Next Day Prep #317 Neutral

Next Day Prep #317: Quiet Close, Violent Rotation: Memory Chips Run While Software Fades – Friday 9/4/2026

September 4, 2026 5:41

Tickers Mentioned

SNDK MU WDC MRVL AMD LULU ADBE FICO TSLA ORCL

Episode Summary

Despite a nearly flat S&P close, breadth deteriorated sharply and money rotated hard into semis and memory names on a DRAM/NAND pricing catalyst, while software lagged badly. The episode breaks down why FICO's 17% drop was a policy shock rather than a broken business, unlike LULU's earnings-driven collapse, and sets up SNDK, MU, and WDC entry levels ahead of the pivotal September 11 CPI print.

Key Takeaways

Strong 162K jobs report lifted September hike odds to ~60%
Semiconductors ripped (SNDK +12%, PHLX Semi +3.4%) as software sank 2.2%
LULU crashed 17% on a second straight guidance cut
FICO -17%, EFX, TRU tumbled on VantageScore policy shock
Breadth eroded to 45% above 40-SMA; regime held Cautious

Situation Awareness: Cautious. A hot August jobs report (162K vs. 45K consensus, unemployment 4.1%) flipped September rate-hike odds to roughly 60% and stalled Thursday’s rebound — the S&P 500 slipped 0.4%, Nasdaq 0.3%, and Dow 0.5%, while the Russell 2000 (+0.3%) and S&P Mid Cap 400 (+0.1%) quietly bucked the weakness. Note: SPY/QQQ/IWM price and moving-average data are unavailable today, so no specific index levels are cited. Trade mode for tomorrow: selective and defensive — respect the split tape and let semiconductor strength lead. The defining context was a violent internal rotation: semis roared (PHLX Semi +3.4%) while software cratered (iShares Software ETF -2.2%), leaving the tape lopsided beneath a quiet index close. Regime context — 45.0% of stocks closed above their 40-day SMA (vs 48.9% prior day, regime held at Cautious), and the 4% Bull/Bear gauge shows 165 bulls vs. 75 bears. The 5-day trend was choppy and two-sided, with a Wed-Thu rebound giving way to a Friday fade on rate fears.

SIP: SNDK MU WDC LULU

What’s working: Continuation (2LYNCH) fired 11 signals, D9M 12, 9M Catalyst 6, Darvas Box 30, Reversal Bullish just 2 — momentum concentrated in memory/semis, not broad.
Leading sectors: Consumer Cyclical +0.89%, Industrials +0.83%, Utilities +0.76%; leading themes: Medical Systems & Equipment +5.5%, Generic Drugs +4.78%, Enterprise Software +4.19%.
Key event: The August Employment Report shocked to the upside, sending 2-yr yields to 4.38% and lifting September hike odds from ~50% to ~60%.
Regime threading: morning SA called Cautious (48.9%), closing is Cautious (45.0%) — held, as breadth eroded modestly but stayed inside the 40-65% band.
DEP watchlist: SNDK, MU, WDC, MRVL, COHR — memory and optics riding DRAM/NAND pricing strength.
SIPS: SNDK, MU, WDC — continuation leaders from the semiconductor melt-up.

Market Scorecard

Index close: S&P 500 -0.4%, Nasdaq Composite -0.3%, DJIA -0.5%, Russell 2000 +0.3%, S&P Mid Cap 400 +0.1%. SPY/QQQ/IWM specific price and SMA levels are unavailable today.
Breadth deteriorated: 45.0% of stocks above the 40-day SMA (down from 48.9%) and just 15% above the 20-day (down from 19%) — a 4-point drop on both gauges.
The 4% gauge held constructive at 165 bulls vs. 75 bears, but the day-over-day fade signals distribution creeping into the broad tape even as semis surged.

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

Winners — semiconductors and memory: SNDK +11.9% to $1740 on stronger DRAM/NAND pricing, MU +6.0%, WDC +5.8%, KLAC +7.3%, MRVL +7.0%, TSEM +7.9%, AMD +4.7%, INTC +4.5%. The PHLX Semi Index gained 3.4%.
Second theme — defensive rotation: Medical Systems & Equipment +5.5% (NNOX +13.2%), Generic Drugs +4.78%, and Utilities +0.76% (NRG +6.75%, CEG +5.03%) drew flows as rate fears hit growth.
What failed — software and consumer discretionary: iShares Software ETF -2.2%, ADBE -6.73% on a CEO transition, ADSK -8%, Design Software theme -2.1%. Consumer discretionary sank 1.3% as TSLA -5.92% and LULU -17.38% led the drag.
Credit bureaus imploded: FICO -16.68% to $932, EFX -6.37%, TRU -5.94% after FHFA Director Pulte cleared VantageScore for all lenders — a policy shock, not a fundamentals story.

Key Earnings & Economic Calendar

LULU -17.38% to $100.61 — beat EPS by $1.13 but missed on revenue, cut FY27 guidance for a second straight quarter; Americas comps -12%, leggings down ~20%. A broken chart ahead of a CEO transition.
DOCU rose on solid Q2 results as IAM adoption hit 15.1% of ARR and FY27 ARR growth was nudged higher; IOT (Samsara) +2.8% intraday on a Q2 beat. Software winners were the exception in a red-software session.
Tomorrow / next week economic data: August PPI (consensus +0.4%, prior 0.0%) and the pivotal August CPI on September 11 (consensus +0.4%) are the next catalysts to reset the September FOMC odds.
Key earnings ahead: light, holiday-shortened week — UNFI reports Tuesday pre-market; ORCL reports after Thursday’s close (ORCL closed +3.11% at $158.83 Friday).

Tomorrow’s Watchlist & Setups

SNDK at $1740 — 2LYNCH continuation and EG100 leader, at monthly demand with 4h supply overhead at $1757-1789. A hold above $1700 keeps the memory breakout alive; extended, so wait for a tight pullback.
MU at $1015 — continuation and 9M Catalyst signal, RVOL 1.53, sitting at 4h supply ($1032-1066). Entry trigger on a clean push through $1032; monthly demand support far below at $971.
WDC at $467 — D9M and EG100 name, between zones with supply at $496-504. Constructive base; a move over $470 targets the supply shelf, risk defined under the day’s low.
MRVL at $223 — D9M with 7.0% gain, between zones; needs to clear $246-252 supply. Watch for consolidation before continuation.
Sector focus: semiconductors and memory remain the only clean momentum group — pair with defensive Utilities/Healthcare for balance while software stays broken.

Strategy Outlook & Scenarios

Bullish scenario: a soft August CPI (below +0.4%) would push hike odds back under 50%, relieving the software/discretionary selling and letting breadth reclaim the 48-50% above-40SMA zone.
Bearish scenario: a hot CPI or a decisive break of hike odds above 60% would pressure long-duration growth further; a drop below 40% above-40SMA over the next 2-3 sessions downgrades the regime to Cautious Bearish.
Signal counts: 2LYNCH 11, D9M 12, Reversal Bullish 2 — continuation setups remain healthy but narrow (memory/semis dominant), while the near-absence of reversal signals shows no washed-out bottom to buy.
Tomorrow’s regime forecast: Cautious. Breadth is eroding (-4pp on both gauges) but the 4% bull/bear spread stays positive; the tape is rate-driven and headline-sensitive into CPI.

Action Codes

CRT (Controlled Risk Taking): Split tape and 45% breadth demand tight sizing — lean into semi/memory continuation but keep stops honest.
T3A (Think 3 Days Ahead): Position for the August PPI/CPI reset — rate expectations, not earnings, will drive the next leg.

Summary & Final Thoughts

Game plan: buy strength only in confirmed memory/semiconductor leaders (SNDK, MU, WDC, MRVL) on tight pullbacks, stay defensive elsewhere ahead of PPI and the September 11 CPI.
Key risk: a hot inflation print cements a September rate hike and accelerates the software/discretionary bleed — avoid broken names like LULU, ADBE, and the credit bureaus (FICO, EFX, TRU).
Overall stance: selective and defensive — respect the narrow leadership, honor Cautious breadth, and let the tape prove itself before pressing risk.

Welcome to WaveRider next day prep. Review today. Prepare tomorrow. Let's dive in. The S&P only fell four tenths of a percent today. So why did it feel like two completely different markets were trading at the exact same time? Right. That's the whole story. So this morning we came in cautious, 48.9% above the 40 day. Did that call hold into the clothes? It held. Still cautious, but honestly the number underneath it moved. Moved how? Breath dropped four points from 48.9 down to 45.0 and the 20 days slid from 19% to 15%. Oh wow, so both time frames eroded. Both. Same four point drop. That's broad deterioration, not noise. But the index closes looked so boring. Deceptively boring. S&P down 0.4, NASDAQ down 0.3, Dow down 0.5. And the Russell? Russell actually up 0.3. Small and mid caps went the other way. See that's the thing that surprised me. The headline number totally masked it. It's like a calm lake with a vicious undertow. Calm on the surface, brutal current underneath. So what was the one line verdict on the day? Quiet on the surface, rotating hard underneath. Semi's up 3.4%, software down 2.2%. A five point plus spread on the same tape. On the same tape, that's a violent internal rotation. Was there anything constructive left in the data? Yeah, the 4% gauge stayed positive. 165 bulls versus 75 bears. So not falling apart, just narrowing. Narrowing, that's the perfect word for it. And if the rotation was that sharp, the scans should show it clearly, right? Oh, they screamed it. Walk me through it. So continuation fired 11 signals. D9M fired 12, catalyst 6, Darvis 30. All of it. All in one place. Clustered in memory and semis every bit of it. That's wild. What was actually driving it? A DRAM and NAND pricing catalyst, the fundamental engine behind the technical signal. And the leaders? SNDK up 11.9%, MU up 6.0%, WDC up 5.8%, all riding the same wave. Here's my question. Every signal firing in two sectors, is that strength or is that a warning? Honestly, it's both. The trades work but concentrations a caution flag, one name carrying the whole offense. Impressive but fragile. Fragile if that player gets shut down, exactly. What about the beaten down names, any bottoms forming? Nope, reversal bullish fired just two signals. Only two. Which tells you there's no washed out bottom to buy yet in software or discretionary. Here's the one I really wanted to ask you. FICO dropped almost 17% today, bad quarter? Not at all, that's the lesson. So what happened? A policy shock. Vantage score got cleared for all lenders. FICO down 16.68%, Equifax down 6.37%, Transunion down 5.94%. Huh, so the chart looks broken but the business isn't. Right, it's a store losing customers because a competitor got a key to every door. And LULU, that was down 17% too. 17.38%, but that one is a business break. Revenue Miss, Guidance Cut, America's Comp's down 12%. So same red candle. Completely different root cause. Know the difference between a broken chart and a broken business. So today's winners were catalyst-driven and narrow. How does that shape tomorrow? Carefully. Let's start with SNDK. It's extended at 1740. Supply sitting at 1757 to 1789. So don't chase it. Don't chase. Wait for a tight pullback. It's a sprinter mid-stride. Let it catch its breath. What about MU? MU's cleaner. At 1015, trigger over 1032 supply. Demand support down at $9.71. And WDC? $4.67 now. Breakout trigger at $4.70. Constructive between the zones. Anything on the calendar I should care about? Earnings are light. UNFI Tuesday pre-market. O-R-C-L Thursday after the close. And the big one? August PPI, then the pivotal August CPI on September 11. Consensus plus 0.4%. Paint me the two scenarios. Bullcase, soft CPI under plus 0.4. Hike odds slip under 50%. Breath reclaims 48 to 50%. And the bear case? Hot CPI or odds above 60%. Breath under 40% for two or three sessions flips us to cautious bearish. So the game plan in one breath? Buy strength only in confirmed semi- and memory leaders on tight pullbacks. Stay defensive everywhere else. I love that. Clean and disciplined. That's the whole thing. So the takeaway today, a quiet index closed can hide a violent rotation. Check breath and sector spread before you call it a boring. And know which kind of broken you're looking at. Perfect. Watch SNDK, MU, and WDC for entries. And mark September 11 CPI as the line that decides bullish or bearish. That's our prep. We'll see you next session. 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

Power Hour #100 Bearish

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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