Next Day Prep: Software Stocks Surge Hidden Signals Unveiled – Wednesday 2/18/2026

Welcome to Next Day Prep. What we are watching tomorrow. We have a lot to unpack from a Wednesday session that refused to stay down. The market absorbed a hawkish hit and kept swinging. Let's dive in. Who was a battleground out there? We saw stocks finish higher, but let's be real. We faded off those session highs once the FOMC minutes dropped. The S&P 500 added six tenths of a percent, and the NASDAQ put on nearly a full percent. But the real story is what happened after the initial knee jerk reaction. Exactly. The minutes hit, and we saw a dip. The fit is talking about a two-sided approach to rates, basically saying hikes aren't off the table if inflation sticks. That usually spooks traders, but we reversed and rallied into the clothes. What's your read on that resilience? It tells me the bid underneath this market is stronger than the headlines. The market expected a dovish timeline got a hawkish tilt and shrugged it off. We saw the S&P 500 eclipse its 50 day moving average at 6, 894 intraday. We didn't close above it, which is the frustration point, but the attempt was there. The underlying demand is intact. Let's talk leadership. It wasn't just the usual suspects. We saw a massive rotation back into software. What lit the fuse there? Bargain hunting. Pure and simple. Software has been dead money for weeks, and suddenly it woke up. Cadence design systems, CDNS, ripped over 7% after a Rosenblatt upgrade. Apploven ticker APP posted a similar gain, even Microsoft, which has been struggling post-earnings, managed to notch a green close. When you see fun stepping back into beaten-down software, that is a risk on signal. And we can't ignore the geopolitical elephant in the room. Energy was the best performing sector. Up 2%, crude oil exploded today. Yeah, crude settled up over 4%, sitting right at $65 a barrel. Tensions are escalating between the US and Iran, and reports of conflict prep sent oil flying. That lifted the whole energy complex, but it also puts a little pressure on the consumer narrative if gas prices start ticking up again. Speaking of the consumer, we had some wild action in the casino space. Cesar's entertainment, CZR. They missed earnings, reported a loss, and the stock rallies 13% walk me through that logic. This is a classic case of, better than feared, coupled with a killer forward outlook. Traders stop looking at the GAAP loss and started looking at the wallet. Management outlined a massive free cash flow ramp for 2026 due to lower CAPEX and interest expenses. They are talking about debt reduction and buybacks. The market loves cash flow visibility more than a backward looking earnings miss. It dragged MGM resorts up 8% with it. Incredible move. Let's shift to the tactical setup for tomorrow. We are staring at Thursday. What are the levels on the board? We are coiling. Looking at the SPY, we are stuck in a consolidation block. Support is sitting firm at 684, and resistance is overhead at 687. We need a high volume break of 687 to challenge that 50 day moving average again. On the QQQ, it's a similar story. Tight range between 603 and 606. Volume is increasing in this range, which usually precedes a violent move. Watch for the breakout. And volatility? Is the VIX getting us any clues? The VXX is flat. It's sleeping. That's actually constructive. It suggests the market isn't pricing in a crash right now, just consolidation. But keep an eye on yields. The 10-year note ticked up to 4.08%. If that starts sprinting higher, it could cap the tech rally. Also, don't sleep on global payments GPN. They surged 16% today on an earnings beat. Financials are finding footing, and that sector rotation is healthy for the broader index. All right, setting up for Thursday morning. The economic calendar is heating up. What is on your radar? Thursday is data heavy. We have weekly initial claims at 830 AM Eastern. Consensus is 225,000. We also get the Philly Fed survey, but the big movers will be earnings. We have Walmart WMT reporting pre-market. That is the ultimate consumer pulse check. If Walmart guides up, it confirms the soft landing narrative. We also have deer, ticker DE, which gives us a look at the industrial and ag side. So, watch the 687 level on SPY. Keep an eye on Walmart for sentiment, and see if software can hold these gains. It feels like the bulls want to run, but they need a catalyst to clear that 50-day line. Spot on. The setup is there for a continuation if we can clear the overhead supply. Stay nimble, watch the volume on the open, and don't chase the gap if we get one. Let the price confirm the direction. Great insights. Let's see if the bulls can close the deal tomorrow. Thanks for listening to Next Day Prep. Good luck out there, and we will catch you in the next session.