Morning Digest 06/26

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Good morning partner,

Few things to cover this morning:

Yesterday’s Session

Micron’s rally helped some of the tape in the early hours of trading, but it wasn’t enough to carry the market for the rest of the day through.

What we’re seeing here is effectively an entire week of rotational activity, out of the big tech and AI-related names and into more of the real economy defensives and cyclicals.

Hard to tell where investors want to put their capital next, but based on the cumulative weekly session, it definitely doesn’t look like they are too excited about chasing the AI rally anymore.

Right now, Apple of all things, is trading in a correction.
When a darling like this one starts to lose steam, it’s time to become more risk aware.

Let’s take a look at the day’s leaders and laggers:

Industrials, Healthcare, Materials.

If you’ve been following these digests every morning, then you know this is more of the same from earlier in the week.

A defensive rotation into areas that have very little (if anything) to do with AI.
In fact, I believe the rallies in industrials are now more aligned with the housing recovery rather than data center euphoria, but that’s for another post.

Cyclicals, Comms, and Defensives lagged, which is worrying. After we got a hot PCE and GDP print yesterday, you would think consumer cyclicals would have gone on a tear.

Instead, our very own Domino’s Pizza, and Uber went into the red. Perhaps this is a chance to keep adding into the bottom section of the K-shaped economy.

Without getting into specifics though, this rotation isn’t indicative of a pending crash, but rather a slow deflation of the bubble as money simply rotates rather than leaves the market altogether.

There’s a specific event in the IRS code that will start to cut reported EPS in half, so maybe the market is looking to price this in ahead of the surprise, we covered the entire theme for you here ⬇

Click here to access the report.

Snapping Jaws

Israel has reportedly resumed attacks on Lebanon last night, a direct violation of the MOU that hasn’t been signed yet between the US and Iran **

What is good for semiconductors is good for hyperscalers, and vice versa.

At least, that was the mantra up until June 2026. The divergence between the “check writers” and the “check receivers” has created a new theme to consider in the markets today.

Has the relationship been broken completely, or will this be a mean-reverting event to benefit from?

If it has changed, then what’s making markets abandon semiconductors and stick to hyperscalers instead?

Answering this will be the target of my next post, so stay tuned.

News

Movers & ES Levels

Now let’s get into some ES levels for today.

Yesterday’s auction was tricky to say the least. We only pierced $7,400 once through the day and then chose to ram through it in the overnight futures session.

We also touched $7,500 again only to see the rallies get sold, a behavior I pointed out to you yesterday.

For today, this new information tells me further selling pressure could come, especially because markets chose to defend $7,400 during the day to potentially trap buyers, and then wipe them out overnight.

As the cash session opens, I would expect $7,400 becomes resistance as these trapped buyers look to get out at breakeven. We are also on our way to close the week in the bottom half of the “P” volume profile.

Therefore, a reversal is more likely.

Bulls want to close above $7,425 here but they only clear the downtrend risk if they manage to close above $7,500.

Bears are smiling this morning, and they want to close the week below $7,500 at all costs, and would look to have another pierce at $7,350 through the day and claim $7,300 to invalidate an inverse head and shoulders for bulls.

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.

Click here to check it out.

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.

Definitely starting to feel the chop here, so for those following this portfolio along, I will dedicate a post to these positions sometime this weekend / early next week.

I’ll cover correlation and volatility measures, outlook on prices to add or cut, option hedging strategies, and even discuss some long/short equity pair trades to make some short-term gains and cushion these small drawdowns.

All of these features will be limited for free readers, to get the full content, I will see you inside Offside Premium.

Markets are getting choppy, make sure you have me on your corner.

Keep notifications on, and consider joining us on the other side as I will post my deep dive research on these watchlist names:

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. ⬇