Morning Dose #264 Bearish

Morning Dose #264: Market Shift: Inflation, Oil, and the End of Broad Rallies – Tuesday 5/12/2026

May 12, 2026 5:12

Tickers Mentioned

SPY QQQ Q HIMS WEN VIK F EBAY GME GTLB+1 more

Episode Summary

Host Gacrux and Analyst Algenib dissect a sudden regime shift in the market driven by sticky inflation and rising oil prices. They analyze the narrowing market breadth, identify defensive sectors, and provide a tactical playbook for trading individual stock gaps rather than the broader index.

Key Takeaways

CPI data shows elevated inflation.
Oil price surge adds to concerns.
Geopolitical risks escalate with Iran tensions.
Earnings season largely over; limited impact.
Market breadth contracting.

Situation Awareness

Situation Awareness: Cautious. Market character is defined by a push-pull between inflationary pressures, geopolitical tensions, and selective strength in specific sectors like semiconductors and industrial production equipment. Today’s trade mode is selective and defensive. Macro dynamics are heavily influenced by April’s CPI data and rising oil prices impacting consumer sentiment and spending. Geopolitical uncertainty stems from escalating tensions with Iran. The latest data shows a tug of war between inflation and economic growth. Regime context — 52.88% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 109 bulls vs. 245 bears. The 5-day trend shows a consistent down sequence, confirming downward momentum.

SIP: Q HIMS WEN VIK

What’s working: Reversal scan is signalling potential bounce trades in down trending names.
Leading sectors: Energy (+2.6%), Materials (+1.4%), Industrials (+1.0%) ; leading themes: (market closed – using Volatility data N/A).
Key event: April CPI data release showed elevated inflation readings, impacting expectations for near-term Fed rate cuts.
Market read: Yesterday’s tape showed semiconductor driven record highs, but many stocks lagged, foreshadowing today’s pre-market weakness. Expect rotation to value or oversold names if tech falters.
DEP watchlist: (data missing)
SIPS: (no continuation signals)

Today’s Market Narrative

Equity futures are pointing to a lower open this morning, driven by a surge in oil prices and ahead of the April CPI report. The S&P 500 and Nasdaq Composite reached fresh record highs in the prior session, fueled by continued strength in semiconductor and AI-related names. However, escalating tensions between the U.S. and Iran are weighing on sentiment, with reports suggesting potential resumption of combat operations. Rising oil prices, up $3.39 to $101.46 per barrel, are adding to inflationary concerns and pressuring equities.

Overnight, Asia-Pacific markets were mostly lower, with South Korea’s Kospi reversing after hitting a record high and Japan’s Nikkei settling at a fresh record. European markets are also trading in the red, with the U.K.’s FTSE outperforming. Economic data from Japan, Australia, and India showed mixed results. The focus today will be on the April CPI report, which is closely watched for signs of broader inflationary pressure. With earnings season winding down, corporate news and geopolitical developments are set to play a bigger role in market sentiment.

After yesterday’s close, AST SpaceMobile and Hims & Hers Health shares came under pressure after earnings. Several companies beat earnings estimates, including Qnity Electronics (Q), which also raised its FY26 guidance, and Wendy’s (WEN), following reports of Trian Fund Management considering taking the company private. Today, the market is digesting the impact of these earnings reports and analyst ratings changes while keeping an eye on potential catalysts from ongoing geopolitical risks.

Macro & Policy

The bond market is reacting to the latest CPI data, with the 10-year Treasury yield rising. Overnight, gilts underperformed, pushing the U.K.’s 10-year yield to levels not seen since July 2008 amid speculation about looser fiscal policy. The April CPI report showed an increase of 0.6% month-over-month, leaving total CPI up 3.8% year-over-year, while core CPI jumped 0.4% month-over-month, leaving core CPI up 2.8% year-over year. These elevated inflation readings are above the Fed‘s 2% target and signal that rate cuts are unlikely in the near term. Also, Treasury Secretary Bessent met with top Japanese officials, reiterating that excess volatility in currency markets is undesirable.

Real earnings are decelerating, posing a risk to discretionary spending and economic momentum. The market is closely monitoring developments in the Iran war and the potential for easing energy prices, which could provide relief to consumers and support discretionary spending. A resilient labor market is helping sustain spending, but the low-hiring environment leaves little margin for error. The market is also banking on strong earnings growth, with massive AI capex potentially mitigating some of the impact of slowing consumer spending.

Economic Calendar Today

06:00 ET: NFIB Small Business Optimism for Apr — Actual: 95.9 | Expected: 96.1 | Prior: 95.8 — Provides insights into small business sentiment.
08:30 ET: CPI for Apr — Expected: 0.6% | Prior: 0.9% — A key inflation indicator impacting Fed policy.
08:30 ET: Core CPI for Apr — Expected: 0.4% | Prior: 0.2% — Excludes food and energy for a clearer inflation trend.
14:00 ET: Treasury Budget for Apr — Expected: $202.5B | Prior: -$164.1 bln — Measures the difference between government spending and revenue.
Earnings reporting today (pre/post market): ARMK, ARVN, CAMT, CDNL. Focus on guidance and outlook in light of CPI.

Earnings & Corporate News

Hims & Hers Health (HIMS) missed revenue expectations, gapping down -14.7% but guided Q2 and FY26 revenues above consensus. Qnity Electronics (Q) beat EPS expectations by $0.16, beat revenue expectations, and raised its FY26 guidance, gapping up 3.1%. Wendy’s (WEN) is higher, up 17.60% in the premarket, after the Financial Times reported that Trian Fund Management is considering taking the company private.

eBay (EBAY) rejected the unsolicited acquisition proposal from GameStop (GME), with GME itself gapping down -4.8%. Analyst upgrades include Autodesk (ADSK) upgraded to Buy at BofA Securities and Lowe’s (LOW) upgraded to Buy at Citigroup. Downgrades include GitLab (GTLB), gapping down -10.9%, downgraded to Market Perform at Raymond James, and ZoomInfo Technologies (GTM), downgraded by multiple firms, gapping down -34.1% after underwhelming guidance. Beazer Homes (BZH) is gapping down -3.9% after Dream Finders Homes went public with a takeover offer; previously rebuffed offers suggest significant board resistance to any deal.

WaveFinder Signal Summary

The scan environment shows a mixed picture. The Reversal scan generated 4 signals, suggesting a potential for oversold bounces. The percentage of stocks above their 40-day SMA has decreased significantly to 52.88% from 59.87% and the percentage of stocks above their 20-day SMA decreased to 82% from 158%, indicating contracting breadth and weakening momentum. This environment calls for more selective and defensive strategies.

Today’s Watchlist

Q — Positive earnings and raised guidance suggest further upside.
HIMS — Guided Q2 and FY26 revenues above consensus following a revenue miss.
WEN — Potential going-private transaction by Trian Fund Management.
VIK — Reversal signal. Bottom picking after a negative day.
F — Reversal signal. Bottom picking a potential value reopening trade.

Action Codes of the Day

CRT — Calculated risks within system, choppy markets given breadth contraction.
BTFD — Buy The Dip when macro supports it, as oversold conditions present potential short term opportunities.

Welcome to WaveRider Morning Dose. Everything you need before the bell. Let's dive in. Did the recent record highs in semiconductors just hit a wall of inflation? With oil at $101.46, is the consumer spending engine about to stall? Let's find out before the bell. Good morning, traders. Welcome back to the Morning Dose. I'm Gackrix, and I've got Algen with me to break down exactly what we're facing today. Algenib, it feels like the ground shifted overnight. Is the party over? Oh, it definitely shifted. Look, here's the hard truth. We are officially in a cautious regime. And the data backs it up. Only 52.88% of stocks are currently trading above their 40-day simple moving average. Wait, hold on. That's a big drop, right? It is. Just yesterday, we were at 59.87%. So in one day, we lost nearly 7 percentage points of breadth. That's not a correction. That's a regime shift. Wow. So the broad rally is paused. But what's driving this? Is it the CPI print? Exactly April CPI came in at 0 month over month That way above expectations And year over year total CPI is now at 3 3 That not 2 Nope. And core CPI, 0.4% monthly, 2.8% yearly. So the Fed isn't cutting rates anytime soon. That's the first headwind. But then you add the geopolitical tension. Right. The oil spike. I saw that number. $101.46. Yeah, up $3.39 a barrel. U.S.-Iran tensions are heating up, and that's adding a massive inflationary tax on top of everything else. It's like a car hitting a speed bump while the engine is already revving too high. Mm-hmm. So we have sticky inflation and rising oil prices. It's a tug of war. But Aljanib, if the macro is this rough, why are we still seeing some sectors move? Because it's a very narrow market. It's like a sports team where the star players are scoring, but the rest of the squad is failing. Okay, I love that analogy. Who are the stars? Tech and AI, specifically names driven by CapEx expectations. But the laggards? Consumer discretionary and rate-sensitive sectors are getting hammered. So the market is pricing in a push between strong AI earnings and this weak macro data Precisely And if you look at the momentum we got a five downward sequence That's consistent. Even the 20-day SMA support is breaking. We dropped from 158% of stocks holding that level down to 82%. Whoa, from 158% to 82%? That's a massive contraction. It is. It tells us the easy money is gone. The bull-bear gauge is screaming defensive sentiment, too. 109 bulls versus 245 bears. That's a 2-to-1 bearish skew. Okay, so the setup is clear. Cautious regime, narrow leadership, and a lot of risk. So for my listeners who are itching to trade, where do we find the edge today? You have to be surgical. The action code is selective-slash-defensive. We are avoiding broad market bets. We are looking at individual stock catalysts. Give me the top three. What are we watching? First, look at Wendy's, WEN. It's up 17.6% in pre-market. That's a massive gap. Then you have CUNITY Electronics, Q, up 3.1%. Okay WEN and Q What about the avoid list Oh definitely Zoom Info GTM It gapped down 34 And HIMS HIMS is down 14 Also GitLab GTLB is down 10 That's brutal! 34% on GTM? Yeah, guidance misses are getting punished hard right now. So the strategy is simple. If a stock gaps up, watch for failure at VWAP. If it gaps down, look for support at the 40-day SMA. So we're trading the gap, not the index. Exactly. And remember, if the 52.88% breadth threshold holds, we stay defensive. If it drops below 50%, we go full defensive. Got it. So no heroics today, just discipline. Discipline is key. And honestly, the market is telling us to be careful. The era of broad rallies is paused until inflation cools. Well said. So here's the takeaway. Review your watch list for those earnings gaps, set tight stop losses, and trade the individual stock catalysts, not the index hype. Couldn't have said it better. Thanks, Aljanib. Traders, stay sharp, stay selective, and good luck out there. We'll catch you after the bell. That's all for today's episode of Wave Rider Morning Dose, everything you need before the bell. See you next time.

Next Day Prep #257 Neutral

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Situation Awareness

Today’s Market Narrative

Macro & Policy

Economic Calendar Today

Earnings & Corporate News

WaveFinder Signal Summary

Today’s Watchlist

Action Codes of the Day

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