OVERVIEW
The Morning Setup

• Premarket: At Reuters’ 6:40 a.m. ET snapshot, Dow futures were flat, S&P 500 futures -0.47% and Nasdaq 100 futures -1.21%. Nvidia was down around 2%, with AMD, Intel, Micron and Marvell all lower.

• Rates: The 10-year Treasury yield has risen to roughly 4.74%, while the 30-year has reached 5.33% — its highest since 2007.

• Oil: Brent is back above $90 as the temporary U.S.-Iran ceasefire expires and negotiations remain stalled.

• Monday: The weakness was broader than yesterday’s Swingly draft suggests. The S&P 500 fell 0.52%, the Dow 0.51% and Nasdaq 0.31%. Energy was the only S&P sector to finish higher, while declining stocks materially outnumbered advancers.

• Earnings: Home Depot is up after stronger sales, while Baidu is lower as weakness in advertising outweighed continued AI-cloud growth.

• Today: Housing starts and import/export prices arrive at 8:30 a.m. ET, followed by industrial production at 9:15 a.m. ET.

• Key levels: SPY 776.85 / 779.37, QQQ 728.54 / 734.39, MDY 713.57, IWM 303.40–305.05.

The market remains above its major medium-term trends, so one weak session is not enough to turn the broader view bearish. But the character has changed.

Monday’s selling was broad, and this morning’s combination of higher oil, higher long-term yields and weakness across technology deserves more respect than yesterday’s report gave it.

MARKET ANALYSIS
Monday Was Broad Scale Weakness

Monday’s session was weaker underneath the surface than the major indexes alone suggest.

The S&P 500 fell 0.52%, the Dow 0.51% and Nasdaq 0.31%. More importantly, Energy was the only one of the S&P 500’s 11 sectors to finish higher. Communication Services and Consumer Staples fell around 1.5%, while Financials and Consumer Discretionary lost a little over 1%.

Market breadth confirmed the weakness. Decliners outnumbered advancers by 1.76-to-1 on the NYSE and 1.68-to-1 on Nasdaq. RSP fell 0.89% and QQQE declined 0.55%, so the selling was not confined to a few mega-cap names.

The encouraging part is volume and about 14.7 billion shares changed hands across U.S. exchanges versus a 20-day average near 17.0 billion. The decline therefore came with clear breadth deterioration, but not the type of heavy turnover we would associate with aggressive institutional distribution.

SPY Has Fallen Back Into the Prior Range

SPY closed Monday at approximately 772.67, down 0.47%. The more important point is where that leaves the recent breakout.

SPY initially cleared the 776.85 pivot last Thursday, retested it Friday and has now closed back beneath it. The recent high at 779.37 remains overhead.

That means the clean VCP breakout we were watching has failed to hold for now.

This is not the same as saying the larger uptrend has failed. SPY’s 50-day average sits around 749.24, still roughly 3% beneath Monday’s close.

But the immediate technical task has changed.

Rather than waiting for SPY to “break resistance,” I would now watch whether it can reclaim the 776.85–779.37 area after falling back into the previous range.

If it cannot, the index may need more time to rebuild before another breakout attempt.

QQQ Faces the More Important Test

QQQ closed Monday at 729.87, down 0.16%. That close still sits just above the 728.54 breakout pivot, but Nasdaq futures are down more than 1% this morning. If that weakness carries into the cash open, QQQ is likely to begin the session back below the breakout area.

This makes 728.54 much more relevant than the old 661.14 support repeatedly highlighted in the automated report.

QQQ’s 50-day average is around 712.74 and so the hierarchy is therefore straightforward:

734.39 — recent high / upside repair
728.54 — breakout pivot that needs to hold or be reclaimed
712.74 — 50-day average and first important medium-term support

The larger Nasdaq trend remains intact while QQQ holds comfortably above the 50-day, but losing the recent breakout and then seeing weakness accelerate toward that average would materially change the setup.

The premarket tape makes this especially important. Nvidia is down around 2%, Tesla 1.4%, while AMD, Intel, Micron and Marvell are down between roughly 2% and 5%. Sandisk and Western Digital are both around 6% lower.

Mid- and Small-Caps Need to Hold Their Recent Progress

MDY held up relatively better Monday, closing around 715.35, just above the breakout area we have been tracking near 713.57. Its 50-day average is around 693.45.

IWM, however, did not gain 0.52% Monday as the original report states. That figure was stale from Friday.

IWM actually closed around 304.06, down 0.34%. That still leaves it around the recent 303.40–305.05 breakout area and comfortably above its roughly 295.10 50-day average.

So the broadening thesis has weakened, but it has not disappeared.

What we want to avoid now is MDY and IWM joining SPY in falling decisively back through their recent breakout areas. If those indexes continue to hold while large-cap technology absorbs the current pressure, the market would still have evidence of rotation beneath the surface.

Oil and Long Yields Are the Main Headwind

The macro pressure this morning is unusually clear. The U.S. 10-year yield has risen to roughly 4.74%, while the 30-year reached 5.327%, its highest level in 19 years.

The rise is not solely an Iran story. Reuters points to several forces: renewed inflation concerns from oil, growing federal borrowing requirements, heavy debt issuance and increased capital demand from AI hyperscalers.

At the same time, Brent is above $90 after the temporary U.S.-Iran ceasefire expired. Iran has said it is moving to a “fully offensive” military posture, while negotiations over a permanent settlement remain stalled and the Strait of Hormuz remains effectively restricted.

That combination matters particularly for technology. Higher long-term yields raise the discount rate applied to future earnings, while higher oil keeps inflation risk alive even after last week’s benign CPI and PPI reports.

The reaction in Nasdaq futures is therefore understandable.

Home Depot Holds Up; Baidu Shows the AI Divide

Home Depot has provided one encouraging read on the U.S. consumer this morning.

Second-quarter sales increased 5.7% to $47.9 billion, comparable sales rose 1.7%, and adjusted EPS reached $4.92. The company also reaffirmed its full-year guidance.

Shares were around 2.3% higher premarket and Baidu is moving the other way.

Quarterly revenue fell 4% to 31.33 billion yuan, below the 31.96 billion yuan consensus. Online advertising revenue dropped 19%, although its AI-powered business grew 25% and AI cloud infrastructure remained a significant area of strength. Baidu’s U.S.-listed shares were down around 3.5% premarket.

The distinction is useful: AI demand remains strong in parts of the market, but investors are increasingly demanding that AI growth translate into enough revenue and profit to offset weakness elsewhere in the business.