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Good morning partner,
Few things to cover this morning:
Yesterday’s Session
After the S&P 500 broke out to the upside away from my given levels, it immediately rejected at overhead resistance and came back toward the lows.
What’s interesting is that, still, roughly half of all stocks advanced and closed the day in the green.
This goes back to the issue of a dangerously concentrated market, exposed to whipsaws in the event that technology and AI-related stocks decide to have a healthy pullback.
Again, you can track this relationship by following the SPY and the RSP, gauging daily breadth against momentum as we go.
Let’s take a look at the day’s leaders and laggers:
Energy, Healthcare, Real Estate.
It doesn’t get more defensive than that, but it also shows you that we’re not in the capitulation stages of the market yet.
This is merely a rotation into safer assets, considering that money left everything that was related to AI yesterday given the declines in Comms, Cyclicals, and Industrials.
The dollar is now back above $101 as well, which tells me this defensive intra-equity rotation is spreading to other asset classes as well and could accelerate.
If that thematic continues, I believe we’ll begin to see more of the bullwhip effect already covered around the AI trade and its potential tail risks surrounding fraud and aggressive accounting to inflate earnings.
We covered this in depth last week inside Offside Premium by the way.
The Iran Front
Seven tankers have crossed the Strait, according to Bloomberg.
That’s still a fraction of the typical 175-250 daily tankers that used to cross the Strait before the war broke out.
A prematurely celebrated MOU has not been signed, and Iran is not happy with Trump’s threats, which keep coming even after ground is broken.
I believe this back and forth is an intentional delay, where Trump would like to keep this card in his deck for later use.
The optionality of a finalized peace deal, and an immediate stock market rally, would come in handy if the SpaceX IPO keeps dropping like it did yesterday.
News
Oracle to lay off another 21,000 workers, citing AI as the reason. We all know they are doing this to pay bonuses to the new CFO, who is the only game in town willing to cook the books as has been done with NVIDIA, sad to see.
Micron deepens its ties with Anthropic through a new deal and collaboration on matters covering supply chain dynamics and enterprise adoption. Funny, we are touching on why Enterprise Software adoption is vital to the AI trade inside Offside Premium this week.
AbbVie seeks to expand its drug portfolio after announcing a $10.9 billion acquisition, the target? Apogee and its new immunology drug tackling inflammatory diseases. A fresh look in a weight loss obsessed healthcare sector.
China prepares the next generation to use AI in the most productive way possible, creating an even more productive labor force. The US? We’re teaching our youth to use AI for prediction-market betting and meme-making (sad.)
Movers & ES Levels
Super Micro Computer 📈 Gained 16% after announcing a new AI data center built for NVIDIA’s latest chip, Vera Rubin. My question here is how much depreciation will be applied to their older (now useless) data centers and chips?
Fervo Energy 📈 Riding higher by 4% on a new NVIDIA partnership, if you’ve read our AI trade coverage, then you know this is just the latest addition to the circular financing scheme. Fervo will now carry all the old NVIDIA chips that nobody else will buy.
Alphabet 📉 Had its worst day in over a year after another high-profile researcher chose to leave the company for a competitor, markets cite concerns around drunken sailor spending around AI without productivity gains to show for it.
SpaceX 📉 Posted a 16% decline yesterday after announcing a new bond offering, investors begin to realize the consequences of investing into an unprofitable business.
Now let’s get into some ES levels for today.
Yesterday, we held the 50-point range mentioned beautifully, and the only breakout was to the upside where we stopped at my $7,600 resistance given.
An immediate rejection sent us fast and hard below the $7,500 line in the sand, something I warned about yesterday as well.
Today’s session is about discovery, we are now in the lower half of a “P” distribution, marked by $7,500. A weekly close below that price could signal a bearish reversal and a continued downtrend.
Bulls want to recover $7,500 and close the day above $7,525 to $7,550. Bears want to keep pushing lower toward $7,350 and close there to catch their breath.
Ultimately, we may be looking at the same distribution pattern that took place in early 2026, only this time it looks to be a lot more aggressive with 200–300-point ranges compared to 50–80-point ranges back then.
I will relay you to this publication covering the Commitment of Traders report, and why today’s positioning may signal a continued downtrend for the index in the foreseeable future.
Portfolio
I have initiated the Offside Portfolio for paid members, but you will receive daily updates on my positions after I decide to buy or sell.
Like last week, when I alerted of my Alibaba and Microsoft buying. Later this week, the auction may be favorable to execute my weekly DCA into one of these names as well.
So keep notifications on, and consider joining us on the other side as I will post my deep dive research on these watchlist names:
Lululemon (LULU)
Uber (UBER)
Pagaya Technologies (PGY)
Cognizant (CTSH)
Nintendo (NTDOY)
Tractor Supply Co. (TSCO)
Here’s my current pitch deck on Lululemon for starters, get familiar with my thesis before I drop the entire deep dive in Offside Premium. ⬇
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