Market Prep: Earnings & Sector Rotations
Market Analysis, SPX, C, DOW, CE, RCAT, Software, Silver
Hello Traders,
The S&P 500 is testing our resolve and critical technical levels. As you can see in the chart below, SPX kissed the 20-day moving average (DMA) and the trendline, delivering a bounce exactly where the bulls needed it.
So far, so good, but the job isn’t done. We need to hold here.
Demand Zones: 6890, 6918
Resistance: 6938, 6969
The price action suggests a battleground. If we lose the trendline, the 6890 level becomes the last line of defense before a deeper check. If we hold, we look back toward 6969.
The Macro Headwind: SCOTUS Delays
Part of the chop today came from the Supreme Court. The market was bracing for a ruling on the tariff cases (IEEPA), but the Court postponed the decision again. Markets hate bad news, but they hate uncertainty even more. Until we get clarity on the tariff framework, expect this geopolitical overhang to keep a lid on animal spirits at the index level.
Earnings & Sector Rotations
While the index chops, the real money is being made (or lost) in sector rotation. The divergence between “real economy” stocks and high-flying software is becoming extreme.
Citigroup (C): Underlying Strength
Citigroup kicked off earnings with a mixed bag. The headline numbers were noisy due to a $1.2B hit from their Russia exit, which dragged on GAAP results. However, if you look under the hood at the core business, Investment Banking and Wealth Management are showing solid growth. The turnaround is messy, but the engine is firing. Buy the dip on JPM usually worked. C in this case most likely also.
The 200 DMA Breakout Theme:
We are seeing a clear bid for cyclicals and recovery plays.
