Situation Awareness: Cautious. The third quarter opened on a subdued note as a violent 6.3% drop in the PHLX Semiconductor Index failed to spread — the S&P 500 slipped just 0.2%, the Nasdaq Composite fell 0.7%, and the DJIA finished flat after touching another intraday record high. Note: our [Index Prices & Technical Levels] feed shows SPY, QQQ and IWM as data unavailable today, so we are anchoring on the Briefing’s index percentages rather than specific dollar or SMA levels. Trade mode for tomorrow: selective and defensive ahead of the jobs number — let the payrolls print set the tone before committing size. The defining context was rotation, not de-risking: chips got hit on profit-taking (KLAC -11.8%, GLW -13.6%) while software (IGV +3.0%), Meta (+8.8%) and financials (+2.1%) absorbed the blow. Regime context — 63.1% of stocks closed above their 40-day SMA (vs 65.2% prior day, regime shifted from Bullish to Cautious), and the 4% Bull/Bear gauge shows 339 bulls vs. 230 bears. The 5-day trend has been constructive into the quarter turn but today’s breadth rollover (% above 20SMA collapsed from 122% to 85%) signals a pause in momentum after a scorching Q2.
SIP: META PLTR NKE COIN
- What’s working: momentum-catalyst names fired hardest — 9M Catalyst logged 8 signals (META, PLTR, HOOD, COIN, NKE, KHC, PDD, GEN); 2LYNCH continuation posted 39 signals, D9M 26 signals, Reversal Bullish only 2 (C, BTDR).
- Leading sectors: Consumer Defensive +1.77%, Communication Services +1.50%, Financial +1.24%; leading themes: Generic Drugs +5.68%, Medical Systems & Equipment +4.40%, Enterprise Software +4.14%.
- Key event: Meta’s +8.8% surge on Bloomberg’s report it plans to build an AI cloud-compute business drove communication services to a sector-leading +2.6%.
- Regime threading: morning SA called Bullish (65.2%), closing is Cautious (63.1%) — shifted, as the semiconductor washout pulled breadth back below the 65% Bullish threshold even though mega-caps held.
- DEP watchlist: KVYO ($16.39, +8.5%), NAVN ($24.23, +6.0%), TEM ($61.67, +6.5%), IOT ($34.18, +5.4%), CELH ($31.87, +8.8%).
- SIPS: GRND ($15.70, +9.3%), TEM ($61.67), BKNG ($182.65, +2.5%) as continuation swing candidates.
Market Scorecard
- Index close: S&P 500 -0.2%, Nasdaq Composite -0.7%, DJIA flat (fresh intraday record), Russell 2000 -0.4% (after an intraday record), S&P Mid Cap 400 -0.8%. SPY/QQQ/IWM specific price and SMA levels are data unavailable in today’s feed.
- Breadth final: 63.1% above 40SMA (down 2.1pp from 65.21%), 85% above 20SMA (down sharply from 122%); Bull 4% jumped to 339 from 285 while Bear 4% rose to 230 from 135 — a mixed, churning read.
- Under the surface, resilience: the S&P 500 Equal Weight Index rose +0.2%, outperforming the cap-weighted index, and the Vanguard Mega Cap Growth ETF finished flat despite the SOX’s -6.3% — classic rotation, not distribution.
- Treasuries slipped again: the 10-year yield rose 6bps to 4.48%, the 2-year up 2bps to 4.16%, a quiet headwind even as crude eased to $68.69 (-1.2%).
Today’s Scorecard — What Worked & What Didn’t
- Winners — software & communication: Meta (META +8.81% to $612.91), Microsoft (MSFT +3.02% to $384.28), Palantir (PLTR +7.77% to $125.73 on Trump’s disclosed $100-250K purchase), IGV +3.0%.
- Financials & fintech ripped with Bitcoin: Coinbase (COIN +8.93% to $159.24), Robinhood (HOOD +8.35% to $108.65), FactSet (FDS +6.72% to $245.55 on an earnings beat).
- What failed — semiconductors and industrials: SOX -6.3% led by KLA (KLAC -11.77%), Corning (GLW -13.60%); Caterpillar (CAT -6.90% to $991.41) pulled back from record highs, dragging industrials -1.1%. Walmart (WMT -3.92%) sank on a Cleveland Research negative note.
- Breadth context: with only 63.1% above the 40SMA and a lopsided decliner tilt in industrials (229↑/368↓), the tape is narrowing even as the indices hold — a Cautious posture is warranted.
Key Earnings & Economic Calendar
- General Mills (GIS +8.53% to $37.77) was today’s marquee beat — adjusted EPS $0.95 topped estimates, FY27 guidance in-line, targeting $3B cost savings by FY30; a clean bounce back from last quarter’s rare miss, though volumes stayed soft (-2%).
- NIKE (NKE +4.90% to $43.06) rallied on better-than-feared results despite guiding Q1 and FY27 revenue down low-to-mid single digits; MSC Industrial (MSM +6%) hit an all-time high signaling a manufacturing recovery. Constellation Brands (STZ -1.59%) beat but fell on soft beer depletions.
- Tomorrow’s data (Thursday, July 2) is the main event: 8:30 ET June Nonfarm Payrolls (consensus 110K; prior 172K), private payrolls 88K, Unemployment 4.3%, Average Hourly Earnings +0.3%, Initial Claims 220K. Today’s ADP printed a soft 98K (vs 112K consensus), a possible breadcrumb to a weaker headline.
- Also tomorrow: 10:00 ET May Factory Orders (consensus +1.5%), 10:30 ET nat gas inventories, and a 14:00 ET Treasury market early close ahead of the July 4 holiday. Earnings: LNN pre-market; the calendar is thin.
Tomorrow’s Watchlist & Setups
- META at $612.91 — episodic pivot on the AI-cloud news; +8.8% breakaway gap on 2.5x RVOL. Watch for a tight consolidation above the gap; failure to hold gap support flags exhaustion.
- PLTR at $125.73 — continuation/9M catalyst, sitting right at supply (128.87/125.815, 0.05% away). A push through $128.87 on volume triggers; nearest demand is far below near $107, so keep risk tight.
- TEM at $61.67 — Darvas box + D9M setup, +6.5% on 1.6x RVOL in medical software; entry on a break of today’s high, watch ATR% of 3.5 for volatility.
- MSM at $87 area (new all-time high) — post-earnings breakout as manufacturing stabilizes; a useful industrial-recovery tell if it holds the breakout into payrolls.
- Sector to focus on: Enterprise Software / Communication Services — leadership is rotating into software and AI-infrastructure names (IGV +3.0%, ALIT, SURG); let semis stabilize before touching chip-equipment dip buys.
Strategy Outlook & Scenarios
- Bullish scenario: an in-line-to-firm payrolls print (near 110K) with tame wages keeps yields contained; if breadth reclaims 65% above the 40SMA and mega-cap software follows through, the buy-the-dip regime that defined Q2 re-engages.
- Bearish scenario: a hot payrolls number that pushes the 10-year above today’s 4.48% — or a hard miss stoking growth fears — plus semis failing to stabilize would drag % above 40SMA under 60% and downgrade the regime toward Cautious-Bearish.
- Signal counts: 2LYNCH 39, D9M 26, 9M Catalyst 8, Reversal Bullish 2, Darvas Box 42 — continuation and box setups remain plentiful, but the thin reversal count says don’t fade weakness aggressively yet.
- Tomorrow’s regime forecast: Cautious. Breadth is drifting lower and the jobs report is a binary catalyst into a holiday-shortened, early-close session — reduced liquidity argues for patience.
Action Codes
- CRT (Controlled Risk Taking): With regime shifted to Cautious and payrolls looming, size down and demand confirmation before entries — leadership is rotating fast between chips and software.
- T3A (Think 3 Days Ahead): Position for the post-payrolls, holiday-shortened tape — the 14:00 ET early close Thursday and July 4 weekend mean thin liquidity; plan exits and entries around the number, not into it.
Summary & Final Thoughts
- Game plan: wait for the 8:30 ET payrolls reaction, then lean into software/comm-services leaders (META, PLTR, software D9M names) on confirmation rather than chasing semiconductor dip-buys.
- Key risk: a yield spike — the 10-year at 4.48% is creeping higher despite falling oil, and a hot jobs number could pressure the very mega-caps that cushioned today.
- Overall stance: selective and defensive. The market’s underlying resilience (equal-weight +0.2%, mega-cap growth flat) is encouraging, but a Cautious 63.1% breadth read into a binary catalyst and a holiday-thinned session demands controlled risk.