Situation Awareness
Situation Awareness: Cautious. Uneasiness prevails as U.S.-Iran negotiations face headwinds amid a busy earnings week. Trade mode: selective and defensive. Market participants are treading carefully as negotiations between the U.S. and Iran stall, injecting geopolitical risk into the mix, ahead of a week packed with mega-cap earnings reports and the FOMC decision. 71.49% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 121 bulls vs. 128 bears. The 5-day trend shows a mixed sequence, indicating indecision despite recent highs.
SIP: XOMA NE NOK MANE
- What’s working: Revenue & Marketshare themes
- Leading sectors: Technology (2.88), Financials (1.94), Industrials (1.65) from Sector Volatility ATR data; leading themes: Market Share, Revenue, New Product
- Earnings from mega-cap tech — Amazon, Microsoft, Alphabet, Meta, and Apple — are slated for release this week.
- Last week, the market logged a choppy but resilient week, holding near record levels amid mega-cap leadership and geopolitical uncertainty; narrow leadership continued.
- DEP watchlist: ENVB, INDI, MBLY
- SIPS: HPK, LPLA
Today’s Market Narrative
Equity futures are indicating a muted start to the week, largely influenced by stalled negotiations between the U.S. and Iran. This geopolitical uncertainty is tempering enthusiasm, despite Asia-Pacific markets starting the week on a mostly higher note. Japan’s Nikkei (+1.4%) and South Korea’s Kospi (+2.2%) both reached fresh records, but U.S. Futures show a flattish to slightly negative opening. News that Iran presented a proposal to restore traffic through the Strait of Hormuz offered some encouragement, but skepticism persists.
The week ahead is dominated by mega-cap earnings, with five of the Magnificent Seven set to report. The market will be closely scrutinizing these reports for continued leadership and insights into the AI-driven rally that powered the S&P 500 and Nasdaq Composite to record highs last week. Investors are also anticipating the April FOMC decision, but a rate change is not expected.
Early corporate news includes Eli Lilly’s (LLY) acquisition of Ajax Therapeutics for up to $2.3 billion and China blocking Meta Platforms’ (META) $2 billion purchase of Manus. Verizon Communications (VZ) reported better-than-expected EPS but missed revenue expectations, raising its FY26 EPS guidance above consensus. These individual stock stories are likely to contribute to stock-specific volatility amid the overarching macro uncertainty.
Macro & Policy
Negotiations with Iran regarding the Strait of Hormuz continue to be a key focus, with President Trump planning a Situation Room meeting to review Iran’s latest proposal. The market is wary, seeking signs of de-escalation that could alleviate concerns about rising energy prices and broader geopolitical instability. Bond market activity is being closely monitored amid these uncertainties.
Treasury yields have been fluctuating in response to news flow. The $69 billion 2-year Treasury note auction met decent demand, drawing a high yield of 3.812%. The U.S. Treasury will also sell 5-yr notes at 13:00 ET. Expectations for rate hikes from the European Central Bank and the Bank of England remain elevated due to persisting energy prices.
Economic Calendar Today
- No economic data of note scheduled for release today. Expect a relatively quiet macro data environment, with market focus shifting to geopolitical updates and corporate earnings news.
- Earnings reporting today (pre-market): DPZ, DEA, NE, VZ. Attention will be focused on Verizon’s results and forward guidance, given its size and influence. Also, Nobel Corp Q1 results will be closely watched.
- No Fed speakers or scheduled Treasury auctions besides the $70 billion 5-year Treasury note auction later at 13:00 ET, reducing potential catalysts outside of corporate news.
Earnings & Corporate News
Verizon (VZ) beat EPS expectations by $0.07, reporting $4.95-4.99 FY26 EPS, missing revenue, and raised FY26 EPS guidance above consensus, driving the stock higher. Noble Corporation (NE) also posted better-than-expected Q1 results, with improving utilization which bolstered the rally in exploration. Domino’s Pizza (DPZ), however, missed EPS estimates by $0.14, leading to a gap down.
In M&A news, Eli Lilly (LLY) is set to acquire Ajax Therapeutics for up to $2.3 billion in cash. China blocked Meta Platforms’ (META) $2 billion purchase of Manus, according to the Financial Times. These corporate actions are introducing stock-specific catalysts amidst overall market uncertainty.
WaveFinder Signal Summary
Today’s scan environment is relatively selective, with 75 continuation/2LYNCH signals, 50 delayed 9M signals, and 47 reversal signals. The relatively low signal count suggests a more cautious approach. Top setups to watch include ANTX from the healthcare sector (Continuation signal) and ENVB from the medical sector (Delayed 9M).
Market breadth indicates weakening momentum, with only 27% of stocks above their 20-day SMA, a decrease from 51% yesterday. However, longer term breadth remains strong with 71.49% of stocks above their 40 SMA.
Today’s Watchlist
- VZ — Verizon beat on earnings, raised guidance; follow-through potential supported by strong industry fundamentals amid elevated energy prices.
- NE — Solid Q1 beat; potential for further upside with rising dayrates; offshore drilling thematic opportunity.
- ANTX — Continuation breakout in healthcare offering opportunity.
- ENVB — Delayed 9M signal in medical sector. Consider monitoring for momentum above initial resistance.
- LLY— Acquisition news could drive further momentum as markets digest strategic rationale.
- LPLA— Continuation Setup in the financial sector.
Action Codes of the Day
CRT Controlled Risk Taking — Selective earnings reactions amidst increased geopolitical uncertainty; requires carefully assessing individual stock setups. Overall market volatility remains elevated.
BBT Big Bang Theory — Noble Corporation (NE) posted better-than-expected Q1 results, is up more than 3.8% and saw a good volume indicating a sustained move higher.