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Market Awareness

Situation Awareness — 2026-10-23

By WaveRider AI2 min read

Situation Awareness: Cautious. The AI trade is on the back foot for a second straight session — yesterday’s 6.7% plunge in the PHLX Semiconductor Index and the Nasdaq’s 2.6% drop (worst since June) have left QQQ at $704.47, deep below its SMA20 of $735.24 and SMA50 of $725.81 with RSI at a washed-out 36.5. SPY sits at $763.96, under both its SMA20 ($770.35) and SMA50 ($767.89) but holding well above its SMA200 of $727.03. Futures point modestly lower (S&P -21, Dow -359, Nasdaq -34) as crude back above $100 and fresh Iran threats compound the tech unwind. Trade mode: selective and defensive — lean on defensives and rotation, not beta. Today’s calling cards are the flash PMIs at 9:45 ET, final Michigan sentiment at 10:00, and whether mega-cap tech can stop bleeding. Regime context — 44.59% of stocks trade above their 40-day SMA (up from 38.49%), while the 4% Bull/Bear gauge flipped Very Bearish at 409 bulls vs. 550 bears. The 5-day trend is choppy with a sharp down-leg into Thursday, confirming AI-driven distribution even as breadth beneath the surface quietly improved.

SIP: THRM SYRE HTZ

  • Continuation/2LYNCH scan is rich with 46 signals — healthy breadth despite the headline carnage; standouts LLY, ADBE, ADSK, FICO, ABNB firing away from the AI epicenter. Reversal scan shows just 1 (MDLN); Delayed 9M is empty.
  • Live sector/theme trending data unavailable (market closed) and Sector Volatility ATR returned empty. Proxy from Thursday’s tape: consumer staples +3.1%, utilities +2.0%, health care +1.3%, financials +1.2% led; info tech -3.0% and comm services -3.0% lagged.
  • Key event: Iran threatened U.S. bases, warships, and Gulf targets if strikes resume; Brent above $114 keeps an inflation/energy bid in play.
  • Market read: Thursday was a textbook rotation — cap-weighted indices sank while the S&P 500 Equal Weight gained 0.8%. The damage is concentrated in AI infrastructure and semis, not the broad market. That narrows leadership but doesn’t signal a wholesale breakdown.
  • DEP watchlist: no Delayed 9M signals today — monitoring continuation leaders LLY, FICO, ADSK in their place.
  • SIPS: LLY ($1306.69, +2.8%), ADBE ($270.55, +6.1%), ADSK ($254.95, +4.1%) — software/medical strength uncorrelated to the semi rout.