Situation Awareness
Situation Awareness: Bullish. Markets are driven by a massive geopolitical de-escalation between the U.S. and Iran, coupled with a historic IPO event (SpaceX) that is reshaping capital allocation in the tech sector. The tape is characterized by a “risk-on” rebound in semiconductors and a rotation out of energy as oil prices collapse. Trade mode: Aggressive breakout on the open, but selective regarding mega-cap volatility due to IPO liquidity drains. The 5-day trend turned up 3 of 5 days, signaling early recovery after mid-week geopolitical jitters. Regime context — 56.26% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 0 bulls vs. 0 bears (resetting after the weekend). The 5-day trend shows a consistent up sequence, confirming upward momentum following the Iran deal announcement.
SIP: ADBE RKLB NVDA SPCX
- What’s working: Continuation strategies are firing with 50 signals, indicating strong breadth in the rebound. The 2LYNCH setup is prevalent in semi-conductors and space-related names.
- Leading sectors: Information Technology (+2.9% yesterday), Industrials (+3.3% yesterday), Materials (+3.3% yesterday); leading themes: Space/IPO, Semiconductors, Defense.
- Key event — SpaceX IPO pricing at $135/share, valuing the company at $1.77 trillion, the largest in history.
- Market read: Yesterday’s tape saw a sharp intraday reversal from geopolitical fear to relief as the Iran deal materialized, sending oil down 3.25% to $84.47 and lifting the S&P 500 by 1.8%.
- DEP watchlist: RKLB, NBIS, ALAB (Space/IPO beneficiaries gapping up 4-6%).
- SIPS: ADI, SIMO, TER (Continuation signals in chips with strong volume profiles).
Today’s Market Narrative
Equity futures are pointing to a robust higher open, with the S&P 500 futures up 46 points at 7,442 and the Nasdaq 100 futures gaining 176 points to 29,641. The market is attempting to extend yesterday’s relief rally, which was triggered by a breakthrough in U.S.-Iran negotiations. The dominant narrative is a “peace dividend” for equities: as geopolitical tensions ease, oil prices have plummeted 3.25% to $84.47 per barrel, approaching the $85 mark. This drop in energy costs is acting as a massive tailwind for the broader market, particularly benefiting airlines, consumer discretionary, and technology sectors that were weighed down by inflation fears earlier in the week.
The secondary, and perhaps more volatile, driver today is the historic IPO of SpaceX. The company has priced its offering at $135 per share, selling 555.6 million shares for a $1.77 trillion valuation. This is not just a listing; it is a liquidity event of unprecedented scale. While the IPO has sent space and rocket names like Rocket Lab (RKLB) and NBIS gapping up by 6.6% and 4.8% respectively, it is also creating a “crowding” effect. Analysts note that the choppiness in mega-cap tech earlier in the week may have been investors raising cash to participate in the SpaceX debut. As the market opens, watch for a tug-of-war between the enthusiasm for the new space leader and the potential liquidity drain on other high-flying tech names.
Corporate earnings are adding a layer of complexity to the narrative. Adobe (ADBE) reported a strong earnings beat, guiding Q3 and FY26 revenues above consensus, yet the stock is gapping down 6.5% to $202.85. This disconnect highlights a shift in market sentiment where “good news” is being sold, potentially due to the departure of the CFO or a broader rotation out of software into hard assets like chips and space. Conversely, the semiconductor sector is showing immense strength, with names like Teradyne (TER) and Analog Devices (ADI) flashing continuation signals. The market is clearly favoring hardware and infrastructure over pure software plays in this specific macro environment.
Macro & Policy
The macro backdrop has shifted dramatically overnight. The primary force is the geopolitical de-escalation: reports indicate a memorandum of understanding between the U.S. and Iran could be signed as early as Sunday, involving the reopening of the Strait of Hormuz and a 15-20 year commitment from Iran to halt uranium enrichment. This has crushed oil prices, with WTI crude falling to $84.47, and is removing a significant inflationary overhang from the global economy. The U.S. Dollar Index is down 0.1% at 99.74, while the 10-year Treasury yield remains flat at 4.46%, suggesting the market is pricing in a “soft landing” scenario where growth persists without reigniting inflation.
Central bank expectations are also in focus. The Bank of Japan is widely expected to announce a rate hike next week, while the Bank of Korea’s governor has stated rates need to rise “before it is too late.” In Europe, the ECB is expected to hold policy steady in July unless energy prices spike again, a scenario that now looks less likely given the Iran deal. The bond market is quiet, with the 2-year yield at 4.06% and the 10-year at 4.46%, indicating that while the geopolitical risk premium has vanished, the underlying rate environment remains restrictive. The key takeaway is that the market is transitioning from a “fear of war” regime to a “growth at lower cost” regime, which is highly constructive for equities.
Economic Calendar Today
- 10:00 ET: University of Michigan Consumer Sentiment (Prelim) — Expected: 46.2 | Prior: 44.8 — This reading is critical to confirm if the “peace dividend” is boosting consumer confidence or if the underlying data still shows a consumer struggling with real wage erosion.
- No major earnings reports scheduled for the U.S. market open today; the focus remains on the SpaceX IPO and the broader sector rotation.
- The economic calendar is light, meaning volatility will be driven by the IPO mechanics and the follow-through on the geopolitical news rather than scheduled data releases.
Earnings & Corporate News
Adobe (ADBE) is the standout story in the earnings space, trading down 6.5% despite beating EPS by $0.14 and guiding Q3 revenues above consensus. The sell-off appears driven by the announcement that the CFO is departing for a chipmaking company, coupled with multiple analyst downgrades (Stifel, Evercore ISI, Wolfe Research) shifting ratings to “Hold” or “Peer Perform.” This suggests the market is punishing the stock for leadership changes and perhaps a lack of upside surprise in a sector that is already crowded.
In contrast, Lennar (LEN) reported in-line EPS but missed revenue expectations, though it did see a 2% year-over-year increase in deliveries. The stock is down 1.9% pre-market. On the positive side, RH (RH) beat EPS by $0.15, though it guided Q2 revenues below consensus. Marvell (MRVL) reaffirmed its Q2 guidance, yet the stock is gapping down 2%, likely due to the broader tech rotation ahead of the SpaceX IPO. The M&A landscape is active, with Alibaba (BABA) reportedly looking to purchase Pupu for $1.5 billion, and Vertiv (VRT) completing its acquisition of ThermoKey S.p.A. The most significant corporate event remains the SpaceX IPO, which has Blackrock (BLK) already securing a $5 billion order book, signaling massive institutional demand.
WaveFinder Signal Summary
The scan environment is rich with opportunity, reflecting the broad-based nature of yesterday’s rebound. The Continuation/2LYNCH scan has generated 50 signals, a high count that indicates strong momentum across multiple sectors. The top signals are concentrated in semiconductors and industrial tech, with Analog Devices (ADI) showing a 5.0% gain and Teradyne (TER) up 9.7%. The breadth data supports this bullish view: the percentage of stocks above the 20-day SMA surged from 36% yesterday to 58% today, a massive 22-point expansion that confirms the market is recovering from its mid-week lows.
While the Reversal scan is relatively dry with only 8 signals, the quality of the continuation setups is high. The 40-day SMA breadth has dipped slightly to 56.26% from 57.89% yesterday, suggesting that while the immediate momentum is strong, the longer-term trend is still stabilizing. The key takeaway is that the market is not just bouncing; it is expanding participation. Traders should focus on the high-conviction continuation names in the chip and space sectors, where volume and price action are aligning with the macro narrative of a tech-led recovery.
Today’s Watchlist
- RKLB — Gapping up 6.6% on SpaceX IPO momentum; watch for a 2LYNCH continuation setup above the open.
- ADBE — High volatility play; gap down 6.5% despite beats; watch for a BTFD entry if it holds key support levels.
- ADI — Strong 2LYNCH signal with 5.0% gain; leading the semiconductor rebound on macro relief.
- SPCX — The IPO itself; watch for initial trading volume and price discovery around the $135 price.
- TER — 9.7% gain with high RVOL; a prime continuation candidate in the industrial/tech space.
- NVDA — “Vera” processor availability news in August; watch for follow-through on the AI infrastructure theme.
Action Codes of the Day
- 2LYNCH — 50 signals detected in the continuation scan, with high-conviction setups in ADI and TER confirming the broad sector rotation into tech and hardware.
- BTFD — Adobe (ADBE) gapping down 6.5% on good news creates a potential “buy the dip” opportunity if the broader market strength holds, as the sell-off appears overdone relative to fundamentals.