Situation Awareness: Bullish regime, broadening. The tape is riding a two-day momentum wave — the S&P 500 closed at a record above 7,700 for the first time (+1.8%) with the DJIA (+1.7%) and MidCap 400 also at all-time highs, and futures point higher again (S&P +28 @ 7,794, Dow +184 @ 54,452, Nasdaq +44 @ 29,907). Semis are the engine (PHLX Semi +6.6% yesterday), earnings are broadly beating, and collapsing oil on Strait of Hormuz peace hopes is greasing the risk-on tone. Trade mode: aggressive but selective breakout — chase quality, respect single-name earnings gaps. Today’s calls come from ADP (8:15) and July ISM Non-Manufacturing (10:00, consensus 54.7%) as pre-jobs-Friday tells, plus a possible U.S.-Iran-Oman deal to reopen the Strait announced today. Regime context — 66.41% of stocks trade above their 40-day SMA (up from 61.32%), and the 4% Bull/Bear gauge shows 665 bulls vs. 111 bears. The 5-day trend has turned decisively up, confirming upward momentum after July’s semiconductor pullback.
SIP: SOPH VVOS DVA VERX
- What’s working: Continuation/2LYNCH scan is rich with 39 signals — strong breadth. Reversal scan thin at 3 (all energy). No Delayed 9M signals firing.
- Sector Volatility (ATR) data unavailable and live trending closed; leadership read from the tape: Information Technology (+4.1%), Materials (+2.0%), Industrials (+1.8%) led yesterday, with defensives (Utilities -0.6%, Energy -0.5%) lagging.
- Key event: Possible U.S.-Iran-Oman interim deal to reopen the Strait of Hormuz — 60-day term, no tolls — could hit the wires today, extending the oil unwind.
- Market read: Yesterday was a broad, high-conviction advance — Equal Weight +1.4%, Russell 2000 +1.9%. Participation is widening beyond mega-cap, a healthy signal for continuation.
- DEP watchlist: NET NUE WAT SMCI ARW
- SIPS: NET TTAN SNX
Today’s Market Narrative
The bulls are not done. After yesterday’s powerful advance carried the S&P 500 to a record 7,700-plus close (+1.8%) and the Dow to fresh highs (+1.7%), equity futures point to another higher open — S&P futures +28 at 7,794, Dow futures +184 at 54,452, Nasdaq futures +44 at 29,907. This is week-of-August momentum layered on top of a semiconductor reversal that has erased July’s damage. The PHLX Semiconductor Index surged 6.6% yesterday with Marvell (+12.8%), Intel (+10.9%) and Sandisk (+10.8%) leading, and Palantir (+29.4%) topped the entire S&P 500 after a blowout print. That’s the AI/momentum trade roaring back.
The overnight backdrop reinforced the risk-on tone. Asia ripped — Japan’s Nikkei +3.7%, South Korea’s Kospi +3.8% to a near-week high, Shanghai +1.5%. Europe is quieter, trading near flat lines (DAX unchanged, FTSE -0.3%, CAC +0.1%) with Spain’s IBEX (+0.5%) the standout on industrials and consumer names. Services PMIs told a mixed global growth story: the eurozone accelerated to 52.0 and the U.K. jumped to 52.1, but China’s RatingDog Services PMI decelerated hard to 50.4 from 54.1 — a near-standstill that markets shrugged off.
The dominant supporting force remains oil. WTI settled down 5.8% to $75.73 yesterday and sits steady around $75.96 this morning after two sharp retreats to open the week. Treasury Secretary Bessent floated a Strait of Hormuz deal, and Axios reports the U.S., Iran and Oman are nearing an interim 60-day agreement that could be announced today — President Trump says he expects it “Wednesday or Thursday.” Easing energy costs feed disinflation hopes and pressure Treasury yields lower, a double tailwind for equities. The offset: Houthis have threatened Saudi tankers in the northern Red Sea, so the oil unwind isn’t fully de-risked.
The single-name story is bifurcated on earnings quality. Eli Lilly (+4.8% pre-market) beat by $2.37 with worldwide Mounjaro revenue up 91% and raised revenue guidance. Disney (+2.7%) beat by $0.20 and reaffirmed. But beats aren’t guaranteeing green — AMD is down 7.8% pre-market despite beating by $0.04 and guiding Q3 revs in-line, and SpaceX is off 10.8% despite a beat. The message: after a record run, the bar is high and guidance nuance matters more than the headline number.
Macro & Policy
The bond market is doing its part. Treasuries are extending Monday’s rebound off the July plunge, with the long end leading this morning: the 10-year is down 2 bps to 4.61%, the 30-year off 2 bps to 5.17%, and the front end anchored — 2-year unchanged at 4.20%, 5-year at 4.33%. Falling oil and peace-deal optimism are cooling inflation expectations, and yields have retraced back toward May highs. The U.S. Dollar Index is soft, down 0.2% at 99.70, with EUR/USD at 1.1550 and GBP/USD at 1.3479.
The macro risk worth keeping on the radar is the one The Big Picture has flagged: the yen. USD/JPY sits at 157.58, hovering near a 40-year low. That’s the exact setup that preceded the August 2024 carry-trade unwind, when the yen ripped from 152 to 141 in days, the VIX spiked above 65, and the Nikkei suffered its largest single-day point loss ever. Japan’s finance minister has signaled readiness to take “decisive steps.” With the BOJ not expected to hike, any surprise intervention or rate move could force a rapid deleveraging. This is a market risk, not a systemic one — but with the tape this stretched, it’s the fat tail to size around.
Geopolitically, the tone is constructive: a Hormuz reopening removes an energy premium, and the Reserve Bank of India held at 5.25% citing benign core inflation. The near-term policy focus at home is jobs — today’s ADP is the appetizer ahead of Friday’s BLS Employment Situation. A soft ADP would harden the case for Fed easing that has underpinned this rally; a hot number would test whether yields can stay contained.
Economic Calendar Today
- 7:00 ET: MBA Mortgage Applications — Actual -2.9% (prior -0.3%). Already out; housing demand still soft under elevated rates.
- 8:15 ET: ADP Employment Change (Jul) — Expected: 75K | Prior: 98K — First read on labor ahead of Friday’s payrolls; a miss feeds the rate-cut narrative.
- 9:45 ET: S&P Global U.S. Services PMI Final (Jul) — Prior: 53.6 — Confirmation of services momentum.
- 10:00 ET: ISM Non-Manufacturing Index (Jul) — Expected: 54.7% | Prior: 54.0% — The headline macro print; prices-paid component matters for rate expectations.
- 10:30 ET: EIA Crude Oil Inventories — Prior: -7.17M — With oil in freefall on peace hopes, a build would amplify the downside.
- Earnings today (AM): LLY, DIS, CVS, UBER, BKNG, GFS, ANET reported; (PM): APP, DASH, MELI, DUOL, AXON, ELF, EBAY, EXPE, OXY — heavy tech/consumer slate that will steer the after-hours tone.
Earnings & Corporate News
The earnings tape is broadly positive but reaction-selective. On the gap-up side: Arista Networks (ANET +16.5%) beat by $0.13 and guided Q3 above; Qualys (QLYS +13%) beat by $0.20 and raised FY26; Kratos Defense (KTOS +11.2%) beat and got a Piper Sandler upgrade to Overweight, tgt $75; Upstart (UPST +10.4%) and Stride (LRN +10.6%) both jumped. Booking Holdings (BKNG +6.3%) beat by $0.11, and CVS Health beat by $0.73 and raised FY26 EPS and cash-flow guidance while revamping its GLP-1 program with Lilly.
The losers are a warning that quality of guidance rules. AMD (-8.7%) beat but the in-line Q3 revenue guide disappointed after the semi run-up. Teradata (TDC -13.9%), Workiva (WK -10.2%), Match Group (MTCH -9.8%), Pinterest (PINS -8.4%) and SpaceX (SPCX -11.1%) all sold off despite mixed-to-decent prints — a classic “priced for perfection” tell in tech and software. USANA (-21.8%) and ANGI (-17.9%) are the day’s ugliest.
On the analyst front, momentum names are getting support: Entegris upgraded to Outperform at Oppenheimer (tgt $180), Coupang to Buy at Deutsche (tgt $21.50), Waters to Buy at TD Cowen (tgt $475). Downgrades cluster in industrials and payments — Aptiv cut to Equal Weight, TransDigm to Hold, FIS to Neutral. In M&A, Gran Tierra (+43.6%) is selling its South American business for $1.33 bln, and Hinge Health is buying Cylinder Health for $105 mln.
WaveFinder Signal Summary
The scan environment is rich and confirms the bullish breadth. The Continuation/2LYNCH scan is firing 39 signals — comfortably above the 10-signal “good breadth” threshold — with Cloudflare (NET, $301.33, +6.6%, RVOL 1.8) the standout software leader, joined by Nucor (NUE, +4.9%) in metals, Waters (WAT, +5.7%) in medical, and Super Micro (SMCI, +10.7%) in computers. The Reversal scan is thin at just three names, all energy (XOM, EQT, SHEL) fading with crude — consistent with the oil unwind, not a broad top.
Breadth is expanding, not contracting: 66.41% of stocks above the 40-day SMA versus 61.32% the prior session (+5.1pp), and Bull 4% breakouts jumped to 665 from 545. That’s a healthy accumulation of new highs beneath the index-level records. No Delayed 9M signals are active, so lean on the continuation book for swing candidates rather than fresh episodic pivots.
Today’s Watchlist
- NET — 2LYNCH continuation, $301.33 +6.6% on RVOL 1.8; software leadership with the AI trade back in command.
- NUE — Continuation breakout, $274.04 +4.9%; materials strength riding higher metals prices and cyclical rotation.
- WAT — Continuation setup at $396.08 +5.7% on RVOL 2.5, backed by a fresh TD Cowen Buy (tgt $475).
- ANET — Beat by $0.13, guided Q3 above, gapping +16.5%; watch for follow-through in AI networking.
- AMD — Down 8.7% despite a beat; a stretched semi that could offer a BTFD reload if it stabilizes near support.
- SOPH — SIP leader, +11.4% from open after raising FY26 sales guidance; small-cap medical momentum.
Action Codes of the Day
- 2LYNCH — Bullish regime with 39 continuation signals and 665 bull breakouts vs. 111 bears; ride established leaders like NET (+6.6%) and NUE (+4.9%) into strength.
- FFM — With breadth at 66.41% above the 40 SMA and futures pointing higher, low-risk names (LQDA 60% risk, SNX 54.5% risk) can work instantly from the open in a trending tape.