The Morning Dose EP217 Neutral

The Morning Dose — 2026-02-20

February 20, 2026 7:35

Tickers Mentioned

AUFETWDCNVDAADIOWLHWMKLACTPHEWY

Episode Summary

With only 4% of market participants bullish and three major catalysts converging before the open—Q4 GDP, December PCE, and a Supreme Court tariff ruling—the hosts break down every scenario and what it means for Energy, Tech, and Defensives. The episode delivers two-scenario trade playbooks, pre-market mover analysis on WDC, NVDA, AU, and FET, and a direction-agnostic setup for traders who want edge without picking a side.

Key Takeaways

Market awaits Supreme Court tariff ruling and Q4 GDP/PCE data before committing direction
Breadth weak with only 36% above 20-day SMA despite stable index levels
Energy leads at 98th percentile but rolling over; Tech/Comm Services remain broken
2LYNCH signals strong in semiconductors and aerospace despite sector headwinds
Gold miners and oil services showing institutional accumulation on geopolitical premium

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Briefing Morning Report

Equity futures are pointing to a modestly lower open on February 20th, with S&P 500 futures down 15 points to 6,862 after yesterday’s uninspired session lacked broad participation. The market sits in a holding pattern ahead of two major catalysts: the advance Q4 GDP reading (consensus 3.0%) and December PCE Price Index (consensus 0.3%), which is the Fed‘s preferred inflation gauge. More critically, we’re awaiting a potential Supreme Court ruling on President Trump’s IEEPA tariffs—a decision that could define market direction for the coming weeks. Geopolitical tensions remain elevated as The Wall Street Journal reports Trump is weighing an initial strike on Iran to enforce nuclear compliance, pushing oil higher throughout the week with crude at $66.10.

Overnight action showed characteristic bifurcation: South Korea’s Kospi surged 2.3% to another record high while Hong Kong’s Hang Seng retreated 1.1% after returning from holiday closure. Japan’s Core CPI decelerated to its slowest pace in two years at 2.0% year-over-year, yet Manufacturing PMI accelerated to 52.8 versus 51.5 expected—a classic mixed signal that’s keeping rate expectations uncertain. European indices are modestly higher with strong UK retail sales (1.8% monthly versus 0.2% expected) providing a bright spot. Corporate news includes NVDA nearing completion of a $30 billion OpenAI investment (down from $100 billion pledged) and Amazon’s cloud unit experiencing AI-related outages. Blue Owl Capital (OWL 11.18, -3.5%) is getting hit on liquidity concerns despite denials. This setup shows ABC (Always Be in Control) is paramount—don’t chase into this two-way volatility.

Market Health

Breadth indicators are flashing cautionary signals that demand attention. The Bull 4% count sits at 117 versus Bear 4% at 91—a thin 26-point margin that shows conviction is lacking. More concerning: only 36% of stocks trade above their 20-day SMA while 49.76% remain above the 40-day, creating a defensive posture where intermediate trends hold but short-term momentum is cracking. The Sentiment 4% reading of just 4% Bullish with a Bearish 40SMA confirms we’re in a late-stage consolidation where the next decisive move hasn’t revealed itself. Compare this to mid-January when Bull 4% reached 117 with 60%+ above the 20-day SMA—we’ve lost that breadth thrust entirely.

Sector rotation tells the real story of defensive positioning masking as stability. Energy leads at +3.94 (98th percentile) but is rolling over with a -0.15% daily change after peaking at +4.09 yesterday—geopolitical premium may be getting priced in. Financials hold steady at +1.22 (63rd percentile) with flat momentum, showing rotation into late-cycle sectors. Meanwhile, Technology remains mired at -1.25 (19th percentile) and Communication Services at -0.95 (20th percentile)—the growth engines that typically lead continuation phases are broken. Healthcare at -0.35 (17th percentile) is struggling despite defensive appeal. The positive: Consumer Defensive at +1.83 (78th percentile) and Real Estate at +1.19 (86th percentile) show money rotating into rate-sensitive defensives. This isn’t a bullish setup—it’s a “show me” market waiting for catalyst confirmation. The CRT (Controlled Risk Taking) framework applies: take shots, but size them for uncertainty.

Strategy Signals

The 2LYNCH continuation scan delivers 104 signals with several institutional-grade setups worth monitoring. Semiconductor strength persists with ADI $354.50 (+2.7%, 92.2% risk score, INST) and KLAC $1,486.81 (+1.1%, 45.5% risk, INST) showing relative strength even as the sector remains under pressure. Aerospace continues its dominance: HWM $257.20 (+2.4%, 64.4% risk, INST) and FTAI $293.54 (+1.6%, 54.1% risk) demonstrate industrial resilience tied to defense spending themes. Medical names like HCA $533.39 (+0.9%, 48.3% risk, INST) are grinding higher on low volume—classic late-stage continuation. The standout is PI $127.33 (+3.3%, 52.2% risk) in chips showing acceleration. These 2LYNCH setups work best when broader market breadth confirms—today’s 36% above 20-day SMA suggests patience until we see GDP/PCE data.

The D9M (momentum reversal) scan shows 88 signals with WDC $296.64 (+4.2%, 0.6 RVOL, 84.4% risk, INST) standing out as memory/storage finally catches a bid after brutal selloffs. The 4.2% move on elevated volume suggests institutional repositioning ahead of potential supply-chain tariff clarity. EWY (South Korea ETF) $141.02 (+4.3%, 92.4% risk) directly mirrors the Kospi record—a pure geopolitical play on de-escalation or defense spending. TPH $46.33 (+0.1%, 1.2 RVOL, 11.1% ATR monthly, 4.0% risk) in homebuilding shows massive volatility contraction (classic TTT Tight Days signal) suggesting an imminent expansion move. These D9M setups require T3A (Think 3 Days Ahead) discipline—anticipate how tariff rulings impact supply chains.

Reversal signals total 105, but quality is questionable with elevated relative volumes on downside names suggesting capitulation rather than accumulation. CAR $94.44 (-2.4%, 2.4 RVOL) and SEM $15.06 (-6.3%, 1.6 RVOL) show distribution, not bottoming. The exception: OWL $11.15 (-3.7%, 0.9 RVOL) may present FFM (Find Free Money) setup if liquidity concerns prove overblown—but that’s a contrarian swing requiring evidence of institutional defense. The 20% Study highlights extreme volatility in ETFs and small caps (DBGI $4.89 showing 29.25% ADR with -72.83% from 52-week highs), which typically marks bottoming processes but needs confirmation before deployment. Today’s not the day to hero-trade reversals—wait for breadth to follow price.

Today’s Watchlist

AU $113.50 — AngloGold Ashanti gapping on better-than-expected Q4 results, riding gold’s safe-haven bid to 299% above 52-week lows with 1,434 funds (+12.3%) showing institutional accumulation in miners.
FET $57.10 — Forum Energy Technologies +7% on Q4 beat and FY26 sales guidance above estimates; oil service equipment play levered to sustained crude strength at $66 amid Iran tensions.
WDC $296.64 — Western Digital +4.2% breakout in memory/storage with institutional ownership; positioned for tariff clarity benefit if supply chains stabilize post-Supreme Court ruling.
NVDA $186.91 — Monitoring for reversal setup after $30B OpenAI news and cloud outage headlines; key level to watch if Tech sector (-1.25 sector score) finds footing on GDP data.
ADI $354.50 — Analog Devices 2LYNCH continuation with 92.2% risk score, institutional ownership, and 2.7% move showing chip resilience; targets $365 breakout if semis rotate back into favor.

Action Codes of the Day

ABC (Always Be in Control) — With Supreme Court tariff ruling pending, GDP/PCE data at 8:30 AM, and breadth showing only 36% above 20-day SMA, this is a rules-based day. No heroics, no FOMO. Let catalysts confirm direction before deploying capital beyond scout positions.

T3A (Think 3 Days Ahead) — Anticipate post-ruling scenarios: tariff invalidation likely triggers short-covering rally in growth (Tech/Comm Services), while tariff confirmation extends Energy/Defensive leadership. Position for both outcomes with small, asymmetric bets rather than concentrated conviction until the headline drops.

Welcome to WaveRider TMD, The Morning Dose, everything you need to know before the market opens. Let's dive in. What happens when the Supreme Court, the GDP report, and the Fed's favorite inflation number all collide on the same morning while the market's already quietly losing its footing? Today is that day. Buckle up. Before I get to the breath data, give me one number. 4% of market participants are bullish right now. Wait, 4%? Not contrarian bullish? Just… Just nobody wants to commit to anything. And here's why. Only 36% of stocks are above their 20-day moving averages while the S&P sits near highs. Huh. That's a wild disconnect. It's like a market running on fumes, not fuel. Everyone's checking at the poker table, waiting for the river card before making the big bet. Okay, so what's driving the overnight action? Let's get into the headlines shaping this morning before the data even drops. Iran reports that the administration is weighing a potential strike to enforce nuclear compliance. Huh. So how much of this is already priced into oil and energy stocks? I mean, crude's sitting at $66.10. It's been grinding higher all week on these headlines, which honestly tells you something about how seriously the market is taking this. Energy sector's at the 98th percentile of strength, but, and here's the thing, it's already showing signs of rolling over. Huh, so it's already baked? Exactly. The geopolitical premium is getting priced in, not accelerating. It's like everyone's boarding up the windows for a storm, and prices reflect the fear, not the reality yet. So is energy a buy here or a trap? Honestly it depends entirely on whether this headline has legs Right now you buying fear not fundamentals and that a different trade Fair All right let talk about the data hitting at 8 a sharp because GDP and PCE together could reset the entire narrative for the next several weeks. Advance Q4 GDP consensus at 3.0%, December PCE at 0.3% month over month. And look, there are three scenarios here, not two. Walk me through them. GDP beat above 3.0% confirms resilience but raises the Fed higher for longer. Which the market has been dreading for weeks, yeah. Right. PCE hot above 0.3%, rate-sensitive defensives like real estate at the 98th percentile could reverse sharply. But here's the underappreciated scenario. If GDP misses below 3.0%, that's actually the most dangerous outcome. Wait, more dangerous than a hot PCE? How does that work? Because it flips the narrative from fed higher for longer to growth scare. And that hits everything simultaneously, including the defensives that have been the market's hiding spot. So you're basically saying a miss is the worst of all worlds. No growth and no rate cuts. Exactly. And the Supreme Court tariff ruling could override all of it. It's like having three GPS systems giving you three different directions. Don't floor it until you know which way to turn. Before we get to trade setups, let's quickly hit the earnings moving stocks in pre-market. Form energy up 7% on a Q4 beat. And FY26 guidance above estimates. But the key question is, if the geopolitical premium fades, does FET's guidance hold up? Right, yeah. This is a company levered to sustained crude strength above The guidance is credible if oil stays elevated but if the Iran headline fades and crude pulls back that tailwind reverses fast So it I mean it basically a geopolitical trade wearing an earnings costume Exactly. Know what you own. OK, let's get into the pre-market movers setting up the most interesting conversations heading into the open. Western Digital up 4.2 percent. What are you seeing there? WDC at $296.64 is the boxer who's been on the ropes landing a clean counterpunch. Memory and storage supply chains run through Asia, so tariff clarity is the key follow-through catalyst. Okay, so is this a day trade or are people actually building positions here? Honestly, without tariff clarity, it could be a one-round wonder. That's the honest answer. Yeah, okay. And Anglo Gold? Gapping up, sitting at $113.50, with 1,434 funds accumulating and 299% above 52-week lows. Late. 299%? I mean, that's not a recovery. That's a completely different stock. Yeah. Gold miners are the consensus bunker trade when nobody knows what's coming. 5,000 years of store of value, I mean, right? It's doing its job. It really is. NVIDIA? $186.91 on reversal watch if tech finds footing on GDP data. But isn't the $30 billion OpenAI investment still a massive vote of confidence? It's not what it looks like, that's the thing. The investment shrinking from $100 billion pledged to $30 billion actually deployed, that signals caution even from the biggest players. A vote of confidence that got cut by 70% is not the same thing. That's the reality check right there. And Blue Owl? down 3 on liquidity concerns Company denied it but honestly denials don change chart structure The distribution pattern says don buy this dip Got it So with all of this in motion what does the actual playbook look like today? Two scenarios. Tariffs invalidated by the Supreme Court, expect a short covering rally in growth names. Tech and communication services could rip. WDC and NVDA are the names to watch. And if tariffs are confirmed? Energy and defensive leadership extends, supply chain sensitive names take another leg down, AU and FET remain in play. So you're saying do nothing until the headline drops? No, do small things deliberately, not big things impulsively. There's a real difference there. Okay, explain that. TPH homebuilder showing massive volatility contraction. Classic tight day signal. The expansion move is coming regardless of which catalyst fires. This is the trade that doesn't require you to pick a side. So you don't even need to have a view on which way it breaks. Right. And look, the scan data is noisy today. Lots of signals, low quality, which is itself a signal to stay patient. It's like packing for a trip where the forecast says sunny or blizzard. You bring both the sunscreen and the parka. But you don't bet your whole suitcase on one outcome. Okay, so big day. I feel like we've been saying that a lot lately, but today actually earns it. Three massive catalysts. A market that's lost its short-term breath. A sector map quietly rotating defensive. Yeah, today earns it. The market is coiled, not broken. And when the catalysts reveal direction, the opportunity will be real. Just don't be the person who fires before the bell rings. Size small, stay ready. All right, we'll be back tomorrow. Thanks, everybody. That's all for today's episode of Waverider TMD. The morning dose. everything you need to know before the market opens. See you next time.

Chapters

Market Overview

Midday Market EP218 Bullish

Try WaveFinder

Briefing Morning Report

Market Health

Strategy Signals

Today’s Watchlist

Action Codes of the Day

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