Situation Awareness
Situation Awareness: Cautious. Equity futures are edging higher, but yesterday’s session saw a pause in the recent record push, with mega-cap tech names exhibiting some profit-taking. Trade mode: selective and defensive. Investors are juggling a hefty batch of earnings reports with ongoing geopolitical developments related to Iran. Regime context — 74.08% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 4% Neutral. The 5-day trend shows early signs of weakening, with participation contracting.
SIP: UNH AMZN RTX AXTI
- What’s working: Despite positive earnings results only Continuation signals have fired today.
- Leading sectors: Technology (3.02), Communication Services (2.05), Financials (2.93). Industries not sectors for themes, sorry, market closed.
- Key event: Senate confirmation hearing for Fed Chairman nominee Kevin Warsh this morning.
- Market read: Yesterday’s pause after a V-shaped rally to all-time highs suggests a digestion phase. The market needs to consolidate gains and digest earnings data before committing to further upside.
- DEP watchlist: AFRM BBWI CLSK CONL ETHU GLXY GT
- SIPS: AESI AEYE AMPX APPF ATOM AVBP
Today’s Market Narrative
Equity futures are pointing to a higher opening this morning, driven by a mix of factors: investors sifting through earnings reports, digesting the previous day’s pullback, and monitoring geopolitical developments. The major averages finished mostly lower on Monday, with the Nasdaq Composite snapping a 13-session winning streak as tech and mega-cap names took a breather. However, the broader market held up reasonably well, as evidenced by the S&P 500 Equal Weighted Index finishing with a modest gain. The Nasdaq’s streak was fueled by AI enthusiasm and mega-cap strength, but consumer weakness could threaten growth outlook.
Overnight, Asia-Pacific markets were mostly higher, with Japan’s Nikkei up +0.9% and South Korea’s Kospi soaring +2.7%, driven by a surge in exports. European markets are also trading with modest gains. Domestically, earnings season is in full swing, with solid results from several Dow components, including UnitedHealth (UNH), helping to maintain growth projections. While the geopolitical situation with Iran remains a concern, the market seems to be looking past the conflict, focusing more on earnings and economic data.
Oil prices are relatively flat this morning after bouncing on Monday, as U.S.-Iran negotiations continue. Oil remains below $90/bbl, signaling a degree of stabilization. Meanwhile, the Senate will hold a confirmation hearing for Fed Chairman nominee Kevin Warsh this morning, which could provide some insights into the future direction of monetary policy. Look for idiosyncratic behavior linked to company headlines.
Macro & Policy
The bond market is mixed this morning, with shorter tenors showing a slightly lower start, while the long end is expected to show some relative strength. The 10-yr note yield is at 4.26%. U.S. officials are traveling to Pakistan to meet with Iranian representatives. President Trump said that he is highly unlikely to extend the ceasefire agreement that expires tomorrow. The U.S. Dollar Index is up 0.1% at 98.21. Key macro events include ongoing U.S.-Iran negotiations and the Senate confirmation hearing for Fed Chairman nominee Kevin Warsh, which could impact investor sentiment.
Economic Calendar Today
- 08:30 ET: Retail Sales for Mar — Expected: 1.3% | Prior: 0.6% — Higher-than-expected retail sales could boost GDP growth estimates but also fuel inflation concerns.
- 08:30 ET: Retail Sales ex-auto for Mar — Expected: 0.9% | Prior: 0.5% — A strong reading here would indicate healthy consumer spending, excluding auto purchases.
- 10:00 ET: Business Inventories for Feb — Expected: 0.1% | Prior: -0.1% — A rise in business inventories suggests increased confidence in future sales.
- 10:00 ET: Pending Home Sales for Mar — Expected: 0.5% | Prior: 1.8% — This is a leading indicator of housing market activity. A positive number could be constructive for the housing sector.
- Earnings reporting today (pre-market): MMM, AUB, DHI, DHR, EFX, FOR, GE, GPC, HAL, MSCI, NTRS, NOC, OFG, DGX, RTX, SYF, TSCO, UCB, UNH, VMI, VICR
- Earnings reporting today (post-market): ADC, OZK, CALX, COF, CB, CYH, EWBC, EQT, ELS, HWC, IBKR, ISRG, MANH, MCRI, NBHC, PEGA, RRC, SON, UAL, WRB WFRD WSBC, WAL, ZWS
Earnings & Corporate News
Earnings season is driving individual stock performance. Amazon (AMZN) agreed to invest up to $25 billion in Anthropic as part of an AI infrastructure deal, according to CNBC. UnitedHealth (UNH) beat EPS expectations by $0.65, beat revenue expectations, and guided FY26 EPS above consensus, contributing to a gapping up +5.8%. 3M (MMM) beat EPS expectations by $0.16 but reported revenues in-line, while Tractor Supply (TSCO) missed by $0.03 and also missed on revenues.
Analyst ratings are also influencing trading. Arrowhead Pharma (ARWR) was upgraded to Overweight from Equal Weight at Morgan Stanley, tgt $100. Conversely, Valero Energy (VLO) was downgraded to Underperform from Peer Perform at Wolfe Research, tgt $203. In M&A news, ServiceNow (NOW) completed its acquisition of Armis for $7.5 bln in cash.
WaveFinder Signal Summary
The scan environment shows mixed signals. Continuation signals are somewhat rich with 136 overall but given market conditions it’s best to be selective. The top setups to watch include UNH due to its strong earnings beat and AMAZON, potentially setting up for a continuation move. The % of stocks above their 40-day SMA have contracted (-0.2pp) from 74.32% to 74.08% compared to yesterday, potentially indicating early signs of short term weakness.
Today’s Watchlist
- UNH — Strong earnings beat and raised guidance, 2ly Lynch above 346.27 could follow through.
- AMZN — $25B Anthropic stake is a positive catalyst; look for a continuation above 255.84.
- RTX — Beat on earnings and reaffirmed guidance; 2LYNCH above current levels can result in continuation trades.
- AXTI — Shares gapped down after revenue guidance, watch to see how they recover from 78.76.
- TSCO — Mised on expectations, watch to see the after earnings fallout in the days to come.
- CLSK — A D9M play with a decent setup in the finance sector.
Action Codes of the Day
- CRT Controlled Risk Taking — Market is mixed, with lingering geopolitical uncertainty and earnings driving idiosyncratic moves; this environment requires a cautious approach.
- BBT Big Bang Theory — Monitoring AMZN and UNH and AXTI if there’s volatility due to the $25 bln Antrhopic stake and results respectively could lead to substantial moves.