Situation Awareness: Cautious. A split tape greets the week — S&P futures cling to +2.00 above fair value while Nasdaq futures sag 120 points below it, a clean divergence driven by renewed semiconductor weakness after China’s CXMT signaled next-gen memory production plans. Index price and SMA data are unavailable this session, so levels cannot be cited — trade off futures tone and breadth. Trade mode: selective and watchful, let the first hour show its hand. The Treasury market is closed for Columbus Day while the NYSE runs a full session, thinning liquidity, and the real catalysts sit mid-week with September CPI Wednesday and PPI Thursday ahead of the unofficial kickoff to Q3 bank earnings. Regime context — 27.15% of stocks trade above their 40-day SMA, and the 4% Bull/Bear gauge shows 163 bulls vs. 117 bears. The 5-day trend turned up, with breadth above the 40 SMA improving +2.3pp and above the 20 SMA jumping +5.0pp, signaling early broadening despite still-narrow absolute participation.
SIP: DNA CEG TWST SBFM
- What’s working: the Continuation/2LYNCH scan is moderately rich with 8 signals led by SBAC (+7.3%), NET (+5.6%) and TWLO (+5.0%); Reversal is thin at 2 (MCHP, PL); Delayed 9M is empty.
- Leading sectors/themes: live trending data is unavailable with markets closed and the Sector Volatility ATR feed is empty — lean on signal-level sector tags (Software, Real Estate, Finance showing the most momentum).
- Key event: bond market closed for Columbus Day thins liquidity; CPI Wednesday and PPI Thursday are the week’s fulcrum for rates and multiples.
- Market read: Friday closed a winning week built on broadening participation — Equal-Weight S&P snapped a seven-week losing streak — but AI/semi names remain the swing factor and are dragging again this morning.
- DEP watchlist: no Delayed 9M setups fired — stand down on that bucket today.
- SIPS: SBAC, NET, COIN from the Continuation scan as swing candidates.
Today’s Market Narrative
We open the week with a tale of two tapes. As of 8:32 ET, S&P futures sit a token two points above fair value while Nasdaq futures are off 120 points — the entire drag is coming from chips. The VanEck Semiconductor ETF (SMH) is down 0.8% pre-market after CNBC reported China’s CXMT plans to begin producing next-generation memory, a direct shot at U.S. and South Korean memory makers. Micron (MU 1,004.70, -24.20, -2.4%) is the poster child for the fear. This is the same AI-spending anxiety that whipsawed the group Thursday and Friday — the PHLX Semiconductor Index fell 4.3% last week even as the broader averages climbed.
That broadening is the story worth holding onto. Last week the S&P 500 gained 1.2%, the Dow added 0.9%, and critically the Equal-Weight S&P rose 1.6% to snap a seven-week losing streak. Consumer staples (+4.0%), utilities (+3.9%), energy (+3.6%) and health care (+2.8%) did the heavy lifting while tech slipped 0.3%. Our own breadth confirms the thaw: stocks above the 40-day SMA ticked up to 27.15% from 24.85%, and above the 20-day leapt to 24% from 19%. It’s a low base, but the direction finally turned.
Overnight was mixed-to-constructive. Europe is firmly green — STOXX 600 +0.6%, DAX +0.7%, FTSE +0.7% — helped by softer oil and easing yields. Asia was choppier: Hong Kong +0.3% on Beijing stabilization efforts, Shanghai -0.4% on export and consumption worries, and South Korea’s Kospi cratered 3.7% as the chip selloff hit hardest at the source. Japan was closed for Sports Day. The through-line is clear — away from semis, risk appetite is intact as investors position for earnings.
Crude is the wildcard. Oil is moving higher this morning even after President Trump said Russia and Ukraine agreed to an “energy ceasefire” — a claim Zelensky called “news to me,” though he signaled Ukraine would reciprocate if Russia committed. Last week WTI finished just under a dollar higher amid Strait of Hormuz tanker-attack headlines. Energy strength has been a double-edged sword: good for the sector’s earnings, bad for the inflation narrative heading into Wednesday’s CPI.
Macro & Policy
The macro backdrop is defined by one word: rates. The FOMC raised the fed funds target to 3.75-4.00% on September 16 in a unanimous vote, and the market reads them as not finished — fed funds futures price an 83.0% probability of another 25-basis-point hike to 4.00-4.25% in December. Don’t fight the Fed, and right now the Fed is still leaning hawkish against sticky inflation. The 10-year note yield finished last week at 5.24% (down 4bp on the week but after touching a fresh 2026 high of 5.36% Wednesday), the 2-year at 4.79%. With the Treasury market shuttered today for Columbus Day, there’s no fresh yield signal — but the trend of elevated long rates is the governing constraint on equity multiples.
The Big Picture framing matters here: the S&P now trades at 19.4x forward earnings, down from 22.2x at the start of the year, as earnings estimates (forward EPS $404.51, up 31.1% since year-end) have outrun the 13.3% price gain. That multiple compression is the market demanding more proof. Higher rates raise financing costs and the competitive pull of risk-free Treasuries, which is precisely why 53% of S&P names now sit below their 200-day average. The takeaway: companies with strong balance sheets, healthy cash flow, and pricing power should outperform rate-sensitive businesses — quality over hope.
On the consumer, Friday’s preliminary October University of Michigan sentiment reading fell to 46.3 from 48.1, well below the 48.1 consensus and far under the 53.6 of a year ago — cost-of-living frustration is deepening. That soft print, paired with elevated yields, is why small caps (Russell 2000 -0.9% last week) keep lagging. The dollar index sits at 102.21, gold has been bid toward $4,216/oz, and the inflation prints Wednesday and Thursday will decide whether the December hike becomes a near-certainty.
Economic Calendar Today
- No U.S. economic releases are scheduled today. The data vacuum plus a closed Treasury market (Columbus Day) means thinner liquidity and headline-driven moves — expect the tape to take its cues from the semiconductor complex and overseas flow rather than domestic data.
- Week ahead that matters: Tuesday — NFIB Small Business Optimism (consensus 98.0; prior 98.7) at 6:00 ET, Existing Home Sales (3.96M; prior 3.98M) at 10:00 ET, Treasury Budget at 14:00 ET.
- Wednesday — September CPI (consensus 0.6%; prior 0.4%) and Core CPI (0.2%; prior 0.3%) at 8:30 ET, plus the Beige Book at 14:00 ET. This is the week’s pivot point.
- Thursday — September PPI (consensus 0.5%; prior 0.4%) and Core PPI (0.3%; prior 0.2%).
- Earnings: several major banks report over the coming days to unofficially kick off Q3 season — no confirmed pre-market names in today’s data, so treat today as positioning ahead of the catalysts.
Earnings & Corporate News
The single-stock tape is already active. Bristol Myers Squibb (BMY 61.67, +2.55, +4.31%) is indicated sharply higher after its Phase 3 ACTION-1 interim analysis met its primary endpoint with a statistically significant and clinically meaningful progression-free survival benefit — a clean fundamental catalyst. Salesforce (CRM 238.31, +9.18, +4.0%) is jumping on a notable double upgrade to Buy from Underperform at Bank of America, a rare two-notch move that signals conviction.
On the cautious side, Super Micro (SMCI) will plead guilty to diverting NVIDIA (NVDA 228.82, -0.46, -0.2%) chips to China per Reuters — NVDA is holding up well given the news, suggesting the market views it as contained. Delta (DAL) set a mixed tone for the week late Friday, coming up shy on Q3 EPS on fuel volatility and guiding FY26 EPS to $5.10-5.60 with a midpoint below consensus, though management flagged no slowdown in bookings. The AI infrastructure debate stays front and center: Lumentum’s (LITE) CEO confirmed optical components sold out through early 2029, lifting peers COHR and AAOI, while Bloomberg’s report that OpenAI is tracking to $70B+ annualized revenue has largely unwound Thursday’s FT-driven scare.
In the wireless shake-up, SpaceX’s (SPCX) ~$8B deal for Grain Management’s 800 MHz spectrum continues to pressure AT&T (T), Verizon (VZ) and T-Mobile (TMUS) while lifting tower operators American Tower (AMT), Crown Castle (CCI) and SBA Communications (SBAC) — the latter firing a 2LYNCH continuation signal, up 7.3%.
WaveFinder Signal Summary
Scan breadth is moderate, not rich — 8 Continuation/2LYNCH signals is a workable but not aggressive environment, and the empty Delayed 9M bucket plus just 2 Reversal signals (MCHP, PL) argues against forcing size. The standouts are momentum names with real catalysts: SBAC (+7.3%, RVOL 2.4) riding the SpaceX tower thesis, NET (+5.6%) and TWLO (+5.0%) carrying software strength, and COIN (+4.3%, RVOL 1.2) as a crypto-beta swing. ELV (+2.9%, RVOL 1.8) adds a managed-care angle. Risk percentages on several (ELV 113.5%, NET 109.3%, IBRX 99.5%) are elevated, so position sizing is everything.
The breadth trajectory is the encouraging footnote: above-40-SMA improved to 27.15% from 24.85% and above-20-SMA to 24% from 19%, with Bull 4% at 163 vs Bear 4% at 117 — a healthier ratio than the prior session’s 177 bulls against 289 bears. Participation is expanding off a low base, consistent with last week’s broadening. Watch whether today’s chip weakness arrests that improvement.
Today’s Watchlist
- MU — down 2.4% to 1,004.70 on CXMT memory-competition headlines; the barometer for whether the semi selloff spreads or stabilizes.
- CRM — 238.31, +4.0% on a BofA double upgrade to Buy; watch for follow-through conviction in a quality mega-cap software name.
- BMY — 61.67, +4.31% on a positive Phase 3 readout; clean catalyst, defensive health care tilt fits the rate backdrop.
- SBAC — 2LYNCH breakout +7.3% on SpaceX tower-demand tailwind; strongest continuation signal, RVOL 2.4.
- NET — 360.93, +5.6% 2LYNCH software momentum; elevated 109.3% risk demands tight sizing.
- DNA — top SIP, +10.54% from open on an NSF autonomous-lab partnership; high short float (14.6%) biotech runner.
Action Codes of the Day
- CRT (Controlled Risk Taking) — with breadth at just 27.15% above the 40 SMA and a split S&P/Nasdaq futures tape, take calculated risks within the system; this is a choppy, prove-it market, not a green-light trend.
- T3A (Think 3 Days Ahead) — Wednesday CPI (0.6% consensus) and Thursday PPI plus bank earnings are the real catalysts; position today anticipating those events rather than chasing a thin, Treasury-closed session.