Situation Awareness: Cautious. Two forces are wrestling for control of the tape — crude oil pushing toward $93/bbl on escalating Strait of Hormuz hostilities against easing Treasury yields, with the 10-year back to 4.77% after touching 4.82% overnight. Futures are mixed and split: Dow futures +103 @ 53,224 lean cyclical/value while Nasdaq futures -76 @ 29,111 drag on chip weakness after Broadcom’s post-earnings fade. SPY/QQQ/IWM cash levels and SMA references are unavailable in today’s data, so we anchor on futures and breadth instead. Trade mode: selective and watchful — respect the oil headwind, buy strength that yields confirm, avoid crowded software. Today’s context is a fickle, rate-and-oil-driven market with a heavy economic slate (ISM Services, jobless claims) and mega-cap earnings digestion calling the shots. Regime context — 45.81% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 256 bulls vs. 89 bears. The 5-day trend turned decisively up, with the Bull 4% count flipping from 104 to 256 in a single session and breadth above the 40 SMA expanding +2.8pp — early recovery signaling, not confirmed strength.
SIP: EOSE IRD GPUS ADBT
- What’s working: Continuation/2LYNCH is firing with 12 signals (decent breadth), led by steel and internet momentum; Reversal scan shows 6 names concentrated in chips and hardware. Delayed 9M is empty — no episodic-pivot follow-through today.
- Leading groups (live sector/theme feeds closed): Reversal-scan strength clusters in CHIPS (ALAB, KLAC) and BUSINESS SVC (HPE); Continuation strength in METALS (STLD +5.8%), INTERNET (RDDT +9.3%), RETAIL (CVNA +2.7%).
- Key event: Crude at/near $93 on Strait of Hormuz military escalation — the U.S. escorted 40 vessels carrying 18M barrels through the waterway and expects continued offensive strikes.
- Market read: Yesterday’s broad rebound (S&P +0.5%, Russell 2000 +1.2%) showed relief once oil and yields stabilized — but that relief is contingent on both staying contained, and oil is back on the offensive this morning.
- DEP watchlist: No Delayed 9M signals today — stand down on episodic pivots.
- SIPS: STLD, RDDT, CVNA lead the Continuation scan for swing candidates.
Today’s Market Narrative
The market walks in this morning off a genuine relief rally but immediately confronts the same two variables that have whipsawed it all week: oil and rates. Crude is up nearly $2 to roughly $93/bbl as hostilities in and around the Strait of Hormuz intensify — Kuwait’s army confronted Iranian missile and drone attacks, and the U.S. military is escorting commercial tankers through the waterway while signaling continued offensive strikes. Against that inflationary/geopolitical headwind, Treasury yields are easing, with the 10-year down 3 bps to 4.77%, extending the stabilization that fueled Wednesday’s bounce. The net result: mixed futures, with the Dow (+103) leaning into cyclicals and materials while the Nasdaq (-76) sags under semiconductor weakness.
Yesterday was a broad, healthy rebound. Ten of eleven S&P 500 sectors finished higher, the S&P 500 and Nasdaq each added 0.5%, the Dow gained 0.6%, and crucially the Russell 2000 outperformed at +1.2% — a signal of participation beyond mega-caps. Materials (+1.5%) led on steel strength (STLD +5.79%), financials (+0.8%) supported the Dow, and communication services (+1.3%) got a lift from Charter (+8.74%) and Reddit (+9.31%). That’s the encouraging tape. The catch, as Briefing’s Page One noted, is that none of it was driven by a durable catalyst — it was seller exhaustion in oil and rates, in thin holiday-season volume. This remains a fickle market keyed inversely to interest rates.
The fault line under the surface is technology, and it’s a sharp one. Semiconductors held up yesterday (NVDA +3.2%, PHLX Semi +0.5%) and Dell ripped +15.76% after raising its FY27 AI-server outlook to $74B from $60B. But software cratered — the tech-software ETF fell 2.6% with PANW -9.31%, MDB -13.54%, PLTR -5.83%, and CRWD -5.42% all despite decent fundamentals, a clear “expectations too high” unwind. After the bell, that divide got more complicated: Broadcom beat and guided Q4 above consensus yet is trading down 3.3% to 354.97, dragging chips lower this morning, while Snowflake exploded +23.94% to 379.06 on accelerating AI-driven consumption. The read: this tape rewards proof of AI monetization and punishes anything priced for perfection.
Macro & Policy
Bonds are the market’s steering wheel right now, and this morning they’re offering support. The curve is richer across the board: 2-year -3 bps to 4.36%, 5-year -2 bps to 4.53%, 10-year -3 bps to 4.77%, 30-year -2 bps to 5.25%. That easing follows Wednesday’s stabilization, when the 10-year finished unchanged at 4.80% after an overnight spike to 4.82%. The Fed backdrop is constructive — NY Fed‘s Williams called recent inflation data “encouraging,” and a soft ADP print (just 38,000 private jobs vs. 47,000 consensus) reinforced the disinflation-and-cooling-labor narrative. The Beige Book showed activity expanding only modestly, with the outlook clouded by higher energy prices and geopolitical risk.
Globally, central bank divergence is the story. The yen rallied ~1.6% to 156.14 after Treasury Secretary Bessent said he “knows what Japan is planning,” fueling BOJ rate-hike speculation (Bloomberg reports the BOJ leaning toward +25 bps). The ECB meets next week and is expected to hike; German growth forecasts were just raised (IfW to 1.3%, ifo to 1.4% for 2026). The dollar index is soft, down 0.4% to 99.21, with EUR/USD at 1.1613. Commodities scream risk-hedging: gold surged $75 to $4,490 and silver +$0.91 to $66.37 — safe-haven demand tied squarely to the Iran conflict. The dominant macro force today is unmistakable: rising oil pressuring the inflation narrative, partially offset by falling yields that keep the equity bid alive.
Economic Calendar Today
- 8:30 AM ET — July Trade Balance: Consensus -$89.6B | Prior -$73.3B. A widening deficit weighs marginally on GDP math.
- 8:30 AM ET — Initial Claims (08/29): Consensus 205K | Prior 203K. With ADP soft, any upside surprise reinforces the rate-cut/dovish case and helps equities via lower yields.
- 8:30 AM ET — Q2 Productivity-Rev / Unit Labor Costs-Rev: 1.4% / 1.3% expected — labor-cost inflation read.
- 9:45 AM ET — S&P Global Services PMI (Final, Aug): Prior 56.8.
- 10:00 AM ET — ISM Non-Manufacturing (Aug): Consensus 54.1% | Prior 54.1% — the headline print of the day; services strength vs. weakness swings the growth-vs-inflation debate.
- 10:30 AM ET — EIA Natural Gas Inventories: Prior +15 bcf.
- Earnings today — post-market: LULU, DOCU, ZS, IOT, PATH, GWRE, AMBA, ASAN. Pre-market already out: CIEN (+2.78%), CPB (guided FY27 below, cut dividend 36%), DOO, VSXY, BRC.
Earnings & Corporate News
The tape is being driven by earnings dispersion more than any single macro headline. Snowflake (SNOW +23.94% to 379.06) is the standout — a broad Q2 beat with FY27 product-revenue guidance raised to $6.07B (36% growth) and RPO up 30% to $9.0B, proving AI demand is translating into real consumption. That’s the template winners need. On the flip side, Broadcom (AVGO 354.97, -3.3%) beat by $0.10 and guided Q4 above consensus but still faded — and Macquarie used the dip to upgrade it to Outperform with a $490 target. NetApp beat by $0.46 and raised, yet trades down 7.9%; HPE beat and guided up but is off 3.5%. The pattern is consistent: the bar is sky-high for tech, and beats aren’t enough.
Away from tech, retail and consumer names delivered clean wins. Five Below (FIVE 257.24, +5.83%) beat by $0.28, posted 14.1% comps, raised full-year guidance, and authorized a new $600M buyback. PVH beat by $0.62, Victoria’s Secret beat by $0.18 and guided Q3 revenue above consensus, and Ciena topped and guided higher. Consumer staples were the sore spot — Campbell’s (CPB) guided FY27 below consensus and slashed its dividend 36%. The worst single reaction: Ultragenyx (RARE -43.7%) after its Phase 3 Angelman trial missed, triggering a wall of downgrades (JPMorgan, Baird, Evercore, Wells Fargo, all to neutral/in-line).
M&A stayed active — CDW acquiring AI-services firm Lovelytics for ~$525M, Diversified Energy buying Birch for $1.8B to expand its Permian footprint, and Shell completing its ARC Resources deal. On policy, Trump signed a bill extending government funding through December 11, removing a near-term shutdown risk.
WaveFinder Signal Summary
The scan environment is moderately healthy, not exuberant. Continuation/2LYNCH is producing 12 signals — solid breadth that aligns with yesterday’s broad rebound and the Bull 4% count jumping to 256. Leaders skew cyclical and momentum: STLD ($247.64, +5.8%) riding the materials rotation, RDDT ($158.10, +9.3%) on internet strength, and CVNA ($74.16, +2.7%) in retail. The Reversal scan (6 names) clusters in chips (ALAB, KLAC) and hardware (HPE, on 3.9x RVOL after earnings) — worth watching but lower-conviction in a semi-heavy morning.
Breadth is improving off a low base: 45.81% of stocks are above their 40-day SMA, up from 43.04% the prior session (+2.8pp), while the 20-day figure is stuck at 17%. That divergence — improving intermediate breadth but weak short-term participation — screams selective, not full-risk-on. The empty Delayed 9M scan confirms there’s no episodic-pivot fuel today; don’t chase gaps blindly.
Today’s Watchlist
- SNOW — +23.94% to 379.06 on AI-consumption acceleration; the AI-monetization winner. Watch for follow-through vs. gap-fade after a 24% move.
- AVGO — Beat and guided up but down 3.3% to 354.97; Macquarie upgraded to $490. Reversal candidate if chips stabilize with NVDA.
- STLD — 2LYNCH continuation, +5.8% to $247.64 on U.S.-Canada trade optimism; cleanest cyclical momentum play.
- RDDT — 2LYNCH signal, +9.3% to $158.10 riding comm-services strength; high-beta momentum, size accordingly given 151% risk read.
- FIVE — +5.83% to 257.24 on 14.1% comps, raised guide, new $600M buyback; clean fundamental breakout.
- HPE — Reversal signal on 3.9x RVOL; beat and raised but down 3.5% pre-market — watch $51.83 area for stabilization.
Action Codes of the Day
- CRT (Controlled Risk Taking) — With only 45.81% of stocks above the 40 SMA and oil back near $93, this is a choppy, headline-driven tape; take calculated system-based risk, not conviction size.
- T3A (Think 3 Days Ahead) — ISM Services (10:00 ET), tonight’s LULU/ZS/DOCU earnings, and next week’s ECB all queue up as catalysts; position ahead of the schedule rather than reacting.