix (NFLX) is gapping down -10.2% after beating EPS expectations by $0.47, reporting revenues in-line, guiding Q2 EPS and revenues below consensus, and reaffirming its FY26 guidance. Reaction to this news will weigh on sentiment in tech generally.
Truist Financial (TFC) beat EPS expectations by $0.09, reported revenues in-line, guided Q2 revenues below consensus, and guided FY26 revenues in-line; the stock is down -0.9% premarket. Autoliv (ALV) beat by $0.22, and beats on revs; their stock is up +9.2%. Apple (AAPL) is up +1.5% after iPhone shipments increased 20% in China in Q1, according to Reuters.
Analyst upgrades include Petrobras (PBR) upgraded to Buy from Neutral at BofA Securities, tgt $24.80. Albemarle (ALB) downgraded to Neutral from Outperform at Robert W. Baird, tgt $210. Floor & Decor (FND) downgraded to Underperform from Buy at BofA Securities, tgt $45.
WaveFinder Signal Summary
Today’s scan environment suggests continued bullish momentum, though selectively. Continuation/2LYNCH scans show a healthy signal count of 127, indicating good breadth and follow-through potential. A combination of earnings reactions from the pre-market and sustained D9M plays are in effect.
The percent of stocks above their 40-day SMA increased slightly to 66.31% from 66.19% yesterday. However the SMA20 percentage decreased to 95% from 111% Day over day. The overall sentiment remains bullish, with traders continuing to favor momentum and breakout strategies.
Today’s Watchlist
- ALLY — Better-than-expected Q1 earnings, continuation breakout potential, monitor volume and price action for entry.
- AMD — Strong momentum play following positive analyst chatter, watch for continuation breakout near $278.
- NFLX — Post-earnings gap down presents a potential BTFD opportunity, look for stabilization and reversal patterns.
- ACH — 2 LYNCH setup in Healthcare
- CONL — D9M signal suggests sustained upside potential.
- KURA – Recent positive data, watch for pullbacks to support levels
Action Codes of the Day
- 2LYNCH — Continuation breakouts are abundant, with 127 signals suggesting a strong momentum environment which supports intraday breakouts
- BTFD — Netflix shares gapping down -10.2% post underwhelming guidance, BTFD may be in play if sentiment shifts.