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The market regime upgraded to Cautious as the 40-day breadth jumped, but the 20-day reading slipped, signaling a narrow, large-cap-led rotation rather than broad confirmation. SMCI’s blowout guidance reignited the AI capex trade, driving momentum scans while reversal plays stayed scarce, and the focus now shifts to after-hours earnings from META, TSLA, IBM, LRCX and...
Chapter by chapter
Breadth Upgrade Under the Hood
Breaking down the Cautious-Bearish to Cautious flip, the 40-day vs 20-day breadth divergence, and why small caps lagged the rotation.
SMCI Reignites the AI Trade
SMCI's guidance raise drives semiconductor and software momentum, while scan counts show continuation and Darvas dominating over reversal signals.
Earnings, Levels, and Scenarios Ahead
Previewing after-hours reports from META, TSLA, IBM, LRCX and TXN, key watchlist levels, and bullish/bearish scenarios for the next session.
Key points
The regime upgrade to Cautious was driven by 40-day breadth expansion, but 20-day breadth actually fell, making the move narrow rather than broad.
SMCI's guidance raise to $18.5-$19.5 billion from $14.5-$15.5 billion revalidated the AI capex thesis, fueling momentum in semis and software.
Momentum scans (Continuation, Darvas) dominated while reversal signals stayed scarce, showing money chased strength rather than bottom-fishing.
Earnings reactions are now the key test: NFLX and AT&T show the market is pricing guidance quality over headline beats, a bar META, TSLA, IBM, LRCX and TXN must clear.
Watch SMCI's follow-through and QQQ/SPY SMA50 levels to confirm whether this rotation broadens into a real Bullish regime or snaps back to Cautious-Bearish.
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