MARKET ANALYSIS
Here’s All You Need To Know

• The market is dealing with three separate forces at once: another jump in oil, the June CPI report, and the first major batch of bank earnings. That combination makes today more about inflation and rates than pure equity momentum.

• Futures are mixed. Dow futures are down around 333 points, or 0.6%, while S&P 500 futures are lower by roughly 0.1%. Nasdaq-100 futures, however, are up around 0.5%, helped by a rebound in semiconductors after yesterday’s selloff.

• The Dow weakness is being heavily distorted by IBM, which is down more than 20% premarket after warning that second-quarter earnings and margins would disappoint.

• IBM alone is set to subtract more than 400 points from the Dow at the open, so the index headline looks worse than the broader tape underneath.

• The real macro issue is oil and Brent crude surged 9.6% on Monday, its biggest one-day gain since 2020, after President Trump announced the reinstatement of a blockade on Iranian shipping through the Strait of Hormuz. The move has extended this morning, with WTI trading above $80 and Brent above $86.

• This is now a genuine inflation-risk event. Oil was already the market’s main geopolitical pressure point, but a move of this size ahead of CPI forces investors to reprice the inflation path quickly.

• A temporary oil spike can be absorbed. A sustained move above $80-$85 starts to pressure headline inflation, corporate margins, consumer sentiment and Fed expectations.

• Bond markets are already reacting. The 10-year Treasury yield is back near 4.63%, the 2-year is around 4.28%, and the 30-year is above 5.10%. Global yields are also moving higher as investors raise rate-hike expectations. Futures markets are now pricing a possible Fed hike as soon as October, with another potentially due next April.

• That is the central risk today and if CPI comes in hot while oil is accelerating and yields are rising, the market will have to price a more restrictive Fed again. That would be difficult for long-duration growth, especially after the strong run in technology and AI-related names.

• The expected CPI setup is mixed. Economists expect consumer goods prices to have fallen 0.2% in June, helped by the pullback in energy prices during the month, with headline inflation expected around 3.8%. Core CPI is expected to rise 0.2%, leaving the annual core rate around 2.8%, still above the Fed’s target.

• The problem is timing. June CPI may still reflect the prior decline in crude, but markets trade forward. If oil is now reversing sharply higher because of Hormuz risk, the Fed may focus less on the backward-looking relief and more on the renewed inflation threat.

• Fed Chair Kevin Warsh also testifies to Congress today, which adds another policy risk. Investors will be listening for how he frames the oil shock, inflation persistence, and the Fed’s balance sheet. If he validates the market’s shift toward additional hikes, yields could stay firm and keep pressure on equity multiples.

• Earnings are the other test and the banks have started reporting, and the headline numbers are mostly better than expected. JPMorgan, Bank of America and Wells Fargo all beat estimates, while Goldman Sachs delivered a very strong earnings and revenue beat. But the stock reactions are mixed, which tells us investors are looking beyond headline beats and focusing on quality, credit, margins, and forward guidance.

• That matters because expectations for this earnings season are high. If companies beat but stocks fail to respond, that tells us valuations are already pricing in a lot of good news.

• The positive offset today is semiconductors which after yesterday’s de-risking, the sector is bouncing in premarket trade. SMH is up more than 2%, Applied Materials is up more than 4%, and Lam Research, STMicroelectronics, Teradyne and Micron are all higher by more than 3%. That rebound is why Nasdaq futures are holding up better than the Dow or S&P.

• This does not erase the chip risk, but it does show buyers are still willing to defend the AI trade after sharp pullbacks. The market is not abandoning semiconductors. It is forcing better entry points and testing whether leadership can hold through earnings and macro volatility.

• China is also providing a supportive growth signal. June exports rose 27% year over year, the fastest pace since 2021, while imports rose 36%. Part of that is likely tied to the AI boom and tariff front-running, but it still shows that global trade momentum has not collapsed.

Nasdaq

54.36%: over 20 EMA | 52.42%: over 50 EMA | 64.07%: over 200 EMA

• QQQ remains inside a 60-day volatility contraction pattern around the rising 50-day EMA and 10-week EMA.

• This is still a constructive structure. Relative volume has been declining aggressively since mid-June, which is exactly what we would expect to see inside a Stage 2 rally base after the initial expansion and breakout phase from March and April.

• The index is not showing accelerated institutional selling. It is compressing above rising intermediate support.

• Yesterday’s pullback did come on rising relative volume, but only at 82% of the 20-day average, so it was still below normal participation. We also did not see a major expansion in average true range, with the session only around 1.2x greater than the expected daily range.

• That matters because if this were the start of a major breakdown, we would expect to see heavier volume and a much wider range expansion through support. We are not seeing that yet.

• For now, QQQ remains in a normal digestion phase after a very aggressive rally. Pullbacks into the 50-day EMA / 10-week EMA area remain viable as long as those levels continue to hold.

S&P 400 Midcap

57.03%: over 20 EMA | 62.06%: over 50 EMA | 67.08%: over 200 EMA

• MDY continues to show erosion and the move lower is happening on low participation, with volume only around 80% of the 20-day average, but the structure remains poor. Price is hitting supply near $692.50 and pushing lower, which keeps the short-term bias weak.

• We continue to expect further downside toward the $680 area, where the rising 50-day EMA and 10-week EMA begin to come into play.

• The bigger issue remains trade quality. MDY has been erratic, non-linear and difficult to trade for weeks. The index lacks clean trend behaviour. It chops, fades, mean reverts, and then reverses again, which makes it a very unfriendly area for swing exposure unless entries are taken at clear support after weakness.

Russell 2000

56.30%: over 20 EMA | 62.84%: over 50 EMA | 65.15%: over 200 EMA

• IWM is bouncing sharply this morning, up nearly 1.2%, after recovering from a brief failure below its 20-day EMA for the first time since June 2026.

• That bounce is notable, but we would not be overly confident that it holds.

• The short-term moving average structure is starting to deteriorate. The 10-day EMA is curling lower toward the 20-day EMA, and if it breaks below, that would confirm a loss of short-term momentum. At the same time, the visible range volume profile shows a large amount of supply between roughly $296 and $300, which is the key overhead zone.

• That makes this bounce more fragile than it looks on the surface. Small caps can push higher intraday, but they are still running into supply, with weakening short-term moving average structure behind them.

FOCUSED GROUP
XOP: Where The Money Is Rotating

• Energy is breaking out into what now looks like a fresh Stage 2 rally, with yesterday’s move coming on roughly 150% relative volume. That is exactly the kind of volume confirmation we want to see when a sector is rotating into leadership.

  

  XLE VRVP Daily & Weekly Chart

• Within energy, our main focus is XOP, the oil and gas exploration and production ETF.

• XOP also rallied on around 150% relative volume yesterday, but the more important point is that relative volume has been rising for the last two weeks. That shows a clear change in participation as buyers rotate into the group.

• The setup also makes sense structurally. XOP bounced off the 200-day EMA last week, then expanded yesterday with a roughly 3% average daily range, which is almost 40% greater than its 20-day average. That combination of rising volume, expanding range and support recovery is a strong signal that institutions are moving into the space.

• The caveat is overhead supply. XOP is now pushing into the $167 area, where both the weekly and daily visible range volume profiles show dense prior trading activity. That means the sector may need to digest or pause near this level. But the broader message is clear: money is rotating into energy.