MARKET ANALYSIS
Here’s All You Need To Know

• The market has two opposing forces. On one side, the cooler inflation report has taken pressure off the Fed and helped risk assets stabilize. On the other, the U.S.-Iran conflict is escalating again, oil is holding above key psychological levels, and investors are still being forced to price energy-driven inflation risk.

• For now, equities are leaning constructive. S&P 500 futures are slightly higher, Nasdaq-100 futures are up around 0.4%, and Dow futures are roughly flat. That is not an aggressive risk-on open, but it is notable given the fresh U.S. strikes on Iran and Brent still trading above $85.

• The reason the market is holding is simple: semiconductors are bouncing.

  

  SMH VRVP Daily & Weekly Chart

• SMH is up more than 1% in premarket trade, led by ASML, Intel and Lam Research. ASML is the key signal. The company raised its full-year sales outlook for the second time this year, now expecting annual net sales of €43B to €45B, up from prior guidance of €36B to €40B. Gross margin guidance was also lifted to 54% to 56% from 51% to 53%.

• That matters because it directly challenges the idea that the AI hardware cycle is breaking down. The market has been worried about whether the AI capex boom can keep going, especially after the recent selloff in SK Hynix, Samsung and the broader memory complex. ASML’s guidance suggests customers are still ramping production of AI chips, which gives the semiconductor trade a fundamental reset after several days of de-risking.

• This does not mean chip risk is gone. It means the market just received evidence that the AI infrastructure cycle is still intact.

• That is why today’s Nasdaq resilience matters. Yesterday, Nvidia was the largest positive contributor to the S&P 500 and Nasdaq, while IBM was the biggest drag after its profit warning. The index-level story was messy, but under the surface, AI-linked leadership was still doing the work.

• Earnings are also helping the broader tape. Morgan Stanley posted record quarterly revenue and profit, with equities trading revenue up 69%, following strong trading results from JPMorgan and Goldman. This confirms that market volatility, AI-driven trading activity and elevated institutional flow are still supporting the banks. Financials remain one of the key non-tech pillars of the market.

• The Fed side also improved after the cooler CPI report. Traders reduced expectations for an immediate July rate hike, with the probability falling to around 17% from 42% the prior day. That is a meaningful repricing. Markets still expect a hike later this year, but the urgency has eased.

• That is the bullish side of the setup: cooler CPI, lower near-term Fed pressure, chip strength, better bank earnings and Nasdaq leadership holding.

• The bearish side is oil. The U.S. launched another round of strikes on Iran, with CENTCOM saying the attacks were designed to degrade Iranian military capabilities used against commercial shipping in the Strait of Hormuz. WTI is still trading around the $80 area, while Brent is above $85. Those levels are not panic levels, but they are high enough to keep inflation risk alive.

• This is the core macro tension. The CPI report gave the market relief, but oil is now moving in the opposite direction. If crude stays elevated, the Fed may treat one cooler inflation print as temporary rather than decisive. That keeps yields and rate expectations sensitive.

• The safe-haven reaction is also not clean. Gold and Treasurys are not catching a strong bid despite fresh strikes, with the 10-year yield still around the 4.60% area and gold lower. That tells us investors are not treating this as a pure fear event. They are treating it as an inflation and policy-risk event.

• China is another mixed input. Second-quarter GDP grew 4.3%, missing expectations and slowing from 5% in the first quarter. That is the weakest pace since 2022. The issue is not exports or industrial production, which are still supported by the AI investment cycle. The issue is weak consumption, weak private investment and the continuing property drag.

• This matters for global markets because China is not providing clean cyclical acceleration. AI-linked manufacturing and exports are still strong, but domestic demand remains fragile. That limits the global growth impulse, even if the AI supply chain remains healthy.

• The market is not ignoring the Iran escalation. It is simply giving more weight today to the combination of cooler CPI, ASML’s AI-driven guidance raise, semiconductor strength and strong financial-sector earnings. That is enough to keep risk appetite alive, but not enough to remove the ceiling from oil and geopolitics.

• For traders, the message is to stay selective. The strongest confirmation today is in semiconductors and AI infrastructure, not in broad cyclicals. Energy remains supported by the oil backdrop, but high crude also creates macro risk for the rest of the market. Banks are still validating the rotation trade, while China remains a drag on global growth confidence.

Nasdaq

47.57%: over 20 EMA | 55.33%: over 50 EMA | 64.07%: over 200 EMA

• QQQ remains in a constructive position. We are still seeing a volatility contraction pattern develop within the broader Stage 2 rally that began in March 2026. The consolidation has now lasted roughly 61 trading days, and it has taken place on aggressively declining relative volume since the June 5th peak.

• That is an important detail. QQQ is not breaking down on expanding institutional selling. It is compressing above rising support while volume dries up.

• The structure is also improving from a support perspective. Since the first major test of the 50-day EMA on June 9th, QQQ has continued to form higher lows. The 50-day EMA has held, and the 10-week EMA has also continued to act as key intermediate support.

• Breadth inside the Nasdaq is softer, but not broken. The percentage of stocks above the 20-day and 50-day moving averages has been declining, but it remains steady enough to support the consolidation thesis.

• In simple terms, more Nasdaq stocks are below their short-term 20-day averages, but they are not broadly breaking their 50-day or 200-day moving averages. That is consistent with healthy digestion, not structural deterioration.

• Nvidia remains one of the key stocks to watch inside the Magnificent 7. The stock has built a very powerful four-week reversal structure since the week of June 22nd.

• Between the week of June 22nd and the week of July 6th, Nvidia formed a Morning Star style reversal on the weekly chart, then began this week with a strong push from the $203.90 area.

• That level is important because it lines up with a major support cluster: the 10-day EMA, 20-day EMA, 50-day EMA and 10-week EMA. Nvidia tested that zone on Monday and again yesterday, and buyers stepped in.

• From our perspective, Nvidia remains a strong pullback-long candidate. The best entry was the pullback into that support cluster yesterday or Monday, similar to the opportunity we discussed two weeks ago when Nvidia was testing the 200-day moving average.

• The logic is straightforward. When a leading stock pulls back on declining relative volume, that usually signals controlled mean reversion rather than institutional distribution.

• The opposite is also true: when a stock rallies aggressively on dwindling volume, the risk of mean reversion lower rises. In Nvidia’s case, the pullback into support was orderly, and the stock is now trying to resume higher.

• We would not treat Nvidia as a clean breakout buy here because there is still supply overhead into roughly $216.77. But any intraday pullback back toward the $203 support cluster and 10-week EMA remains interesting for long exposure.

• MAGS appear to be resolving from an inverse head and shoulders structure. The left shoulder formed between roughly June 10th and June 18th, the head came from the sharp spike lower on June 26th, and the right shoulder developed between July 1st and July 9th.

• Yesterday, the group tested that right-shoulder area and buyers stepped in aggressively.

• The visible range volume profile confirms demand around the $67 shelf, with roughly 6M shares traded green versus about 3.64M shares traded red. That is a clear buyer imbalance from a key support zone.

• If MAGS continues to push higher from here, it should help drive both QQQ and the S&P 500 higher. This is one of the main reasons we are still constructive on the broader Nasdaq structure.

S&P 400 Midcap

55.52%: over 20 EMA | 60.80%: over 50 EMA | 67.08%: over 200 EMA

• MDY remains weak, choppy and indecisive. Relative volume has started to rise from July 6th while price action has weakened, which points more toward distribution than accumulation. The index still lacks clean linearity, and that makes it a poor area for swing exposure.

• A move back toward $682-$681 looks increasingly likely. That would bring MDY down toward the 10-week moving average shelf, which is the more logical area to reassess the group.

• For now, we would not be looking for mid-cap exposure. The structure remains too erratic, and the better opportunity is still in pullbacks across the strongest technology and semiconductor names.

Russell 2000

53.74%: over 20 EMA | 62.24%: over 50 EMA | 65.15%: over 200 EMA

• IWM is showing a similar pattern to MDY. Small caps are rejecting the 10-day moving average for the first time since the pullback that began on June 5th. That is a short-term change in character and suggests the Russell 2000 is losing momentum.

• We now suspect a pullback toward roughly $290 is likely. That would represent around 1.42% downside and would bring IWM back toward the 10-week moving average and 50-day moving average area.

• That does not mean small caps are collapsing, but it does mean they are not the cleanest long exposure right now. Like mid-caps, the group remains choppy and less attractive than the strongest areas of technology.

FOCUSED GROUP
TAN: Solar Looking To Mean Revert

• Our focus group today is TAN, the solar ETF. We still want to be clear: our first priority remains the strongest stocks inside the technology complex, especially names like Nvidia. But TAN is worth tracking because it is pulling into a historically important support area.

• TAN is bouncing from both its 200-day moving average and 50-week moving average. Since July 2025, tests of the 200-day moving average have repeatedly produced bounces. The same is true of the 50-week moving average since June 2025.

• That gives this area technical significance. The other key point is volume. TAN has been selling off since the May 29th mean reversion lower, but relative volume has been declining aggressively throughout that move. That suggests sellers are not gaining fuel as price moves into support.

• When price pulls back into a historically responsive support zone while relative volume declines, the probability of mean reversion rises.

• This is not a leadership breakout setup yet. It is a support-based mean reversion setup. The trade only works if the 200-day moving average and 50-week moving average continue to hold.