Today's Free Feature

Overnight trading has seen U.S. equity futures edge higher, attempting to stabilize after Tuesday’s profit-taking session. As of this morning, S&P 500 futures are up about 11.5 points (0.17%), the Dow is flat to slightly positive, the Nasdaq is ahead by 78 points (0.32%), and the Russell 2000 is up just 1.2 points (0.05%). The modest lift comes despite Tuesday’s retreat in tech and follows Micron’s stronger-than-expected earnings and guidance, as well as yet another round of headlines from OpenAI about its massive AI infrastructure ambitions. Investors appear somewhat cautious, with the muted pre-market reaction in Micron underscoring that much of the AI optimism may already be reflected in valuations. Meanwhile, geopolitical shifts—namely Trump’s sharp pivot in tone at the UN toward supporting a full Ukrainian victory—are driving European defense shares higher and adding another wrinkle to the global risk backdrop.

In Asia, markets were mixed. Japan’s Topix and Nikkei gained modestly (+0.23% and +0.3%), while China/Hong Kong posted stronger gains. The Hang Seng rallied 1.37%, the HSCEI rose 1.64%, the Shanghai Composite climbed 0.83%, and the Shenzhen index added 1.56%. Tech stocks were the standout in Hong Kong, with Alibaba surging more than 9% after unveiling new AI investment plans, JD.com gaining 3.6%, and SMIC up 5.7%. By contrast, Taiwan’s TAIEX slipped 0.19%, Korea’s KOSPI fell 0.4%, Australia’s ASX 200 lost 0.92%, and India traded down roughly 0.3%. The outperformance in Chinese tech has been buoyed not just by company announcements but also by speculation of a potential Trump–Xi mini trade deal at the upcoming APEC meeting, which could ease cross-border tensions and support valuations.

Europe has opened softer, with major indices down 10–30 basis points, though the picture is highly sectoral. Defense contractors and aerospace are outperforming on Trump’s Ukraine pivot, joined by strength in real estate, telecom, energy, and utilities. Laggards include healthcare, retail, luxury, banks, insurers, chemicals, autos, and basic resources. The rotation reflects both geopolitical influences and ongoing concerns about macro softness in Europe. Any sustained rally in defense and energy could carry implications for U.S. peers later today.

Micron is the headline corporate story. The company reported adjusted EPS of $3.03 versus consensus of $2.84, on revenue of $11.3 billion versus $11.2 billion expected, marking a record quarter and 46% year-over-year growth. Gross margins and operating margins both beat Street estimates, and guidance for FQ1 was robust, with revenue expected at $12.5 billion at the midpoint and EPS at $3.75, well ahead of consensus ($11.9 billion and $3.10). Despite these strong results, shares are only up about 1% in pre-market trading. That muted reaction contrasts sharply with the explosive rallies recently seen in Broadcom and Oracle after their AI-linked results, suggesting investors may now be demanding more than solid beats—they may require upside surprises that reset the AI narrative. This is an early sign that bullish AI sentiment is already priced in, and today’s session will be a key test of whether momentum can be sustained.

Other corporate and policy headlines to note:

- Adobe (ADBE): Downgraded at Morgan Stanley (Overweight ? Equal Weight) on AI disruption concerns.
- Amazon (AMZN): Upgraded at Wells Fargo (Equal Weight ? Overweight), citing AWS growth potential; stock is higher pre-market.
- Alibaba (BABA): +9% in Hong Kong after unveiling expanded AI spending plans and a new language model.
- JD.com (JD) and Meituan: Higher after China eased competition in food delivery.
- Comac: Cut delivery targets for the C919 jet, highlighting challenges for China’s aerospace ambitions.(Watch BA)
- JD Sports: Results in line with guidance; full-year outlook largely consistent with consensus.
- Lithium Americas (LAC): Soared after reports the White House may seek a 10% equity stake in its project.
- Tether: Reportedly seeking to raise up to $20 billion at a $500 billion valuation.

On the calendar today, Cintas reports before the open, KB Home after the close, and earnings are also due from Uranium Energy, Thor Industries, and H.B. Fuller. U.S. new home sales for August (10am ET) are expected to hold steady at around 650K units. Treasuries remain flat across the curve ahead of today's 5-year auction, the dollar index (DXY) is up about 0.3%, Brent crude is flat, gold is up 0.2%, and bitcoin has rebounded 0.5%.

For trends, the broader market has shifted into a consolidation phase after a powerful multi-week rally. Tuesday’s retreat, sparked by questions around Nvidia’s financing ties with OpenAI and Powell’s cautious tone on labor markets, highlights that investors are more sensitive to stretched valuations. The action in Micron today will be instructive: a strong print but lackluster stock response could mark a transition from AI euphoria to AI digestion. Meanwhile, geopolitical shifts, especially in Europe, could drive further sector rotation. With PCE data looming Friday and Q3 earnings season approaching, markets may remain in a holding pattern, balancing bullish fundamentals against valuation fatigue.

Internals/breadth should be evaluated to determine which set-ups will offer the greatest probability of success. Tracking sector and industry performance can also help significantly. Take the time to scroll through the charts and find those candidates with recognizable and clear technical patterns. Note on days where a scan results in too many stocks (20+), then those with lower volatility and volume with be filtered out.

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* ETFs are boldfaced

*This is based upon Daily and Weekly indicators and price action of the SPY.  It is not to be used as an exact "timing" system due to the lagging nature of trend-changes, however, it is best used to establish an intermediate-term Long/Short "bias" based upon strong or weak momentum and trends.  It can be subject to "false" or short-lived signals on occasion due to unforeseen news/events, especially if there are "gap" days that reverse through the prior day or week's range.   
**Signals are color-coded accordingly:  GREEN = Bullish/Upward Momentum Bias    YELLOW = Neutral/Flat Momentum    RED = Bearish/Downward Momentum Bias