MARKET ANALYSIS
Here’s All You Need To Know

• Very little has changed from yesterday and the market is still sitting in a holding pattern ahead of Nvidia earnings tonight, and that is the only event that really matters for the growth trade in the short term.

• We did get a decent bounce yesterday across the leading semiconductor names, with AMD, Intel, Marvell, Micron and Qualcomm all showing premarket strength this morning after the group had started to cool from a rapid rally. XLK and the broader technology complex also stabilized, which tells us buyers have not disappeared from growth.

• The problem is that this bounce does not change the broader setup. Growth is still technically extended, semiconductors are still crowded, and Nvidia is about to report into one of the most important AI earnings events of the year.

• Nvidia is not just another earnings report. Goldman’s Ben Snider noted that Nvidia has contributed around 20% of the S&P 500’s returns this year and almost the same share of the index’s earnings growth in 2026. That makes tonight’s reaction a direct read on the entire AI infrastructure trade.

• The market itself is also not giving a clean directional signal. Futures are slightly higher this morning, helped by oil cooling, but that comes after the S&P 500 and Nasdaq both posted their third straight losing sessions yesterday as yields pressured equities.

• Oil has pulled back this morning, with WTI down around 2% and Brent down around 3%, which gives the market some short term relief. But crude is still elevated enough that the inflation risk has not gone away.

• The bigger macro issue remains the bond market as the 30 year Treasury yield briefly moved above 5.19%, its highest level in nearly 19 years, while the 10 year yield touched 4.687%, its highest level since January 2025. That is exactly the type of long end yield pressure that can keep weighing on expensive growth stocks.

• This is why we would not overreact to one bounce in semiconductors or XLK. A bounce was expected after the recent pullback, but the market still needs Nvidia to confirm that the AI trade can hold at these levels.

• The cleaner read is this: growth is trying to stabilize, but the market has not chosen a direction yet.

• Until Nvidia reports, the best approach is to avoid forcing trades. Let the event pass, watch the reaction in Nvidia, semiconductors, XLK and the MAG7, then reassess whether this is a real continuation setup or simply a bounce inside a broader cooling phase.

S&P 500

39.96%: over 20 EMA | 46.71%: over 50 EMA | 50.69%: over 200 EMA

• The SPY is still extended, but the mean reversion we were looking for is now starting to take shape. It is sitting at 5.73 ATR multiples above the 50-day EMA, which remains elevated enough to keep upside asymmetry poor, especially ahead of Nvidia earnings tonight.

• Relative volume has started to pick up over the last four candles, which is important because the market is no longer drifting higher on quiet volume. We are now seeing more active participation as price begins to cool off.

• There is also the potential for an evening star style formation to develop on the weekly chart, but this is not confirmed yet. The week has not closed, and more importantly, this is not yet a valid intermediate trend reversal. It is simply a warning that the market is losing some momentum after a very extended move.

• Breadth and positioning are still being held hostage by Nvidia tonight. That is the key reason we should avoid getting too aggressive in either direction before the print. Nvidia will likely dictate how the MAG7, semiconductors, XLK, QQQ and SPY behave into tomorrow.

• SPY is bouncing in premarket, but the visible range volume profile still shows dense supply overhead into $740. From the current close around $733.73 up to the $740 area, there are roughly 9.17M shares traded green versus 6.04M shares traded red.

• That matters because many of those buyers are still trapped above current price. If SPY pushes back into that zone and fails, those buyers can become supply as they look to exit near breakeven.

• The cleaner read is that SPY is likely to remain choppy until Nvidia reports after hours. We would expect whipsaw price action rather than clean directional follow-through today.

S&P 400 Midcap

30.25%: over 20 EMA | 48.25%: over 50 EMA | 49.00%: over 200 EMA

• The mid-caps are testing a much more interesting level than SPY. MDY is sitting directly around its 50-day EMA and 10-week EMA, which is exactly where we would expect buyers to make an attempt.

• Yesterday’s candle was constructive in the short term. MDY formed a red hammer candle, and the lows showed strong demand through the volume profile.

• On yesterday’s lows, we saw roughly 19K shares traded green versus only 3.72K shares traded red, which is a major imbalance in favor of buyer aggression.

• That tells us buyers are stepping in at this level, and we do suspect the 50-day EMA and 10-week EMA area holds initially.

• The caveat is volume quality. Yesterday’s bounce came on only 50% relative volume, while the prior seven sessions of selling came with rising relative volume as price moved lower.

• That is not a clean strength signal. It means the bounce is technically logical because of the moving average test, but the broader short-term structure still carries weakness.

• The most likely scenario is a bounce attempt from this level, but not necessarily a clean trend reversal unless we see stronger relative volume step in.

Russell 2000

32.26%: over 20 EMA | 52.63%: over 50 EMA | 53.63%: over 200 EMA

• IWM is showing very similar behavior to MDY, but the bounce was stronger.

• Yesterday’s session came on 83% relative volume, which is materially better than the mid-cap bounce and shows stronger demand in the small-cap complex.

• Price formed a doji-style candle while bouncing from the 10-week EMA and 50-day EMA, which is exactly the area we expected buyers to defend.

• The volume profile also supports that view. At yesterday’s demand zone, we saw roughly 1.05M shares traded green versus 499K shares traded red, which is around a 2 to 1 imbalance in favor of buyers.

• IWM is also bouncing more strongly in premarket, which makes sense given the demand that showed up at the moving average cluster.

• The issue is that today is not a normal trading day. Nvidia reports after hours, and the entire market is likely to trade around that event risk.

• We would not be surprised to see an early morning push across the market that fades later in the session. Most traders are unlikely to want meaningful naked exposure into Nvidia earnings, especially with how heavily the entire growth complex depends on that reaction.

• The practical read is simple: MDY and IWM are at logical bounce zones, but today’s action may be noisy and unreliable. Let Nvidia pass before reading too much into intraday strength or weakness.