Situation Awareness: Cautious, but with a bullish catalyst just released. The tape is being driven squarely by the 8:30 ET July CPI print, which landed in-line — headline +0.1% (consensus +0.1%) and Core +0.2% (consensus +0.2%) — enough to keep the Fed from hiking in September and spark a premarket relief rally. S&P futures snapped to +20 above fair value and Nasdaq futures to +240 immediately post-release, with tech leading on strong AI earnings. Trade mode: selective and constructive — respect the CPI-driven lift but let the 10-yr auction and oil headlines confirm before pressing. Today’s context is a rare rate-HIKE debate (CME FedWatch shows 45.9% odds of a 25bp September hike), so soft inflation is the bull’s oxygen. Regime context — 60.09% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 214 bulls vs. 157 bears. The 5-day trend cooled into yesterday’s mild pullback, with breadth above the 20-SMA collapsing from 164% to 115% day-over-day, signaling near-term consolidation ahead of the print.
SIP: ALMR SLXN BWEN TISI
- What’s working: the Continuation/2LYNCH scan is rich with 16 signals — good breadth — led by VSEC (+9.3%), MELI (+6.3%), EDIT (+5.0%), MDGL (+3.9%). Reversal scan is thin at 4 (CMG, AMD, AAOI, COMP). No Delayed 9M signals today.
- Leading sectors/themes: market closed — no live Trending Sector or ATR data available; sector volatility feed is empty. Lean on the Briefing tape: semis and industrials led yesterday, comm services (-2.1%) lagged.
- Key event: July CPI in-line — the week’s marquee catalyst is now behind us and it favored the doves; $42B 10-yr auction at 1:00 ET is the next test.
- Market read: yesterday faded to modest losses on rising oil and mega-cap tech weakness, but equal-weight (+0.3%), Russell 2000 (+0.3%) and midcaps held green — resilience beneath the surface into a friendly print.
- DEP watchlist: no D9M signals firing today — stand down on that setup.
- SIPS: VSEC, MELI, MDGL from the Continuation scan.
Today’s Market Narrative
The whole week funneled into one number, and that number cooperated. July CPI rose 0.1% month-over-month and Core rose 0.2%, both matching consensus and following June’s -0.4% headline and flat core. The reaction was immediate — S&P futures jumped to +20 above fair value and Nasdaq futures to +240, extending an already-firm premarket bid. The significance is not the print itself but what it does to the September FOMC math: with the market treating a hike as a coin-flip, an in-line-to-soft inflation read tilts the odds back toward a hold and takes the tail risk off the table.
Tech is leading the charge, and the fuel is earnings, not just macro. CoreWeave (CRWV 106.54, +18.0%) surged on in-line revenue and solid guidance despite an EPS miss, Super Micro (SMCI 34.31, +8.6%) beat and guided FY27 well above consensus, and CAVA (CAVA 70.65, +16.2%) topped both lines. That AI enthusiasm rippled overnight — South Korea’s Kospi ripped +3.7% on semiconductor-component leadership, with Japan’s Nikkei +0.8%. Europe traded modestly higher into our print.
Contrast that with yesterday’s actual close: the S&P 500 slipped 0.3%, the Nasdaq Composite 0.6%, and the Dow 0.3% as mega-cap growth sagged. Alphabet (GOOG -3.61%), Amazon (AMZN -2.09%), Oracle (ORCL -3.71%) and AppLovin (APP -5.99%) did the damage. But the internals told a better story — the S&P 500 Equal Weight rose 0.3%, advancers beat decliners on both exchanges, and small/midcaps outperformed. That divergence — heavy at the top, healthy underneath — is the setup CPI just tried to resolve to the upside.
The wildcard remains oil. Brent has climbed from roughly $80 at the start of the month to $89.04 today, and WTI sits at $83.35, up 0.2%, as the U.S.-Iran standoff over the Strait of Hormuz drags on. President Trump claimed U.S. control of the Strait and warned Iran would “get blown away” — rhetoric that keeps a geopolitical premium in crude and a lid on any runaway equity enthusiasm. Energy (+1.1%) and utilities (+1.1%) tied for yesterday’s sector lead, a defensive-plus-inflation-hedge combination worth noting.
Macro & Policy
This is the unusual regime where the debate is about hiking, not cutting. The CME FedWatch Tool shows a 45.9% probability of a 25bp September hike — a genuine toss-up — driven by an economy that has stayed resilient and inflation that keeps flirting with stickiness. Today’s in-line CPI is exactly what the doves needed: enough disinflation progress to argue for patience without reigniting hike fears. Treasuries had already caught a pre-CPI bid on that hope.
The curve richened across the board overnight: the 2-yr yield fell 3bps to 4.19%, the 5-yr 3bps to 4.36%, the 10-yr 2bps to 4.66%, and the long bond 3bps to 5.21%. That’s a broad-based rally consistent with softer inflation expectations. The next hurdle is the $42B 10-yr note auction at 1:00 ET — after Tuesday’s strong $58B 3-yr offering, demand here will tell us whether buyers are comfortable adding duration at 4.66% with a hike still on the table. A weak auction could reverse the morning’s yield relief.
Currencies and commodities round out the picture: the dollar is quiet with EUR/USD flat at 1.1540 and USD/JPY at 159.08 — the yen has drifted back to weakness after that post-intervention high of 155.23 on August 3. Gold is firm at $4,474/oz (+0.8%), a nod to lingering geopolitical and rate uncertainty. Europe’s inflation stays hot — Germany 2.8% and Italy 2.9% year-over-year, both well above the ECB’s 2% target — reinforcing that the global disinflation story is uneven. The Big Picture backdrop remains supportive: forward S&P earnings estimates are up 24.5% YTD to $383.98, compressing the forward P/E to 20.1x from 22.2x at year-start. Prices are higher, valuations lower — the earnings engine keeps carrying this market.
Economic Calendar Today
- 8:30 ET (RELEASED): July CPI — Actual +0.1% (consensus +0.1%; prior -0.4%); Core +0.2% (consensus +0.2%; prior 0.0%). In-line — the dovish outcome the market wanted; drove futures higher.
- 7:00 ET (RELEASED): MBA Mortgage Index — Actual +3.6% w/w (prior -2.9%); refis +5%, purchases +3%. Modest thaw, but rates above 6% still cap housing.
- 10:30 ET: Weekly crude oil inventories — Prior +2.48M. Matters given the Iran/Hormuz premium in crude.
- 13:00 ET: $42B 10-yr note auction — The day’s key rates catalyst; gauge duration demand at 4.66%.
- 14:00 ET: July Treasury Budget — Consensus -$300.0B; prior -$120.3B.
With CPI now printed and in-line, the marquee risk of the week is cleared — the auction at 1:00 ET is the last real catalyst. Expect volatility to compress after the open unless oil headlines or the auction surprise.
Earnings & Corporate News
The AI-compute complex is doing the heavy lifting. CoreWeave (CRWV) gaps +18.0% to 106.54 despite an EPS miss — the market rewarded in-line revenue and constructive Q3/FY26 guidance, a signal that AI infrastructure demand remains insatiable. Super Micro (SMCI) adds +8.6% to 34.31 on an EPS beat and FY27 guidance “well above consensus.” Those two set the tone that lifted the Kospi overnight and underpin Nasdaq futures’ +240 lead.
Outside AI, CAVA (CAVA) rips +16.2% to 70.65 on a clean top-and-bottom-line beat — restaurant growth names still command premium multiples when comps deliver. On the disappointment side, Rocket Lab (RKLB) traded lower after Q2: revenue jumped 62% yr/yr to $234M and Q3 guidance topped views, but investors fixated on the narrowing year-end Neutron launch window, softer Q3 margins (35-37% vs 41.5%), and elevated cash burn of $(110M). Cardinal Health (CAH) flew on a Q4 beat and FY27 EPS guidance of $12.40-12.60 above the $12.11 consensus, with adjusted EPS up 40% yr/yr.
Recall Monday’s structural news still reverberating: NVIDIA (NVDA) organized a $500B financing initiative with Apollo, BlackRock, Blackstone, Brookfield, Goldman and KKR for AI infrastructure. NVDA closed flat at 217.48 yesterday as the capital isn’t yet deployed, but participants KKR (+6.92%) and Apollo (+6.23%) were among the day’s best S&P names — the market is paying up for the enablers.
WaveFinder Signal Summary
The scan environment is constructive. The Continuation/2LYNCH engine is firing 16 signals — solidly above the 10-signal “good breadth” threshold — with genuine leadership breadth: VSEC (+9.3%, RVOL 1.3), MELI (+6.3%, RVOL 1.9) and EDIT (+5.0%) show real accumulation, while MDGL (+3.9%) and ALNY (+1.9%) keep the medical complex represented. The Reversal scan is quiet at just 4 names (CMG, AMD, AAOI, COMP), and there are zero Delayed 9M setups — so the actionable edge today is continuation, not bottom-fishing.
Breadth is the caution flag. The percentage of stocks above the 40-SMA held roughly steady at 60.09% vs 60.48% (-0.4pp), but the 20-SMA reading cratered from 164% to 115% — a 49-point one-day contraction that reflects yesterday’s mega-cap-led fade. Net: intermediate breadth intact, short-term breadth cooling. A friendly CPI can re-expand it, but confirmation comes from the 4% breakout counts accumulating after the open.
Today’s Watchlist
- CRWV — Gaps +18.0% to 106.54 on AI-demand guidance; watch for a first-hour base and continuation, but respect the EPS miss.
- SMCI — +8.6% to 34.31 on FY27 guidance above consensus; a clean episodic-pivot candidate if it holds the gap.
- VSEC — Top 2LYNCH signal, +9.3% at 241.82 with RVOL 1.3; leading the continuation board.
- MELI — +6.3% to 1940 on RVOL 1.9, ATR%-M +3.2 — retail momentum with real volume conviction.
- CAVA — +16.2% to 70.65 on a full beat; gap-and-go watch for follow-through in a risk-on tape.
- ALMR — Top SIP (sentiment +2), +26% from open at 36.57 on better-than-expected Q2; small-cap momentum leader.
Action Codes of the Day
- CRT (Controlled Risk Taking) — With breadth at 60.09% above the 40-SMA and the 20-SMA reading gutted 49 points to 115%, this is a choppy, catalyst-driven tape; size positions to the system and let CPI‘s dovish read work without overexposure.
- T3A (Think 3 Days Ahead) — CPI is cleared, but the $42B 10-yr auction at 1:00 ET, weekly crude inventories, and the September FOMC hike debate (45.9% odds) are the catalysts to position around; anticipate the auction reaction before it hits.