Next Day Prep: Rotation Play Tech Disappoints, Small-Caps Surge
A quick analysis of today’s market outlook and key trading opportunities to start your day.
Intro & Market Mood
Welcome to Next Day Prep! The market continues to defy expectations, with a split market dynamic where the Dow sets records, small-caps surge, but tech and Nasdaq lag behind.
We are witnessing the aftermath of the Fed rate cut and the Great Rotation into cyclicals and defensives. Key data shows the Dow up 1.3% versus the Nasdaq down 0.3%, with the Russell 2000 displaying strength at +1.2%.
Overnight Headlines
- Mosaic (MOS) surged 6% following a Russian fertilizer plant fire, causing a supply shock in the market.
- Managed care stocks like ELV and CNC rose on the failed Senate vote concerning ACA subsidies, reflecting policy-driven trading.
Economic Announcements
- Jobless claims at 236k indicate a robust economy without recession fears, supporting the narrative of a “Soft Landing.”
Earnings Highlights
- Oracle (ORCL) experienced a 10% drop due to concerns over free cash flow and capex spend, despite positive growth in cloud/AI.
- Disney (DIS) rose 2.4% on the OpenAI/Sora partnership, showcasing the convergence of old media and new tech.
- Broadcom (AVGO) is awaited eagerly for its earnings report after the bell.
Top Movers
- FLNC (Fluence Energy) displaying bullish continuation in grid storage.
- PWR (Quanta Services) showing strength in infrastructure.
- LEU (Centrus Energy) gaining momentum in uranium/nuclear sector.
Quick Trade Ideas
- Consider AMD for buying the dip if support holds, despite sector lag.
- Exercise caution with precious metals miners as momentum has faded.
Key Takeaway
Focus on SPY support/resistance levels (~688/690) and keep an eye on Broadcom earnings to gauge market sentiment and rotation trends. Stay alert to tactical opportunities in the grid and infrastructure sectors.