Situation Awareness: Bearish regime, but a relief bid is testing it. The tape is caught between a hawkish Fed and a second straight session of falling oil — futures point sharply higher (S&P 500 +60 @ 7,683, Dow +380 @ 52,295, Nasdaq +304 @ 29,561) as mega-cap and semiconductor names lead the bounce off yesterday’s post-FOMC retreat. Index technical levels for SPY/QQQ/IWM are unavailable in today’s data, so lean on futures and breadth for structure. Trade mode: selective and defensive — let the open prove the rebound before chasing. The dominant force is rates: Warsh delivered a “hawkish hike” and yields spiked, but Treasuries are catching a bid this morning alongside a slide in crude back toward $100. Regime context — 28.38% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 160 bulls vs. 234 bears. The 5-day trend shows breadth contracting two straight sessions (40SMA 28.38% vs 32.52%), confirming narrow, defensive participation beneath the futures pop.
SIP: AXON ALMU DLHC TGL
- What’s working: the Continuation/2LYNCH scan fired 12 signals — decent breadth given the weak internals — heavily concentrated in chips (ALAB, AXTI, CBRS) and hardware (DELL). Reversal scan is thin at 2 (AMPX, LUNR); Delayed 9M is empty.
- Leading sectors: live Trending Sector/Theme and ATR volatility data are unavailable (market closed). Signal concentration points to CHIPS and COMPUTER hardware as today’s leadership, echoing the semiconductor-led futures bounce.
- Key event: FOMC hiked 25 bps to 3.75-4.00% on a unanimous 12-0 vote — first hike since July 2023 — with 16 of 18 officials penciling in at least one more this year.
- Market read: yesterday’s early gains were erased by Warsh’s press conference; the 2-yr jumped to 4.73% and the 10-yr tagged 5.01%. Today’s rebound is a rate-relief and oil-relief bounce, not a breadth turn.
- DEP watchlist: no Delayed 9M signals today — nothing qualifies.
- SIPS: ALAB, DELL, LITE — chip and hardware continuation setups riding the semi rebound.
Today’s Market Narrative
Futures are pointing to a firm rebound this morning, with S&P 500 futures up 60 points at 7,683, Dow futures up 380 at 52,295, and Nasdaq futures up 304 at 29,561. The bid is being led by mega-caps and semiconductors — the same cohort that provided early leadership yesterday before Fed Chair Kevin Warsh took the wind out of the market’s sails. Pre-market, chips are green across the board: INTC +2.7%, AMD +2.3%, LSCC +1.9%, NVDA +1.5%, plus foreign names like TSEM +6.0% and SKHY +2.6%. This is a rate-and-oil relief trade, not a change in the underlying regime.
Yesterday told the real story. The major averages finished mostly lower after an initially positive session unraveled during Warsh’s press conference — the S&P 500 fell 0.4%, the Dow dropped 1.2%, and the Nasdaq Composite closed flat after being up as much as 0.9% intraday. The 25-bp hike itself drew little reaction; it was Warsh’s insistence that “inflation is too high, and has been for too long” that reset expectations toward a broader tightening cycle. Financials (-1.6%) and energy (-3.0%) were the day’s laggards, with the Invesco KBW Bank ETF off 2.9% as yields climbed. Crypto names extended losses after the Clarity Act stalled in the Senate — COIN -4.42%, HOOD -5.46%.
The offset this morning is crude. WTI is down $2.47 (-2.4%) to $99.96, a second consecutive decline, after Axios reported Trump is expected to meet Gulf leaders at the UN General Assembly next Tuesday to discuss next steps in the Iran conflict. Falling oil eases the inflation impulse that has been driving the entire rates narrative, and it’s helping Treasuries and European equities firm — the STOXX 600 is +0.5%, the DAX +0.6%, the FTSE +0.6%. Gold is soft at $4,375, silver at $64.78.
The key tension: the breadth backdrop remains bearish. Only 28.38% of stocks sit above their 40-day SMA, down from 32.52% the prior session, and bears outnumber bulls 234 to 160 on the 4% gauge. That means today’s rebound is being carried by a narrow slice of large-cap tech and chips, not a broad-based recovery. Respect the bounce, but don’t confuse it with a bottom.
Macro & Policy
The Fed‘s message was unambiguous: this was a hawkish hike, not a dovish one. The 12-0 unanimous vote — implying Warsh and predecessor Powell both backed it — signaled resolve, and the directive closed with “The Committee will deliver price stability.” The dot plot showed 16 of 18 officials expecting at least one more hike this year, with no consensus for a cut until 2028. The SEP nudged 2026 GDP up to 2.3%, PCE inflation to 3.7%, core PCE to 3.4%, and cut unemployment to 4.1% — a stronger-growth, stickier-inflation profile that justifies further tightening.
The bond market got the memo. The 2-yr yield spiked from 4.60% pre-announcement to 4.73%, and the 10-yr climbed from 4.95% to 5.01% by the close. This morning, though, Treasuries are rallying on the oil pullback: the 2-yr is down 2 bps to 4.72%, the 5-yr down 3 bps to 4.83%, the 10-yr down 4 bps to 4.97%, and the 30-yr down 3 bps to 5.32%. The Dollar Index is flat at 100.25, USD/JPY eased to 155.83, and EUR/USD firmed to 1.1489 after eurozone August CPI came in slightly cooler than feared at 3.2% yr/yr.
Globally, central banks are diverging. The Hong Kong Monetary Authority followed the Fed with its own 25-bp hike to 4.25%. The Bank of England held at 3.75% on a 6-3 vote but warned it could hike if the Iran conflict drags on, and it sees inflation topping 4% in early 2027. Trump, meanwhile, posted that rates should be “1% or less” — noise against a Fed that has clearly chosen the other direction. Watch the Bank of Japan next: a hawkish Fed raises the ante for the BoJ, and any move to shore up the yen risks unwinding carry trades that could inject fresh volatility.
Economic Calendar Today
- 8:30 AM ET: August Housing Starts — Consensus 1,325K | Prior 1,239K — a rebound would signal housing resilience despite higher rates.
- 8:30 AM ET: August Building Permits — Consensus 1,410K | Prior 1,443K — forward-looking read on construction pipeline.
- 8:30 AM ET: Initial Claims (09/12) — Consensus 209K | Prior 206K — labor tightness feeds the Fed‘s “employment mandate is met” framing.
- 8:30 AM ET: Continuing Claims (09/05) — Prior 1,774K.
- 8:30 AM ET: September Philadelphia Fed Index — Consensus 35.0 | Prior 47.4 — a sharp expected cooldown; a big miss could weigh on cyclicals.
- 10:00 AM ET: August Pending Home Sales — Consensus 0.5% | Prior -2.3%.
- 10:30 AM ET: EIA Natural Gas Inventories (09/12) — Prior +40 bcf.
- Earnings: light slate — LEN already reported (missed by $0.05); no major post-market heavyweights flagged today.
No Fed speakers or Treasury auctions of note flagged. With the FOMC behind us, the data prints and oil headlines will call the tape.
Earnings & Corporate News
The standout mover is Generac (GNRC 229.31, +54.20, +30.95%), soaring on a long-term supply agreement with Amazon (AMZN 249.12, +1.28%) tied to up to $8 billion of generator purchases for data centers — $2.4 billion of initial deliveries in 2027-2028, plus a warrant to Amazon. This is a clean AI-infrastructure/power read-through and the day’s biggest single-name story. On the downside, Fluence (FLNC) is cratering -21.9% after lowering FY26 guidance on supply-chain issues, drawing a double downgrade — Goldman to Neutral (tgt $9) and Baird to Underperform (tgt $3).
Homebuilders are soft after Lennar (LEN -2.2%) missed by $0.05, missed on revenue, saw deliveries fall 3% to 20,840 homes, and cut FY26 delivery guidance to 80,000-81,000 homes — a caution flag heading into today’s housing data. YETI is down 5.0% despite laying out a 2030 framework, and Viant (DSP) is off 7.9% on a secondary. Salesforce (CRM -1.06%) offered a long-term target of $63 billion-plus in FY30 revenue at its Investor Day.
On ratings, J.B. Hunt (JBHT) — which cratered 13.3% yesterday after warning of a 5-10% sequential Q3 earnings drop on abnormal fuel costs — was upgraded to Outperform at Citizens (tgt $300) and is bouncing +1.4% pre-market. Beware the group read-through: JBHT‘s fuel warning is a caution for the whole freight complex into Q3 season. Elsewhere, security software took hits — Bernstein cut PANW, S, and OKTA — while chips got a fresh bull, with Morgan Stanley initiating SiTime (SITM) Overweight at $370.
WaveFinder Signal Summary
The scan environment is moderately constructive against a weak backdrop: the Continuation/2LYNCH scan produced 12 signals, respectable given that only 28.38% of stocks sit above their 40-day SMA. Leadership is unmistakably concentrated in semiconductors and hardware — ALAB ($269.18, +6.6%), AXTI ($64.30, +11.4%), CBRS ($190.47, +3.5%), and DELL ($563.29, +3.6%) all firing — which lines up perfectly with the semi-led futures rebound. LITE ($919.40, +9.6%, RVOL 1.6) is the strongest telecom/optical name.
But breadth is the warning light. The percent above the 40-day SMA contracted 4.1 points day-over-day (28.38% vs 32.52%), and above the 20-day slipped to 25% from 26%. With bears outnumbering bulls 234-to-160 and zero Delayed 9M signals, the message is clear: leadership is narrow and defensive. Trade the chip continuations selectively, size down, and don’t extrapolate the futures bounce into a breadth thrust.
Today’s Watchlist
- GNRC — +30.95% on the $8B Amazon data-center supply deal; watch for gap-and-go continuation vs. fade after the euphoric open.
- ALAB — 2LYNCH continuation at $269.18 (+6.6%); clean chip leadership riding the semi rebound.
- DELL — 2LYNCH setup at $563.29 (+3.6%), lowest risk in the scan at 38.9% — hardware/AI infrastructure play.
- INTC — +2.7% pre-market on SK hynix Ohio fab chatter; a rebound tell for the whole PHLX SOX.
- JBHT — upgraded to Outperform (tgt $300) after a 13% drubbing; watch for a dead-cat bounce vs. sector contagion.
- FLNC — -21.9% on cut guidance and double downgrade; a broken chart, relevant as a short/avoid signal for storage names.
Action Codes of the Day
- FHP (First Hour Pass) — With breadth bearish (28.38% above 40SMA, 234 bears vs 160 bulls) but futures up 60 S&P points, let the open show whether the rebound is real before committing.
- BTFD (Buy The Dip) — Oil down a second day to $99.96 and yields easing (10-yr -4 bps to 4.97%) give cover to buy quality tech/chip pullbacks like ALAB and DELL selectively.