Situation Awareness
Situation Awareness: Cautious. Markets look to open higher, shrugging off geopolitical flares with Iran, but volatility remains elevated. Trade mode: selective and defensive. Focus is squarely on today’s jobs report and how it might influence future rate cut expectations, even as energy prices remain elevated due to ongoing tensions. President Trump renewed trade war rhetoric with the EU. Regime context — 68% of stocks trade above their 20-day SMA, while 65.9% 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 down sequence, confirming downward momentum.
SIP: TNDM NUS PAR LOCO
- What’s working: earnings beats and guidance raises are generating upside (but not broad-based).
- Leading sectors: Technology (4.39 ATR, rising); leading themes: data unavailable.
- Key event: April jobs situation report, crucial for rate cut sentiment.
- Market read: yesterday’s pullback from record highs suggests some exhaustion; today’s open higher may be a relief rally or the start of a fresh leg up.
- DEP watchlist: AAL, CLSK, CORZ
- SIPS: COST, CRWD
Today’s Market Narrative
Equity futures are pointing to a higher open this morning, seemingly undeterred by renewed hostilities between the U.S. and Iran in the Strait of Hormuz. This comes after the S&P 500 and Nasdaq Composite hit record highs yesterday morning, only to retreat later in the session following an intraday jump in oil prices. The market is attempting to look past the geopolitical noise and focus on underlying economic strength and earnings.
Software stocks continue to show strength, fueled by earnings beats from companies like Akamai Technologies (AKAM 143.00, +26.31, +22.5%), whose gains are related to a $1.8 bln commitment from a leading frontier model provider. However, broad market participation remains questionable, with yesterday’s pullback suggesting some fragility beneath the surface. The direction of oil prices remains a key factor, as any sustained rally could reignite inflation concerns and further push out rate cut expectations.
The April Employment Situation Report is the main event today, with the market closely scrutinizing the numbers for any hints about the Federal Reserve’s next move. Strong job growth could reinforce the “higher for longer” narrative, while a weaker-than-expected report might breathe some life back into rate cut hopes. However, the surge in energy prices due to the war with Iran continues to be a primary concern, overshadowing even the jobs data to some extent.
Asia closed mostly lower. Japan’s Nikkei fell -0.2%, while South Korea’s Kospi rose by +0.1%. Kospi did see its biggest outflow of foreign currency of almost $5 billion yesterday. In Europe major market indices are mostly down, Dax -0.9%, FTSE -0.2% and CAC -0.8%.
Macro & Policy
The bond market is closely monitoring the incoming economic data to gauge the Fed‘s likely course of action. Overnight, the bond market is inching higher ahead of the jobs report. The U.S. Treasuries are up slightly looking to recover from losses on Thrusday. The 10-yr note is currently -2 bps to 4.37%. The market appears to be pricing in a reduced probability of rate cuts this year, reflecting both inflationary pressures and ongoing economic resilience, as highlighted by impressive earnings growth.
Geopolitically, the flare-up in tensions between the U.S. and Iran adds another layer of uncertainty. While President Trump downplayed the latest exchange of fire, the situation remains fluid and could easily escalate. Trump also set a July 4 deadline for the EU to fulfill the trade agreement or face higher tariffs.
Economic Calendar Today
- 08:30 ET: Nonfarm Payrolls for Apr — Expected: 67K | Prior: 178K — Key read on labor market strength and potential rate cut implications.
- 08:30 ET: Nonfarm Private Payrolls for Apr — Expected: 60K | Prior: 186K — Another look at the labor market.
- 08:30 ET: Unemployment Rate for Apr — Expected: 4.3% | Prior: 4.3% — A trend higher would raise alarms.
- 08:30 ET: Average Hourly Earnings for Apr — Expected: 0.3% | Prior: 0.2% — Inflationary pressure within jobs data.
- 08:30 ET: Univ of Michigan Consumer Sentiment – Prelim for May — Expected: 50.5 | Prior: 49.8
- 10:00 ET: Wholesale Inventories for Mar — Expected: 1.4% | Prior: 0.8%
- Earnings reporting today (pre-market): AQM, AMR, AMCX, ANIP, CLMT, ROAD, DCH, EMBJ, FLR, FTS, TILE, KOP, OSK, etc.
Earnings & Corporate News
Earnings season continues to be a mixed bag, with some companies soaring on strong results while others are getting punished for misses or weak guidance. Airbnb (ABNB) missed EPS estimates but beat revenue expectations and guided Q2 revenues above consensus. Akami Technologies (AKAM) beat EPS expectations and reported revenues in-line, with a major commitment from a top AI model provider.
FWRD is gapping down significantly at -42.5% on weaker earnings. UPWK is down -22.3% and NET is down -17.6%, also in reaction to earnings.
On the analyst front, PTC Therapeutics (PTCT) was upgraded to Buy at TD Cowen, while HubSpot (HUBS) suffered multiple downgrades after its report. KLA Corporation (KLAC) announced a 10-for-1 stock split. Logitech Int’l SA (LOGI) is initiating a new $1.4 bln share buyback program.
WaveFinder Signal Summary
The scan environment is relatively dry, reflecting the market’s cautious tone. While there are 57 continuation signals and 58 delayed 9M signals, the scans are not as robust as they were earlier in the week, signalling contraction and less volume in the markets. The low Bull/Bear ratio (0 bulls vs 0 bears) across the 4% range shows increased uncertainty and caution, and the % of stocks trading above their 40-day SMA declined from 67.64% to 65.9%.
Top setups include FLNC, due to that name appearing in both the Delayed 9M and the Gapping Up list. For swing trading candidates, COST and CRWD looks to benefit.
Today’s Watchlist
- COST — 2LYNCH continuation breakout, relative strength as consumer staples rotate into favor, buy the dip.
- CRWD — 2LYNCH software strength should help maintain momentum.
- FLNC — Delayed 9M signal; high-risk, high-reward catalyst event, but needs to hold initial gains.
- AKAM — Gapping up over 20% on AI deal, MAGNA53 setup if volume confirms.
- UPWK — Down big on earnings, potential BTFD if macro supports.
- PLNT — Down big on analysts downgrades, reversal signal could trigger a mean reversion.
Action Codes of the Day
CRT — Controlled Risk Taking given heightened volatility and mixed signals (65.9% above SMA40).
T3A — Think 3 Days Ahead monitoring geopolitical headlines (Iran) and the jobs report for directional bias.