Next Day Prep #301 Neutral

Next Day Prep #301: Green Screen, Thin Field: Why Cautious Held – Wednesday 8/12/2026

August 12, 2026 6:32

Tickers Mentioned

SMCI CRWV LITE DELL HPE EAT META AMZN TSLA CSCO

Episode Summary

Despite a strong Nasdaq close and a double-digit semiconductor rally, breadth actually weakened, keeping the regime dial on Cautious. The team breaks down which trend-continuation trades earned their keep, why mega-caps lagged, and what tomorrow's Core PPI print means for the next regime shift.

Key Takeaways

In-line July CPI cut September hike odds to ~40%
Semis surged: CRWV +19%, SMCI +19%, LITE +14%
Mega-caps split — META, AMZN, TSLA dragged lower
Breadth cooled to 57.8% above 40-SMA, regime stays Cautious
PPI at 8:30 ET is tomorrow's key swing factor

Situation Awareness: Cautious. An in-line July CPI cleared the week’s biggest macro hurdle and reignited the AI momentum trade — the Nasdaq (+0.54% to 26,609.51) and S&P 500 (+0.26% to 7,748.50) closed higher while the Dow finished flat (-0.04% to 53,770.27); the PHLX Semiconductor Index jumped 2.5% on blowout post-earnings moves. SPY/QQQ/IWM technical levels are (data unavailable) today, so index MA positioning cannot be confirmed. Trade mode for tomorrow: selective and constructive — lean into semis/AI strength but respect mega-cap dispersion and the PPI print at 8:30 ET. The tape was defined by a narrow, two-speed market: chips and AI infrastructure ripped while non-semi mega-caps (META -3.38%, AMZN -1.83%, TSLA -1.59%) sagged. Regime context — 57.8% of stocks closed above their 40-day SMA (vs 60.1% prior day, regime held at Cautious), and the 4% Bull/Bear gauge shows 231 bulls vs. 115 bears. The 5-day trend shows breadth cooling day-over-day even as headline indices rose, a divergence that keeps the regime firmly Cautious rather than Bullish.

SIP: SMCI CRWV LITE DELL HPE

What’s working: Continuation breakouts (2LYNCH: 24 signals), Darvas Box: 32, Reversal Bullish: 7, D9M: 4, 9M Catalyst: 2 — trend-continuation and box breakouts dominated the tape.
Leading sectors: Energy (+0.43%), Real Estate (+0.27%), Healthcare (+0.15%); leading themes: Consumer Electronics (+7.09%), Generic Drugs (+3.67%), Managed Care (+3.15%).
Key event: In-line July CPI (headline +0.1%, core +0.2%) cut September rate-hike odds to ~40% and re-energized AI/semiconductor names.
Regime threading: morning SA called Cautious (60.1%), closing is Cautious (57.8%) — held, as breadth softened but stayed comfortably in the 40-65% band.
DEP watchlist: SMCI $37.58, HPE $58.79, DLR $197.09, MDLZ $62.17 — the D9M cohort skews toward AI-hardware momentum.
SIPS (Continuation swing candidates): FOUR $43.89, DRI $227.72, HUM $388.71, LGN $68.64.

Market Scorecard

Indices: Dow 53,770.27 (-0.04%), Nasdaq 26,609.51 (+0.54%), S&P 500 7,748.50 (+0.26%). SPY/QQQ/IWM prices and SMA levels are (data unavailable) for 2026-08-12.
Breadth final: NYSE advancers 1,480 vs 1,223 decliners; Nasdaq 2,830 vs 2,020 — positive but not decisive. % above 40-SMA slipped to 57.82% from 60.09% (-2.3pp); % above 20-SMA fell to 104% from 115%.
Volume/character: NYSE 1.08 bln, Nasdaq 7.94 bln shares. Advance-heavy tape but the breadth erosion under rising indices signals mild distribution beneath a semi-led surface.
Bull/Bear 4% gauge improved to 231/115 (from 214/157) — the internal breadth thrust favored bulls even as the moving-average breadth cooled.

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

Winner — AI infrastructure/semis: CoreWeave (CRWV) +19.28% to $107.73, Super Micro (SMCI) +18.83% to $37.55, Lumentum (LITE) +13.63% to $932.47; SOX +2.5%. Record margins and 1.6T optical ramp at LITE fueled the group.
Second winner — Story stock breakouts: Brinker (EAT) +13% to a new all-time high on a real Chili’s turnaround and above-consensus FY27 guide; DELL +9.84% and HPE +8.11% extended hardware strength.
What failed — Consumer Discretionary (-1.4%, worst sector): AMZN -1.83%, TSLA -1.59%, homebuilders soft with iShares U.S. Home Construction ETF -2.3% despite easing yields. Communication Services (-0.9%): META -3.38%, CHTR -4.74%.
Theme laggards: Gaming Software -2.09% (1-month -22.93%), Solar Energy -2.33% (FSLR -6.89%), Airlines -2.21% — avoid these until relative strength returns.

Key Earnings & Economic Calendar

Most impactful today: CoreWeave (CRWV +19.28%), Super Micro (SMCI +18.83%), and Lumentum (LITE +13.63%) all soared post-earnings — the AI-capex read-through was the day’s dominant catalyst.
Second notable: Brinker (EAT +13%, new ATH) confirmed the casual-dining turnaround; management flagged July sales/traffic accelerating vs Q4.
After the close: Cisco (CSCO) reported its Q4 (Jul) and Cerebras Systems (CBRS) delivered its second public earnings report — watch premarket reactions for AI-infrastructure follow-through and a CSCO order-conversion read.
Tomorrow’s data: July PPI 8:30 ET (consensus +0.1%; prior -0.3%), Core PPI +0.3% (prior -0.2%), Initial Claims ~205K (prior 199K); $25 bln 30-yr bond auction 1:00 ET.

Tomorrow’s Watchlist & Setups

SMCI at $37.58 — D9M / EG100 momentum after +18.9% gap; nearest daily supply $40.64-$44.95. Watch for a tight consolidation above $37; a push through $40.64 opens continuation, failure back below $34 negates.
HPE at $58.79 — D9M + 9M Catalyst + Darvas breakout (+8.1%, RVOL 1.56); 52-wk high just -8.5% away. Entry on hold above $58, demand zone at $52.19-$52.40 as risk anchor.
DELL at $484.34 — EG100 momentum (+9.84%, RVOL 1.23) sitting just -0.28% from its 52-wk high. A clean break to new highs is the trigger; watch for consolidation digestion first.
EAT at $245.39 — Darvas Box breakout to all-time high (+10.8%, RVOL 2.5) but ATR-M 8.7 and risk 234% mean size small; buy a controlled pullback rather than chase the gap.
LITE at $932.47 — post-earnings momentum leader; let it settle and look for a first higher-low above prior breakout as an add point on the optical/AI theme.
Sector focus: Technology/Semiconductors — the clear leadership; secondary watch on Energy (+0.43% today, +6.01% 1-wk) if oil stays firm near $83.26.

Strategy Outlook & Scenarios

Bullish scenario: A soft/in-line PPI tomorrow that keeps September hike odds falling (currently ~40%) plus semis holding gains would push % above 40-SMA back above 60% and re-open a Bullish tilt — confirmation on Nasdaq holding above 26,600.
Bearish scenario: A hot PPI (core >+0.3%) reviving Fed-hike fears, plus continued mega-cap breakdown (META, AMZN, TSLA) dragging % above 40-SMA under 55% and toward 50%, would tip the regime toward Cautious-Bearish.
Strategy signal counts: 2LYNCH 24, Darvas 32, Reversal 7, D9M 4, 9M Catalyst 2 — continuation/breakout setups are plentiful, confirming trend-following still pays in leadership pockets even as broad breadth cools.
Tomorrow’s regime forecast: Cautious. Breadth is drifting lower (60.1% → 57.8%) while indices rise — a classic narrow-leadership tape that stays Cautious until breadth re-expands.

Action Codes

CRT (Controlled Risk Taking): Cautious regime with narrow, high-ATR leadership (SMCI risk 143%, EAT 234%) demands trimmed size and defined stops.
T3A (Think 3 Days Ahead): PPI tomorrow, a 30-yr auction, and post-earnings CSCO/CBRS reactions mean positioning for the next few sessions matters more than chasing today’s gaps.

Summary & Final Thoughts

Game plan: Trade the AI/semiconductor leadership (SMCI, HPE, DELL, LITE) with controlled size on constructive pullbacks or tight-consolidation breaks — don’t chase vertical gaps.
Key risk: Tomorrow’s PPI is the swing factor; a hot core reading could reignite Fed-hike fear and hit the very momentum names leading the tape.
Overall stance: Selective — participate in confirmed leadership while breadth is soft (57.8% above 40-SMA), keep cash flexible into the PPI print, and watch mega-cap dispersion for signs the rally is narrowing further.

Welcome to Wayfrider next day prep review today prepare tomorrow. Let's dive in So NASDAQ closed up semis ripped double digits. So why is our regime dial still stuck on cautious? Let's find out Yeah, this is a fun one. Mm-hmm. Okay, so we called it cautious this morning. Did it hold into the it held clean We opened at 60.1% above the 40 day closed at 57.8% right wait So breath actually dropped while the indices went up down 2.3 points and that's the whole story right there. Yeah, huh You know what NASDAQ was up half a percent, right plus 0.54% S&P up 0.26% but fewer stocks were participating Exactly see honestly that's the thing that trips people up exactly green screen up top thinner field underneath Oh, man. What did advanced decline look positive? But soft NYSE was 1480 up versus 1223 down NASDAQ 2890 to 2020 so positive just not decisive right not a thrust today for the home market Mm-hmm, but hang on didn't one of the internal gauges actually improve it did that's the nuance bull bear 4% Gauge jumped to 231 bulls versus 115 bears right right. Oh, that's interesting So the strong names got stronger internal thrust without broad participation. That's the mixed signal in a nutshell and the CPI Prince said all this in line CPI it cut September hike odds to around 40% and that lit the fuse under semis So x popped 2.5% oh wow, so basically one line verdict on the day Strong headline thinning field. Mm-hmm. Love it. Okay, if the regime held let's see which signals are in their keep today Yeah, what dominated the scans trend continuation hands down Darvist box printed 32 signals continuation and 2LY gave us 24 and Reversals just seven so trend following ruled the tape not bottom fishing exactly Right, right. So the leaders kept leading that's the tell you follow strength on a day like this Right, okay, so the AI infrastructure names core weave super micro Lamentum, why did those work because they had real catalysts not just momentum core weave ripped 19.28 percent SMCI of 18.83 percent Lamentum 13.63 percent. Oh, wow those are huge moves and Lamentum specifically record margins a 1.6 Terabit optical ramp that catalyst pulled the group up. Yeah, totally see that's the difference between a chase and a set up Totally, concrete fundamentals plus volume equals a move you can trust. Mm-hmm. What about eat brinker breaking out filled different It was different other teen percent to an all-time high But that's a real turnaround story, right meaning what exact chilies traffic accelerating plus an FY 27 guide that beat consensus real fundamentals behind that breakout. Yeah, not just a pretty chart, right? Okay, but here's the flip side plenty of stuff didn't participate. No, and that's the two-speed market Consumer discretionary was the worst sector down 1.4 percent right right even with the AI rally roaring even then Amazon down 1.83 percent Tesla down 1.59 percent and communication services fell 0.9 percent with Meta off 3.38 percent. Oh, wow Meta down over 3 percent on a green day and sharder down 4.74 percent so the mega caps were dead weight What's the lesson there for traders? Avoid the stale laggards gaming software fell 2.09 percent today and it's off 22.93 percent over the month Mm-hmm. Yeah, that's persistent weakness. You don't fight that you rotate toward confirmed strength Right, so today's winners weren't random catalysts and volume now. What do we do with it tomorrow? Look first thing check the after-hours reactions Cisco and cerebrus reported read those before the open and then the big one is PPI, right? I mean July PPI at 8.30 headline consensus plus 0.1 percent and core PPI plus 0.3 percent that's up from minus 0.2 percent prior So core is the swing factor. It's the whole ballgame There's also initial claims around 205k and a $25 billion 30-year auction Mm-hmm. Okay, give me the bullish scenario Honestly soft or in-line PPI semis hold their gains breath back above 60 percent if Nasdeck holds 266 100 that reopens a bullish tilt Right and bearish hot core PPI plus a mega cap breakdown drags breath under 55 percent toward 50 percent That tips us to cautious bearish Yeah, sure what levels are you actually watching? So SMCI at $37.58 in validation below $34 HPE at $58.79 risk anchor near $52 Dell at $484.34 near its 52-week high watch for a clean breakout Mm-hmm and eat after that gap by pullbacks not the gap. It's $24.59 high risk so size down And Lumentum at $932.47 wait for a first higher low Right. So the regime forecast into tomorrow Breath Trends says we stay cautious unless PPI resolves it decisively one way or the other That's the perfect place to leave it a narrow catalyst driven rally can lift the indices without upgrading the regime Trade the leaders but size for breath that hasn't confirmed Mm-hmm watch that 830 core PPI it decides whether we broaden or narrow Right keep those stops tight stay selective and check back for the morning call 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

Midday Wave #87 Neutral

Try WaveFinder

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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