Situation Awareness: Cautious, constructive undertone. Record-high tape cooling into a modestly lower open after last week’s ferocious rebound (S&P +3.6%, Nasdaq +5.2%), with S&P futures 14 points below fair value and Nasdaq futures off 57 as the market digests gains ahead of Wednesday’s July CPI. SPY/QQQ/IWM index levels are (data unavailable) this morning, so lean on breadth and futures for positioning. Trade mode: selective and patient — let the first hour show its hand before chasing, with a bull bias intact beneath the surface. The dominant force is a “bad-news-is-good-news” rate story: a soft July jobs report knocked September hike odds under 50%, while a fresh Iran/Strait-of-Hormuz headline is lifting crude toward $80. Regime context — 64.66% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 454 bulls vs. 143 bears. The 5-day trend turned up decisively last week, with breadth expanding for a second straight session (+3.7pp on the 40SMA), signaling broad participation rather than narrow mega-cap leadership.
SIP: FEAM GTN VATE NEPH
- What’s working: Continuation/2LYNCH is rich with 38 signals — healthy breadth. Reversal scan is thin at 3 (CCL, BA, YMM). No Delayed 9M signals today.
- Leading sectors: live trending data unavailable (market closed); the last completed week saw Info Tech +7.2%, Materials +5.6%, and Homebuilders (ITB +7.2%) lead, with Energy -3.3% the laggard on collapsing oil.
- Key event: July CPI Wednesday (consensus +0.1%, Core +0.2%) is the week’s primary catalyst; no U.S. data today.
- Market read: Friday’s session held the 7,700 S&P level and closed the week at record highs — momentum is intact but stretched, arguing for discipline into the print.
- DEP watchlist: No D9M signals today — nothing qualified.
- SIPS: IONQ, AVAV, CBRS from the continuation scan.
Today’s Market Narrative
After a blistering week that saw the S&P 500 climb 3.6%, the Nasdaq surge 5.2%, and the DJIA add 3.0% — all to record territory — Monday opens on its back foot. S&P futures trade 14 points below fair value and Nasdaq futures 57 below, a garden-variety exhale rather than a reversal. Note the intraday churn in the pre-market itself: at 5:37 ET Nasdaq futures were up 91, by 8:03 they were up 5, and by 8:33 they had flipped to -57. That two-way tape tells you positioning is nervous into Wednesday’s inflation read, with no U.S. data and a light earnings slate to fill the vacuum today.
The leadership question dominates. Last week technology reclaimed the wheel after a rough July — the info tech sector jumped 7.2% and the PHLX Semiconductor Index ripped 9.3% — but the more important story is breadth. The Russell 2000 is up 22.3% year-to-date versus 9.9% for mega-cap growth, and the equal-weight S&P has outperformed the cap-weighted index. This is not a narrow melt-up; it’s a broadening advance, which is exactly what our 64.66% above-40SMA reading and 454-to-143 bull/bear gauge confirm.
Overnight, Asia set a firm tone — Nikkei +2.1%, Hang Seng +1.1%, Shanghai +0.7% — even as China printed another deflationary CPI (-0.1% m/m, decelerating to just 0.5% year-over-year from 1.0%). Europe is flattish, with the FTSE lagging (-0.3%) on homebuilder and consumer weakness after Vistry Group dropped more than 5% on tighter supplier credit limits. The one wrinkle to watch: crude is up 1.6% to $79.43 after President Trump signaled a “low-key,” economic-pressure approach to Iran, letting sanctions bite rather than escalating militarily. That’s calming for equities but re-firms the energy trade after last week’s roughly 10% oil collapse.
The takeaway for today: this is a consolidation session inside an uptrend, driven by rate expectations and event risk, not a fundamental shift. Respect the record highs, but respect the CPI landmine two days out.
Macro & Policy
The Fed narrative flipped on Friday. July nonfarm payrolls fell by 23,000 against a +86,000 consensus, with May slashed to 63,000 and the 3-month average collapsing to 20,000 from 77,000. Average hourly earnings rose just 0.1%, cooling the annual wage rate to 3.2%. The market read it as classic “bad news is good news” — soft enough to keep the Fed in wait-and-see mode. Per CME FedWatch, September hike odds dropped to 42.1% from 55.0%, and the 2-year yield sank to 4.16% intraday Friday.
This morning Treasuries are giving a little back, with the front end leading the selling. The 2-year is up 2 bps to 4.23%, the 5-year up 2 bps to 4.38%, the 10-year up 1 bp to 4.67%, and the 30-year unchanged at 5.21%. That’s a modest bear-flattening bounce, not a trend change — yields remain well off last week’s highs. The Dollar Index is up 0.2% to 99.72, USD/JPY jumped 0.7% to 158.86 as the BoJ’s summary of opinions read hawkish, and gold holds firm at $4,396/oz.
The Big Picture desk reframes the record-high anxiety worth carrying into the week: prices are higher, but valuations are lower. The S&P’s forward 12-month P/E sits at 20.1x versus 22.2x to start the year, because the forward EPS estimate has climbed 24.5% to $383.98. Earnings growth has outrun price. As long as estimates keep trending higher and rates stay contained, the bid holds — which is precisely why the market has looked through tariffs, geopolitics, and Fed noise all year.
Economic Calendar Today
- No U.S. economic data releases scheduled today — a quiet slate that leaves the tape hostage to positioning and headlines.
- Wednesday (T+2): July CPI — Expected +0.1% headline, +0.2% Core | Prior -0.4% headline, 0.0% Core. The week’s marquee event; a cool print cements the Fed-on-hold thesis and rewards rate-sensitive leadership.
- Earnings: Berkshire Hathaway (BRK.B 524.45, +0.5%) reported Q2 operating earnings of $12.98B, up 16.3% year-over-year, with net earnings of $25.67B. Broader Q2 season has largely beaten, but this week’s docket is a fraction of prior weeks.
- No scheduled Fed speakers or major Treasury auctions of note; the RBA met overnight with no hike expected.
With no data today, expect low-conviction, range-bound trade until Wednesday — a classic setup for volatility compression, not expansion.
Earnings & Corporate News
Two names frame the earnings tape’s split personality. On the winning side, Lyft (LYFT) rallied on record Q2 Gross Bookings of $5.5B (+23% yr/yr), active riders topping 30 million for the first time, and Adjusted EBITDA up 37% — easily outweighing a modest headline EPS miss. Management guided to continued bookings growth and margin expansion, with FreeNow in Europe and a Waymo supply-sharing launch in Nashville by year-end adding optionality. That’s the profile buyers reward: scale finally pairing with profitability.
On the losing side, The Trade Desk (TTD) got hammered after Q2 revenue rose just 3% to $715M — below its own $750M-plus guide — and Q3 guidance of at least $650M implied a roughly 12% year-over-year decline, which would be its first quarterly contraction since 2020. Macro pressure in CPG and autos (about 25% of the book) plus execution shortfalls drove the miss. The read-through: ad-tech is bifurcating, and growth deceleration is being punished without mercy.
In pre-market movers, Hewlett Packard Enterprise (HPE 56.30, +5.8%) leads the tape after a Morgan Stanley upgrade to Overweight with a $69 target. Apple (AAPL 309.95, -1.1%) is soft on a WSJ report it has tested memory chips from China’s CXMT. Taiwan Semiconductor (TSM 420.10, flat) reported July revenue up 45% year-over-year, underscoring the durability of AI infrastructure demand that powered last week’s semi surge.
WaveFinder Signal Summary
The scan environment is constructive. Continuation/2LYNCH is rich at 38 signals — that’s healthy breadth confirming the broadening advance, not a narrow tape. Standouts include IONQ ($44.43, +11.9%, RVOL 1.6) leading quantum-computing momentum, AVAV ($186.73, +9.1%, RVOL 1.5) and KRMN ($58.23, +5.6%) carrying the aerospace/defense theme, plus CBRS ($226.73, +7.3%) on the chip side. The Reversal scan is thin at just 3 names (CCL, BA, YMM), and there are no Delayed 9M signals today, so there’s no fresh episodic-pivot leadership to lean on.
Breadth is expanding: 64.66% of stocks sit above their 40-day SMA versus 60.95% the prior session (+3.7pp), and the percent-above-20SMA reading rocketed to 240% from 139%. The 4% gauge flipped hard bullish — 454 bulls vs. 143 bears, a near-mirror reversal from 257/279 two sessions ago. That’s a green-light backdrop for continuation setups, tempered only by the event risk two days out.
Today’s Watchlist
- IONQ — 2LYNCH continuation, +11.9% with RVOL 1.6; quantum leadership but 133% risk demands tight sizing and an FHP approach.
- AVAV — 2LYNCH breakout +9.1%, aerospace/defense strength; watch for follow-through above the gap on volume confirmation.
- HPE — Morgan Stanley upgrade to Overweight, $69 target; +5.8% pre-market, cleanest analyst-driven catalyst today.
- TSM — July revenue +45% yr/yr; flat pre-market but a barometer for the AI-semi complex that led last week.
- GTN — SIP standout, gapped 14.25% on better Q2 results and guidance; media name with 231 funds already involved.
- TTD — Downside momentum after the guidance miss; a short/avoid watch, not a dip-buy until it stabilizes.
Action Codes of the Day
- T3A (Think 3 Days Ahead) — With no data today and July CPI Wednesday (consensus +0.1% / Core +0.2%), position for the catalyst, not the noise; the print decides whether the September-on-hold trade holds.
- BBT (Big Bang Theory) — Breadth exploded (percent-above-20SMA to 240% from 139%, 454 bulls vs. 143 bears) alongside 38 continuation signals; big volume is preceding big moves in names like IONQ and AVAV.