Full Day Review — Breadth & Sector Shifts
Markets extended their rebound with the S&P 500 closing up 0.8% and reclaiming its 50-day moving average, while the Nasdaq Composite surged 1.2% to approach positive territory for 2026, all eyes now on NVIDIA’s after-hours earnings.
- Breadth remains constructive but uneven: Bull 4% at 360 vs Bear 4% at 127 signals very bullish sentiment, with 78% of stocks above their 20-day SMA but only 56.55% above the 40-day SMA. The Bull 20% reading of 78 confirms strong short-term momentum despite the 40-day SMA struggling at bearish territory.
- Technology leads with ATR at 1.51 (95th percentile): The tech sector posted a 1.74% daily gain with the PHLX Semiconductor Index up 1.7%. AMAT jumped 4.3% with healthy 65.5% risk positioning, while JBL surged 5.4% on 0.8 RVOL, representing prime 2LYNCH continuation setups ahead of the NVDA print.
- Consumer Discretionary and Energy lag as rotation narrows: Consumer Discretionary ATR fell to 0.53 (11th percentile) with homebuilders down 3.7% following LOW‘s disappointing guidance. Energy sector dropped 0.9% as crude oil slipped, with Energy ATR at 2.71 (5th percentile) showing significant underperformance.
- Volatility environment favors narrow leadership: The market-weighted S&P 500 decisively outperformed the Equal Weight Index (-0.1%), with the Vanguard Mega-Cap Growth ETF up 1.3%. This concentration pattern suggests CRT (Controlled Risk Taking) environments where only highest-conviction names work.
Strategy Signals — Continuation, Reversal & SIP
- 2LYNCH continuation signal: AMAT at $394.26, up 4.3%. With 0.5 RVOL and 7.0 ATR%-M reading showing controlled momentum into strength, this represents textbook continuation ahead of sector catalyst. NVDU (NVIDIA 2x leveraged ETF) also signals at $127.58, up 4.6% on 0.7 RVOL with 61.0% risk.
- Reversal setup watch: MELI at $1,772.60, down 7.8% on 3.2 RVOL. High relative volume on weakness creates potential BTFD opportunity if price stabilizes into tomorrow’s session. GDDY plunged 13.9% on 3.2 RVOL, suggesting wait for volume exhaustion before entry.
- SIP leaders show mixed signals: TEM (Tempus AI) dropped 5.67% from open despite Q4 revenue beat, signaling profit-taking in recent momentum names. ELAN holding at $24.98 with price target raises represents FFM setup with only 4.2% from 52-week highs.
- ABC (Always Be in Control) most relevant today: With 47 continuation signals but narrow sector leadership and NVIDIA earnings as binary catalyst, position sizing and stop discipline trump aggressive exposure. The 360/127 Bull/Bear ratio suggests euphoric positioning ahead of a make-or-break event.
Closing Watch — Last Hour Considerations
- SPY reclaimed its 50-day MA at approximately 6,896 intraday: This level becomes the key pivot for tomorrow’s session. A hold above confirms the short-term reversal; a breakdown suggests failed breakout and distribution.
- Watch Financials sector into close for breadth confirmation: Financials up 1.6% with COIN surging 13.28% on stock trading expansion news and Bitcoin rebounding 7.5%. If Financials maintain strength into the close, it signals genuine broadening beyond mega-cap tech.
- Volume patterns show selective accumulation: Russell 2000 (+0.4%) and S&P Mid Cap 400 (+0.3%) turned positive late session, suggesting institutional rotation into broader names. However, Equal Weight Index still negative points to distribution in lower-quality names while smart money concentrates in leaders.
Final Thoughts & Tomorrow’s Setup
- Overnight catalyst: NVIDIA earnings after the bell. The market is pricing in a decisive beat-and-raise, but as we’ve seen with other mega-caps this year, meeting expectations hasn’t been enough. Position accordingly with the understanding that semiconductor sector volatility will spike regardless of outcome.
- Key level for tomorrow: 6,896 on the S&P 500 (50-day MA). Above this level validates the two-day rebound and opens 6,950-7,000 resistance zone. Below it and we’re back to testing 6,850 support with renewed distribution concerns.
- Overall bias: Cautiously bullish with tight stops (T3A). The two-day rally has improved breadth with 78% above 20-day SMAs, but concentration risk remains extreme and sentiment is stretched at 360 Bull 4%. Think three days ahead: if NVDA disappoints, the narrow leadership unravels quickly. If it delivers, we get continuation but likely face profit-taking by Friday. PLASTICS code applies—stay with sector winners (Technology, Financials) and avoid laggards (Energy, Materials at 5th percentile ATR).