Situation Awareness: Cautious. A record-setting four-session rally hit its first real resistance as memory-chip guidance dragged Nasdaq futures lower while the Dow extended its record run — a split tape, not a broad reversal. SPY/QQQ/IWM cash levels are unavailable in today’s feed, but futures tell the story: S&P +11 at 7,760, Dow +130 at 54,624, Nasdaq -78 at 29,537. Trade mode: selective and watchful — let the semis shake out and let the 8:30 ET data print before committing. Today’s context is a collision of hot-inflation rate risk (FT reports Fed Chair Warsh is open to a September hike), a firming yen carry-trade backdrop, and a Middle East de-escalation trade as the U.S. and Iran near a Strait of Hormuz deal. Regime context — 65.01% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 190 bulls vs. 203 bears. The 5-day trend rallied hard into Tuesday’s record then paused Wednesday, with breadth above the 40 SMA slipping from 66.51% to 65.01% — momentum cooling at the highs, not breaking.
SIP: SII PRMB TBI CE
- What’s working: the Continuation/2LYNCH scan is thin with just 4 signals (UROY, RERE, DASH, MCK) — a dry read that argues for patience, not aggression. Delayed 9M and Reversal scans are empty.
- Leading sectors: live Trending Sector and Theme data is offline (market closed) and the ATR volatility table returned no entries — no fresh sector leadership read available; lean on yesterday’s cash-session leaders (materials +1.5%, health care +1.3%) as the fading tell.
- Key event: 8:30 ET Q2 preliminary Productivity and Unit Labor Costs — the labor-cost print carries direct inflation implications into a hawkish Warsh narrative.
- Market read: Wednesday’s orderly consolidation (S&P -0.2%, Nasdaq -0.8%, Dow +0.5%) after a ~6% four-day sprint was healthy digestion, not distribution — but the memory-name reactions overnight raise the bar for tech to reassert leadership.
- DEP watchlist: no Delayed 9M signals today — nothing qualifies.
- SIPS: DASH (2LYNCH, $207.27), MCK (2LYNCH, $877.23), UROY (2LYNCH, $3.56).
Today’s Market Narrative
The tape enters Thursday split down the middle. After Tuesday’s twin records in the Dow and S&P 500 and Wednesday’s controlled pause, equity futures point to a mixed open: S&P 500 futures up 11 at 7,760 and Dow futures up 130 at 54,624, but Nasdaq futures down 78 at 29,537. The drag is entirely concentrated — memory and chip names finally met resistance after a record-setting run, and last night’s earnings gave the bears something to work with.
The overnight memory-trade reaction is the headline. SanDisk (SNDK) crushed EPS by $4.29 and beat on revenue, then guided Q1 revenue below consensus — and is indicated down 9.8% at $1,218.87. Western Digital (WDC) beat by $0.25 and guided Q1 EPS above consensus, yet is marked down 14.5% at $443.92 as investors sold the fine print. This is a classic sell-the-news setup at the highs: good-but-not-good-enough guidance meeting stocks that had already sprinted. AppLovin (APP) is the harshest tell, indicated down 19.0% at $338.80 after in-line EPS but a revenue miss, drawing downgrades from both Wells Fargo (to Equal Weight, $357) and Piper Sandler (to Neutral, $385).
Yet the broader complex is far from cracking. The Dow’s record run is intact, materials and health care led Wednesday’s session, and the underlying earnings backdrop remains extraordinary — FactSet’s blended Q2 S&P 500 growth rate sits at a scintillating 50.1%, versus the 18.3% projected at the end of Q1. Even stripping out the equity-investment gains that skew that figure, growth is far exceeding estimates. Gappers-up breadth is genuinely broad this morning — SITM +27.3%, SOUN +22.4%, AEVA +16.5%, PAYC +12.6%, OSCR +12.9% — so this is rotation and consolidation, not a risk-off event.
The counterweight is rates. Treasuries are pulling back after three days of gains, yields are ticking higher across the curve, and the Warsh September-hike headline reintroduces policy risk into a market that had been leaning on the easing narrative. That’s the tension driving today: strong earnings and easing geopolitics on one side, a firming rate picture and stretched tech on the other.
Macro & Policy
The rate story flipped this morning. After three consecutive sessions of Treasury gains that pushed long-end yields to one-week lows, the market is set for a modestly lower start. The 10-year yield is up 3 bps to 4.65%, the 2-year up 3 bps to 4.21%, the 5-year up 4 bps to 4.36%, and the 30-year up 3 bps to 5.20%. The catalyst is inflation sensitivity: the Financial Times reports Fed Chairman Kevin Warsh will maintain limited communication but is open to a September rate hike if inflation readings run hot. That makes this morning’s 8:30 ET Q2 Unit Labor Costs print (consensus 1.7%) more market-relevant than usual — a hot number feeds the hawkish case directly. The U.S. Dollar Index sits up 0.1% at 99.75.
Overhanging all of it is the yen. USD/JPY is at 157.88, hovering near a 40-year low, and Briefing’s Big Picture continues to flag carry-trade unwind risk as the market’s key tail. The August 2024 episode saw the yen rocket from 152.78 to 141.69 in six sessions while the VIX spiked from 17.69 toward 65.73 and the Nikkei shed 19.1%. Fitch this morning added that the BOJ will have to keep hiking for the yen to climb — precisely the divergence setup that sparks forced deleveraging. Japanese debt outperformed overnight on a solid 30-year JGB auction and a Finance Minister pledge not to lean on new debt issuance. This remains a market risk, not a systemic one, but it’s the reason to keep position sizing disciplined at record highs.
Geopolitically, the tape is de-risking. NBC News reports the U.S. and Iran are close to a deal to reopen the Strait of Hormuz, though Iran insists on limited control and the U.S. opposes any transit fees. Crude is stable just above $75 (WTI +0.8% to $75.80) after dropping nearly 10% this week. Gold pushed higher, +15.50 to $4,320.70, as the safe-haven and rate-hedge bid persists. Europe trades mostly higher (IBEX +1.1%, FTSE MIB +1.0%) on strong Siemens and Deutsche Telekom results, while Asia was mixed with Korea’s Kospi hammered 4.6%.
Economic Calendar Today
- 8:30 ET — Q2 Productivity (Prelim): Expected 0.8% | Prior 0.3% — a rebound signals disinflationary efficiency gains.
- 8:30 ET — Q2 Unit Labor Costs (Prelim): Expected 1.7% | Prior 1.8% — the day’s key inflation tell against the Warsh hike narrative; a hot print pressures rates.
- 8:30 ET — Initial Jobless Claims (Aug 1): Expected 200K | Prior 197K — labor still tight; watch for any upside surprise.
- 8:30 ET — Continuing Claims (Jul 25): Prior 1,782K.
- 10:00 ET — Wholesale Inventories (June): Expected 0.3% | Prior 0.3%.
- 10:30 ET — EIA Natural Gas Inventories: Prior +28 bcf.
- Earnings today: heavy pre-market slate including COP, CEG, CELH, DDOG, HWM, MSI, TFX, ZTS; after the close brings ABNB, DKNG, TTD, TWLO, LYFT, RMD, MCHP, MNST.
Earnings & Corporate News
The memory trade dominates, but the beat/miss tape is broad. On the winning side: Block (XYZ) beat by $0.15 and guided FY26 above; HubSpot (HUBS) beat by $0.24 and authorized a $1.0 bln buyback — yet is indicated down 22.3% on decelerating guidance concerns and a cluster of downgrades (Piper to Neutral $220, Capital One to Equal Weight $206, Oppenheimer to Perform). Paycom (PAYC) beat by $0.40 and guides FY26 revenue above, gapping up 12.6%. Costco (COST) posted July sales up 10.7% with comps up 8.9%. DoorDash (DASH) beat on revenue with EBITDA above prior guidance and is up 2.5% — notable given it’s also firing a 2LYNCH continuation signal.
The disappointment column is deep too: Celsius (CELH) missed on both lines and is down 16.6%; Figma (FIG) beat but is down 15.2%; EPAM down 12.7% on soft guidance; Dutch Bros (BROS) beat but guided cautiously, down 10.4%; Zillow (ZG) beat but guided Q3 and FY26 below, down 10.6% and hit with downgrades from Evercore and Bernstein. The read-through: after a 6% four-day melt-up, the market is punishing anything short of flawless guidance, rewarding clean beats. That’s a stock-picker’s tape, not a beta chase.
On capital returns and M&A, SanDisk authorized an additional $14 bln buyback (total capacity $15.5 bln) — a floor under the stock despite the guide-down. Etsy launched a fresh $2 bln buyback, Darling Ingredients a $1 bln program, and MetLife a new $3 bln authorization. Electronic Arts (EA) saw its consortium acquisition completed. KKR is acquiring Medicover India. In the quantum/space corner, IonQ (IONQ) beat by $0.23, won an NRO radar contract and a $28 mln DARPA extension, and gaps up 7.7%.
WaveFinder Signal Summary
The scan environment is dry, and that matters. The Continuation/2LYNCH scan surfaced just 4 signals — UROY, RERE, DASH, and MCK — while the Delayed 9M and Reversal scans are empty. Fewer than five continuation setups is a cautious read that reinforces the selective posture: the market is consolidating, not expanding into fresh breakouts. The two cleanest names are DASH ($207.27, RVOL 1.4, riding its earnings beat) and MCK ($877.23, +5.6%, RVOL 1.2) — both large-cap continuation candidates with real institutional participation rather than low-float noise.
Breadth is cooling gently at the highs. Stocks above the 40-day SMA slipped to 65.01% from 66.51% — a 1.5-point contraction that keeps the regime perched right at the bullish/cautious line. The 4% Bull/Bear gauge tilted slightly negative at 190 bulls vs. 203 bears, and 4% sentiment is Neutral even as the 40SMA sentiment stays Bullish. Translation: the trend is intact but the daily impulse has flattened. Respect the tape, size down.
Today’s Watchlist
- DASH — 2LYNCH continuation at $207.27 on a Q2 revenue beat and above-guidance EBITDA; strongest clean setup in the scan.
- MCK — 2LYNCH signal, +5.6% at $877.23 after beating by $0.37 and guiding FY27 EPS above; defensive-growth leadership.
- SNDK — down 9.8% at $1,218.87 despite a $4.29 EPS beat; watch for a $14 bln-buyback-backed reversal versus a memory-trade breakdown.
- WDC — down 14.5% at $443.92 on a beat-and-in-line guide; a gauge for whether the semi pullback is a dip or a deeper rotation.
- APP — down 19.0% at $338.80 on a revenue miss plus dual downgrades; oversold momentum name — watch for capitulation, not knife-catching.
- COST — July sales +10.7%, comps +8.9%; steady consumer-staples leadership if defensive rotation continues.
Action Codes of the Day
- CRT (Controlled Risk Taking) — With breadth at 65.01% and slipping, the 4% gauge neutral-to-bearish (190 vs 203), and only 4 continuation signals, this is a choppy tape rewarding calculated, sized-down risk within the system — not aggression.
- T3A (Think 3 Days Ahead) — Rate risk builds into the 8:30 ET labor-cost print and the Warsh September-hike narrative, with the yen at 157.88 near a 40-year low; anticipate the carry and inflation catalysts rather than chasing today’s split open.