Situation Awareness
Situation Awareness: Cautious. Futures point higher to close out a heavy earnings week — S&P 500 futures +18 at 7,753, Nasdaq futures +156 at 29,644, Dow futures +68 at 54,081 — but the tape is being held hostage by the 8:30 ET July jobs report (86K NFP consensus, 4.2% unemployment) and lingering Middle East oil risk. SPY/QQQ/IWM index levels are (data unavailable) this morning, so lean on futures and the S&P’s ~7,700 support cited in yesterday’s close. Trade mode: selective and watchful into the number — let the print set direction before committing size. Today’s context is all macro: payrolls feed the Warsh rate-hike debate, crude sits below $77 after Iran/Strait-of-Hormuz headlines, and breadth is quietly deteriorating even as the week’s hyperscaler/semi gains hold. Regime context — 60.95% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 257 bulls vs. 279 bears. The 5-day trend shows two consecutive underwhelming sessions after a record run, signaling momentum is cooling even as weekly gains stay intact.
SIP: TTD DOCS U IOVA
- What’s working: Continuation/2LYNCH scan is moderately rich with 14 signals; Reversal thin at 4; Delayed 9M empty — breadth supports selective longs, not aggressive chasing.
- Leading sectors (ATR/Sector Volatility data unavailable — market closed): use yesterday’s tape — Energy (+1.6%) led on the oil surge, Information Technology (+0.1%) and Health Care (+0.1%) the only other green sectors; Real Estate (-1.0%), Materials (-0.9%) and Utilities (-0.9%) lagged.
- Key event: July Employment Situation Report at 8:30 ET is the single biggest catalyst — a hot print revives the September rate-hike narrative.
- Market read: Thursday’s oil-driven fade (S&P -0.2%, DJIA -0.9%) tells you the bid is fragile; earnings winners are rewarded but the bar is exceedingly high.
- DEP watchlist: no Delayed 9M signals today — nothing to carry.
- SIPS: VSEC, IRTC, PTC from the Continuation scan.
Today’s Market Narrative
Equity futures are pointing to a solid open to cap a busy earnings week, with the S&P 500 futures up 18 points at 7,753 and Nasdaq futures leading with a 156-point gain to 29,644. That’s a rebound in tone after two straight lackluster sessions. Yesterday stocks drifted lower — the S&P slipped 0.2% and found support near 7,700, the Nasdaq eased 0.1%, and the Dow lagged with a 0.9% decline — as an intraday oil surge overwhelmed an early tech rebound. The whole week’s story remains intact: big moves from hyperscalers and semiconductors earlier in the week have the major averages tracking impressive weekly gains despite the recent pause.
The dominant force this morning is the labor market. Investors are awaiting the July Employment Situation Report at 8:30 ET, expected to show nonfarm payrolls rising 86,000 with unemployment steady at 4.2% and average hourly earnings up 0.3%. This number matters more than usual because Fed Chair Warsh is reportedly open to a rate hike if inflation doesn’t cool — so a hot payroll figure or firm wages feeds directly into the September policy debate. Everything else — the earnings beats, the M&A flurry — is secondary until that print clears.
Geopolitics is the wildcard. Yesterday’s fade was triggered by reports that Houthi forces attacked a Saudi-flagged tanker and that a draft U.S.-Iran agreement would bar U.S.- and Israel-linked vessels from the Strait of Hormuz. WTI settled up 2.8% at $77.27. This morning crude is backing off, down about 0.8% to $76.66, even as Bloomberg reports Iran wants compensation from “hostile countries” for Strait access while the U.S. insists on free transit. Gold is ripping — up $85 to $4,384 — a clear tell that hedging demand and safe-haven flows are alive under the surface.
Overseas is constructive. Europe trades broadly green (DAX +0.8%, FTSE +0.7%, CAC +0.4%), and Asia finished the week mixed with Shanghai +1.0% on a larger-than-expected Chinese trade surplus of $112.5 bln. That said, breadth at home is thinning — the percentage of stocks above their 40-day SMA slipped to 60.95% from 65.01%, and 4% breakdowns (279) now outnumber breakouts (257). The rally is narrowing, and that argues for discipline into the number.
Macro & Policy
The rate picture is the crux. Treasuries are set for a modestly higher start, with the 10-yr yield down 1 bp to 4.66%, the 2-yr off 2 bps to 4.23%, the 5-yr down 2 bps to 4.37%, and the 30-yr unchanged at 5.21%. Yields backed up yesterday alongside the oil spike and after FT reported Warsh is open to a September hike absent cooler inflation. President Trump said in an interview he will not criticize Warsh on rate policy, and Fed Governor Cook (a voter) reiterated she’s prepared to vote for a hike if inflation doesn’t improve — she gets her next data point with next week’s July CPI. The bias among Fed officials is clearly hawkish-leaning, which caps upside enthusiasm.
The dollar is flat, with the Dollar Index at 99.91. USD/JPY sits at 158.33 — and this is worth flagging. The Big Picture piece has been warning that the yen is hovering near a 40-year low against the dollar, raising the risk of another carry-trade unwind like August 2024, when the S&P fell as much as 5.8% and the VIX spiked to 65.73 in the blink of an eye. FT reported the ECB wasn’t even aware of the Fed‘s participation in last week’s yen intervention — evidence that policymakers are already active in FX. This is a tail risk, not today’s base case, but it’s the kind of latent trigger that turns a soft session into a violent one.
Bottom line on macro: rates are the ceiling, oil is the wildcard, and the yen is the trapdoor. A benign payroll number that keeps the hike odds contained is the bulls’ best friend today; a hot print that pushes yields higher and pressures the yen is the setup to fade.
Economic Calendar Today
- 8:30 ET — July Nonfarm Payrolls: Expected 86K | Prior 57K. Private payrolls consensus 69K (prior 49K). The main event — drives the September rate-hike bet and Treasury direction.
- 8:30 ET — Unemployment Rate: Expected 4.2% | Prior 4.2%. A tick higher eases hike fears; a drop stokes them.
- 8:30 ET — Average Hourly Earnings: Expected 0.3% | Prior 0.3%. Wage acceleration is the inflation angle the Fed is watching.
- 15:00 ET — June Consumer Credit: Expected $9.0B | Prior -$0.2B. Second-tier, consumer-health read.
- Earnings (pre-market): ACMR, ANIP, ATMU, ROAD, FLR, SPB, UAA, WEN, TTWO, GTN, OKLO, PPL, EMBC. No afternoon reports — the week’s earnings gauntlet effectively ends today.
Earnings & Corporate News
The earnings tape is a mixed bag with sharp reactions. On the winners: Airbnb (ABNB 162.88, +7.4%) beat by $0.11, guided Q3 revenue above consensus and sees FY26 growth improving to at least mid-teens — Wedbush upgraded it to Outperform, $200 target. Cloudflare (NET 328.95, +15.7%) beat and guided higher. Doximity is exploding pre-market (DOCS +92.8% in the gap-up list, though the SIP has it trading at $20.63) on raised FY27 sales guidance. Atlassian (TEAM +32.6%) beat by $0.37 and drew a BofA upgrade to Buy. Twilio, JFrog, Onto, ACM Research, Microchip and CarGurus all beat with solid follow-through.
The blowups are instructive about the high bar. The Trade Desk (TTD 17.67, -6.8% AH, gapping -27% pre-market) missed on revenue and guided Q3 below consensus, triggering a cascade of downgrades — Evercore, BMO, Susquehanna, Baird, Guggenheim, Truist and Raymond James all cut it. Sezzle is gapping -21.6%, HCAT -26%, CVRx -42.5%, and Take-Two (TTWO) guided FY27 below on both lines. From Thursday’s close, AppLovin (-19.7%) and Datadog (-19.0%) both got punished despite decent numbers — DDOG for a sequential-growth slowdown as its largest customer trims usage. The message: beats aren’t enough; guidance and forward growth trajectory rule.
M&A is busy: Dream Finders Homes is buying Beazer (BZH) at $33.50 cash in a $2.2 bln deal (BZH +2% pre-market), AMD is acquiring inference-chip startup Taalas, Nielsen is buying DoubleVerify (DV) at $13.60 cash, and Sunoco is grabbing Offen Petroleum for ~$600 mln. Unity (U) is the SIP standout, up nearly 12% from open on a triple-upgrade to Buy from BofA, Benchmark and Deutsche Bank.
WaveFinder Signal Summary
The scan environment is moderately constructive but not exuberant. The Continuation/2LYNCH scan produced 14 signals — healthy breadth that supports selective long setups — while the Reversal scan is thin at 4 and Delayed 9M is empty, meaning no episodic-pivot depth to chase today. The cleanest continuation setups are VSEC ($225.45, +4.5%, RVOL 2.0, tight 40.7% risk), IRTC ($128.12, +2.9%, RVOL 2.3) which also flags as a SIP on medical strength, and PTC ($147.66, +5.9%). LITE, SANM and CTSH round out the actionable list.
Breadth is the caution flag: stocks above the 40-day SMA fell to 60.95% from 65.01% (-4.1pp), and the 20-day measure collapsed from 252% to 139%. That’s a two-day contraction that says the rally is narrowing into the jobs number. Trade the leaders, keep risk tight, and don’t fade the payroll reaction — respect it.
Today’s Watchlist
- TTD — Post-earnings washout at $17.67, gapping -27% on a revenue miss and guide-down; wave of downgrades. Watch for a capitulation-and-hold, not a knife-catch.
- U — Unity up ~12% from open on a triple Buy upgrade; momentum name if it clears the gap and holds above $40.81.
- ABNB — Clean beat, raised guide, $200 street target; +7.4% at $162.88 with 2LYNCH-style continuation potential.
- IRTC — Continuation signal AND SIP; $128.12, +2.9% on RVOL 2.3 in a leading medical group.
- VSEC — Tightest-risk continuation setup (40.7%) at $225.45, +4.5% on RVOL 2.0 — SIPS swing candidate.
- IOVA — Iovance gapped 37% on a Q2 beat; watch for follow-through above $6.17 on heavy volume.
Action Codes of the Day
- CRT (Controlled Risk Taking) — With breadth contracting to 60.95% above the 40 SMA and bears (279) outnumbering bulls (257), take calculated risks within the system into a binary jobs print; VSEC‘s 40.7% risk is the kind of tight setup to favor.
- T3A (Think 3 Days Ahead) — The 8:30 ET payrolls and next week’s July CPI are the catalysts that decide the Warsh hike debate; position for the sequence, not just today’s tape.