Next Day Prep #296 Neutral

Next Day Prep #296: Sprint, Not a Stumble: Reading the Market’s One-Day Breather – Wednesday 8/5/2026

August 5, 2026 6:07

Tickers Mentioned

GOOG AMD NVDA LLY AMGN NEM MCK SNDK WDC SPCX

Episode Summary

After a 5.8% four-day rally to record highs, the market cooled with the regime slipping from Bullish to Cautious and sentiment flipping net-bearish overnight. Underneath the mild index moves, AMD's record revenue still sold off on soft margin guidance while Materials and Health Care led rotation, and the team previews tonight's memory earnings and Friday's jobs report as the next catalysts.

Key Takeaways

S&P pauses at record highs; Dow up, Nasdaq down 0.8%
Materials and health care lead as tech mega-caps fade
AMD sells off 7% despite 50% revenue beat
Breadth slips to 62.2%, regime shifts Bullish to Cautious
Memory names SNDK, WDC report after close as next test

Situation Awareness: Cautious. After a powerful four-session run that lifted the S&P 500 nearly 6% to fresh record highs, stocks paused Wednesday — the S&P 500 slipped 0.17% to 7723.55, the Nasdaq fell 0.83% to 26384.46, while the DJIA bucked the trend, gaining 0.49% to 54349.12; all major averages still printed fresh record intraday highs before fading. SPY/QQQ/IWM technical levels are data unavailable today, so we lean on index cash levels and breadth. Trade mode for tomorrow: selective and defensive — respect the rotation, let leadership prove itself before chasing. The tape was defined by a mega-cap tech pause (GOOG -4.05%, AMD -7.04%, AMZN -1.72%, TSLA -1.77%) offset by rotation into materials, health care and financials, plus lower crude on Strait of Hormuz de-escalation. Regime context — 62.2% of stocks closed above their 40-day SMA (vs 66.4% prior day, regime shifted from Bullish to Cautious), and the 4% Bull/Bear gauge shows 158 bulls vs. 170 bears. The 5-day trend rose four of five sessions before today’s orderly consolidation, so momentum remains constructive but is cooling at the highs.

SIP: MCK TSAT SOPH NRG

What’s working: Continuation (2LYNCH) fired 8 signals, Darvas Box 30, 9M Catalyst 1, Reversal Bullish 1, D9M 0 — trend-continuation setups still dominate but breadth of new signals is narrowing.
Leading sectors (briefing): Materials +1.5%, Health Care +1.3%, Financials firm; leading themes: Ethical Drugs +37.05%, Generic Drugs +2.52%, Residential/Commercial Building +2.50%.
Key event: Google AI chief Jeff Dean departure (per WSJ) plus SpaceX (-13.61%) plan to enter wireless crushed Communication Services -2.4%; memory names SNDK and WDC reported after the close.
Regime threading: morning SA called Bullish (66.4%), closing is Cautious (62.2%) — shifted lower as tech leadership stalled and defensives were sold, but breadth stayed above 60%.
DEP watchlist: D9M produced zero signals; substitute Darvas/continuation leaders — MCK, CNC, TVTX, DASH, TPR.
SIPS (Continuation swing candidates): MCK $876.98 (+5.6%), DASH $207.25, UHS $171.66.

Market Scorecard

SPY/QQQ/IWM prices and SMA levels are data unavailable today. Cash index proxies: S&P 500 -0.17% at 7723.55, Nasdaq Composite -0.83% at 26384.46, DJIA +0.49% at 54349.12; Russell 2000 -0.6% and S&P MidCap 400 -0.5% both notched fresh record intraday highs before fading.
Breadth softened: 62.2% of stocks above the 40-day SMA (down 4.2pp from 66.4%); 4% Bull/Bear flipped negative at 158 bulls vs 170 bears, a sharp reversal from yesterday’s 665 bulls vs 111 bears.
Volume context: NYSE 1.31 bln, Nasdaq 9.16 bln; NYSE decliners led advancers 1597 to 1132 and Nasdaq 2536 to 1856 — mild distribution beneath a flat index, classic pause-day internals after a 5.8% four-day sprint.

Today’s Scorecard — What Worked & What Didn’t

Materials led (+1.5%) on precious-metals strength — Newmont (NEM 104.27, +6.69%) among the S&P’s best; miner KGC printed a 9M Catalyst signal at $25.70 (+8.9%).
Health care (+1.3%) rode earnings: Eli Lilly (LLY 1168.77, +4.76%) and Amgen (AMGN 407.83, +4.57%); Managed Care theme +2.28% with CVS +5.74% and MCK a continuation standout (+5.6%).
What failed: Communication Services -2.4% (GOOG -4.05%, SpaceX -13.61%) and Energy -2.0% (crude $75.18, -0.7%); AMD -7.04% sold the news despite a 50% revenue beat, and semis (SOX -1.4%) faded into the close.
Breadth trend: four up days then a pause; the Bull/Bear 4% flip to net-bearish is the first real caution flag after the rally — watch whether it’s a one-day reset or the start of a broadening pullback.

Key Earnings & Economic Calendar

AMD (482.05, -7.04%) reported a beat with Q2 revenue up 50.1% yr/yr to a record $11.54 bln and above-consensus Q3 guide, but flat ~56% gross-margin guidance and Helios-ramp timing drove a sell-the-news drop after a strong run.
Uber, Booking (+8%), Disney (+2%), CVS (+1%), and Eli Lilly (+5%) rounded out a strong-but-mixed batch; the Q2 S&P 500 blended earnings growth rate sits at a scintillating 50.1% per FactSet.
Sandisk (SNDK 1350.50, -5.40%) and Western Digital (WDC 519.17, -5.36%) reported after today’s close — the key memory/AI test; both slid into the print. React to guidance, not just the beat.
Tomorrow’s macro focus: Friday’s July Employment Situation Report (private payrolls consensus ~70K) looms after today’s soft ADP (44K vs 75K consensus) and a solid-but-cooling ISM Services 54.1%.

Tomorrow’s Watchlist & Setups

MCK $876.98 — Continuation breakout (+5.6%, RVOL 1.7, INST) in the medical/managed-care leadership pocket; use today’s high as the trigger, tight stop under the breakout pivot.
DASH $207.25 — Continuation setup (+2.4%, RVOL 1.3, INST), consumer-cyclical strength; entry on push through intraday high, watch broad-market risk-on confirmation.
TVTX $62.73 — Darvas Box breakout with conviction (+12.0%, RVOL 5.0) in medical; volatile, size small, buy strength above the box top.
NKE $42.46 — EG100 momentum/liquid_lava at demand (+2.23%, RVOL 2.33, INST); nearest supply $42.96–43.32, reclaim needed for continuation, demand support $40.77–41.47.
Sector focus: Materials and Health Care — precious-metals miners (NEM, KGC) and managed care (MCK, CVS, CNC) are where fresh money is rotating while tech consolidates.

Strategy Outlook & Scenarios

Bullish scenario: a clean SNDK/WDC memory beat-and-raise reignites semis and the Nasdaq reclaims lost ground; S&P 500 holds above 7,700 and breadth re-expands above 65% to restore Bullish regime.
Bearish scenario: follow-through selling in mega-cap tech (GOOG, AMD, AMZN, TSLA) drags breadth below 55% and the Bull/Bear 4% gap widens further to the bear side — that downgrades the tape toward Cautious-Bearish.
Signal counts: 2LYNCH 8 (steady), D9M 0 (dry), Reversal Bullish 1, 9M Catalyst 1, Darvas 30 — continuation setups intact but new-signal breadth thinning versus yesterday’s risk-on surge.
Tomorrow’s regime forecast: Cautious. Breadth at 62.2% and net-bearish 4% gauge argue for a consolidation/choppy bias into Friday’s jobs report; needs a memory-earnings spark to turn back Bullish.

Action Codes

CRT (Controlled Risk Taking): Regime slipped to Cautious (62.2%) with a net-bearish 4% gauge — take only high-conviction continuation setups with tight stops.
T3A (Think 3 Days Ahead): Position for Friday’s payrolls and tonight’s memory prints (SNDK/WDC) — plan entries around the events rather than reacting into them.

Summary & Final Thoughts

Game plan: lean on the rotation — buy strength in materials and health-care leaders (MCK, NEM, KGC), keep tech exposure light until SNDK/WDC clarify the memory/AI trade.
Key risk: a second day of mega-cap tech weakness plus a net-bearish 4% gauge could turn today’s orderly pause into a broader unwind ahead of Friday’s jobs number.
Overall stance: selective and defensive — the four-day, 5.8% advance earned a breather; respect record-high resistance, demand confirmation, and let leadership rotate rather than force trades.

Welcome to wave rider next day prep. Review today, prepare tomorrow. Let's dive in. The market just ripped 5.8% in 4 days to fresh record highs. Then hit the brakes and closed lower. Was that a warning shot or just a well-earned breather? Ooh, great way to frame it. So this morning the regime read was bullish, right? 66.4% above the 40 day. Did that hold by the close? It didn't actually, we slipped to cautious. 62.2%. Huh, so down about 4 points. Down 4.2, yeah. But here's the thing, it stayed above 60. That's why I'm calling it a pause, not a breakdown. Okay, and the bull bear gauge. That's the one that really moved. Oh man, this is the number that jumped out of me. Yesterday, 665 bulls, 111 bears. Right. Today, 158 bulls, 170 bears. Wait, really? So it flipped negative overnight? Sharpest one day reversal we flagged. Bears actually edged out bulls. That's wild and yet the index damage was pretty mild. Super mild, honestly. S&P down just 0.17%, Mazdaq off 0.83%, but the dado actually gained 0.49%. So it's a split tape. Totally split. And here's what's crazy. Small caps and mid caps hit fresh record intraday highs before fading. See, that's the thing that surprises me. New records under the surface, but decliner's lead. On both the NYIC and NASDAQ, yeah. So my one line verdict, a strong four-day sprint earning a legitimate breather. Not a trend break. Not a trend break. A sprinter catching their breath, not pulling a hamstring. Okay, so if the index story was a pause, what were the signals telling us underneath? Hmm, this is the fun part. Let's start with AMD, because that one confuses people. It beat and dropped 7%. Down 7.04%. And get this. Revenue up 50.1% year over year to a record $11.54 billion. A record, and it still fell? Classic sell the news. But why? It wasn't the beat. It was the flat gross margin guidance. Around 56%, plus the timing on the Helios ramp. So the guide over the headline. The guide over the headline. Every time. That's the lesson. It's like breaking a personal record, but getting docked on the landing. Exactly right. Judges wanted a cleaner finish. And Google got hit too, didn't it? Goog down 4.05%, that was the Jeff Dean departure headline. And SpaceX's wireless move down almost 14% dragged the telecom adjacent names. Which is why communication services and energy both fell over 2%. You got it. So where did the money actually go? Materials and health care. Materials up 1.5, health care up 1.3. Numa jumped 6.69%, Kinross up 8.9%. Precious metals. Precious metals and managed care. CVS up 5.74%, McKesson up 5.6%. Now here's my question. If breath narrowed, were the scans actually still firing? That's the beautiful part. Continuation still fired 8 signals. Darvestbox produced 30. 30, so the trend structure held. Intact. Fewer new setups, sure. But the existing trends kept working. A garden where the established plants keep growing just fewer new seeds. Perfect analogy. And the standout breakout? TVTX up 12% on 5 times relative volume. Oh wow, that's textbook. Textbook confirmation. And McKesson showed up as an institutional standout too, door dash as well. So the trend held under the hood. Now what could change that tomorrow? Tonight really, memory earnings. SNDK and WDC. Both slid into the print. Sandisk down 5.40%. Western digital down 5.36%. So the guidance reaction matters way more than the headline. They fell into it so the bar is already lowered. Exactly. A weighted coin flip. And then Friday, the jobs report. After that soft ADP number, right? 44K versus 75K expected. Plus, ISM services cooling to 54.1%. Still solid, just softer. Okay, so give me the two scenarios. Vol case. A beat and raise from the memory names Read Night Semi's. S&P holds above 7,700. Breath re-expans past 65%. And the bear case? Mega cap weakness persists. Breath drops below 55% and the regime tilts cautious bearish. So it's a coin flip open. Coin flip open. Watch the first hour for confirmation. And the action codes? Two of them. CRT, controlled risk taking. High conviction continuation setups only. Tight stops. And T3A. Think three days ahead. Position for Friday's payrolls instead of reacting after the fact. I love that. Play field position before the big matchup. That's the whole game right now. So here's the takeaway team. A 4A 5.8% rally earned a legitimate breather. Respect record high resistance. Let leadership rotate instead of forcing trades. And let tonight's earnings and Friday's jobs report confirm the next move before you commit size. Stay disciplined with that CRT positioning. Watch SNDK and WDC's guidance overnight. And check back tomorrow for the regime update after the jobs report. We'll see you then. That's all for today's episode of Wave Rider next day prep. Review today. Prepare tomorrow. See you next time.

Chapters

Today's Verdict

Signal Review

Tomorrow's Playbook

Next Day Prep #297 Neutral

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Market Scorecard

Today’s Scorecard — What Worked & What Didn’t

Key Earnings & Economic Calendar

Tomorrow’s Watchlist & Setups

Strategy Outlook & Scenarios

Action Codes

Summary & Final Thoughts

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