Party on Wall St.! Palantir, Micron, SK Hynix Invited! (SpaceX, AMD Not…)
Are ‘Happy Days’ here again? Let’s check the stats, charts and the action on Wall Street. Also, guess who’s getting beat up along the way….
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Houston, we have liftoff! Oh, happy day. Or should I say… “Happy Days.” No, not Richie-and-the-Fonz-type “Happy Days.” More like multiple upward days for U.S. financial markets ahead of and in response to spreading rumors of a peace deal, or at least a deal that stops the fighting temporarily between the U.S. and Iran. Funny how much a change in price can change sentiment. You see it in the financial media.
You feel it yourself. After a number of weeks of playing defense with my portfolios, suddenly, at least the larger ones are toying with all-time highs again. Feels like it’s been a while. Really wasn’t so long. Our patience and our attention spans really are not what they used to be. Maybe we won’t have to read daily about Michael Burry’s short positions. Maybe. He did time this summer swoon quite well. Then again, the rest of us timed the multi-year bull market rather well, didn’t we?
Thank Scott Bessent
The latest portion of this rally, the surge that you experienced on Tuesday, came via the Treasury Secretary of the United States. Equity index futures were trading higher on Tuesday morning, but not exceedingly so. The rally that had started last Thursday felt a little tired. U.S. Pres. Donald Trump had been bending over backwards in his attempts to lessen the impacts of this war on the Iranian populace and the Iranian military, even in opposition to some of that nation’s civilian leaders, wanted none of it.
Enter Scott Bessent, who has become one of this president’s most competent and probably most trusted cabinet members. Bessent appeared on CNBC on Tuesday morning. He said, “We are in talks with the Iranians. There is a chance we may have a deal today or tomorrow to open the strait and move toward a more normalized position in this conflict.”
Bessent went on, and the keyword-reading algorithms that control the price-discovery process in 2026 were clearly listening. By the way, Bessent’s “today or tomorrow” translates to yesterday or today if you are reading this note as intended, early on Wednesday morning.
Bessent added that any such deal would restore “freedom of movement” in reference to the Strait of Hormuz. Bessent wasn’t done. He obviously knows that the neighborhood kids that used to work at the NYSE trading floor and at a number of trading desks in New York City have been replaced with robots.
Bessent then said, “It’s not just energy. It’s fertilizer, it’s refined products, it is the various industrial gasses. We could see a big relief trade as those prices go down.”
That was all markets, and keyword readers, needed to hear. Throw in a home run of an earnings report issued by Palantir Technologies (PLTR) and some robust forward-looking guidance and the market was off to the races. Crude oil sold off hard. U.S. Treasury debt securities rallied. Yeeha!
Rock Around The Clock
One, two, three o’clock, four o’clock, rock
Five, six, seven o’clock, eight o’clock, rock
Nine, ten, eleven o’clock, twelve o’clock, rock
We’re gonna rock around the clock tonight
Put your glad rags on and join me, hon’
We’ll have some fun when the clock strikes one
We’re gonna rock around the clock tonight
We’re gonna rock, rock, rock, ’til broad daylight
We’re gonna rock, gonna rock, around the clock toni
– Myers, Freedman (Bill Haley & His Comets), 1949
Slow Down the Party?
Before we get too carried away, we do need to note that both Advanced Micro Devices (AMD), which is a Sarge name, and SpaceX (SPCX) are getting roughed up overnight.
Marketplace
Tuesday turned into an all-day party for the equity bulls. The S&P 500 gained 1.79% for the regular session, ending at an all-time record high close. The Nasdaq Composite added 2.59% for the day to land not at a record high, but at its highest level in about seven weeks. The tech-heavier Nasdaq 100 had an even better day, tacking on 3.32%.
Looking into the weeds, but not too far off the beaten path, we see that the small caps performed with the broader marketplace. The Dow Transports ran hot (+2.58%) and the Philadelphia Semiconductor Index (+6.55%) ran even hotter. Arm Holdings (ARM) and Intel (INTC) led the semis on Tuesday.
Breadth
Market breadth was overwhelmingly positive on Tuesday. Yes, again. Seven of the 11 S&P sector SPDR exchange-traded funds ended the day in the green. Tech (XLK) easily led the winners, gaining 4.98%. Growth and cyclical sector took the top five slots on the daily performance tables, which is exactly how traders posture themselves as markets (and economies) rev up. The utilities (XLU) led the losers as defensive type sectors, took three of the four slots at the bottom of those daily tables and four slots in the bottom six. That too, is how traders position themselves as they get more bullish than they have been.
Winners beat losers by better than two to one at the NYSE on Tuesday and by a rough three to one at the Nasdaq. Advancing volume took a commanding share of composite trade for a second straight trading session. Advancing trades took a whopping 81.7% share of composite Nasdaq-listed and a 68.6% share of composite NYSE-listed volume. The only negative take-away I have from Tuesday is this. While aggregate NYSE-listed trade was up 13.6% on a day over day basis and activity was up across the membership of the S&P 500, trade was down 12.6% day over day across Nasdaq-listings.
Charting the ‘Ascending Triangle’
Here we see the technical breakout across the S&P 500 from our “ascending triangle” pattern of bullish continuation. I do love when a plan works to perfection.
This breakout may stumble, let’s say, if Iran starts shooting at people again. That said, the S&P 500 breakout, which will still probably have to be tested, is currently supported by both its reading for Relative Strength as well as by the posture of all three components of its daily moving average convergence divergence.
Readers will also see that the Triangle that we drew up for you on this chart of the Nasdaq Composite did indeed produce the non-directional volatility that we had promised in this column. Here now, we also have a breakout to the upside supported by both Relative Strength and the daily moving average convergence divergence.
On the positive side, despite trading volume that has tailed off over the past two days, trading volume over the four-day rally has been significantly more active than it had been during most of the selloff. This is likely due to the retaking of the 21-day exponential moving average and 50-day simple moving average for this index.
That has developed into re-engagement with both swing traders and professional managers. It will be very interesting this morning to see if weakness in AMD and SPCX forces a broader weakness across growth / tech or if this visible strength across tech rescues AMD and SPCX from their overnight selloff. Even down 8.5% through the zero-dark hours on Wednesday morning, AMD remains up 101% year to date, so that stock is still ripe for profit-taking.
Heads Up: Storage Stocks Rock
For those who thought that maybe the memory/storage trade was dead, Digitimes is reporting that Micron Technologies (MU) and its South Korean counterparts Samsung and SK Hynix (SKHY) have already completely sold out of their projected 2027 (not 2026) supplies of DRAM and HBM capacity with no additional capacity planned at his time.
Clients are reportedly being allocated just 60% to 70% of the volumes they initially ordered. This report implies that chip design industry insiders are pointing out that 2027 could wind up as the most severe year yet of the current memory shortage.
Economics (All Times Eastern)
07:00 – MBA 30 Year Mortgage Rate (Weekly): Last 6.76%.
07:00 – MBA Mortgage Applications (Weekly): Last -6.4% w/w.
08:15 – ADP Employment Report (July): Expecting 73K, Last 98K.
09:45 – S&P Global Services PMI (Dec-F): Flashed 53.6.
10:00 – ISM Manufacturing Index (Dec): Expecting 54.4, Last 54.0.
10:30 – Oil Inventories (Weekly): Last -7.167M.
10:30 – Gasoline Stocks (Weekly): Last +7K.
The Fed (All Times Eastern)
4:05 p.m. – Speaker: Reserve Board Gov. Lisa Cook.
Today’s Earnings Highlights (Consensus EPS Expectations)
Before the Open: CVS (1.85), LLY (6.58), UBER (.81), DIS (1.85)
After the Close: ALB (3.24), CACI (7.23), MCK (9.54), SNDK (34.52), WDC (3.30)
At the time of publication, Guilfoyle was long SNDK, PLTR, AMD, INTC, MU equity.
