Back-to-back gap ups across the major indices for the second week running. This reveals the strength of the current tide — and it came with a slightly narrower range than the previous week in the S&P and Nasdaq, and a much more significant volatility compression in the Russell. VIX dropped below 16 on Thursday, a level not seen in four months. This more structural tailwind was accompanied by a 9% weekly drop in WTI and a cooling of the 10-year rate. In the tweetosphere, winds change rapidly — but I'm of the opinion that the 60-day truce will hold. For now.
Resiliency Test Passed
Other than Thursday — where the truce deal propelled the market into a single-direction lane — the other three sessions showed a solid capacity to absorb selling pressure in the first quarter of each session. On three separate occasions, the shock absorbers worked well and the bulls took it to the finish line. This is what someone who is long wants to see: pressure absorption and resilience. But it doesn't end there — you also want good catalysts to materialise in the tape.
Follow The Upgrades
And that is exactly what happened this week. Analyst calls on two major semiconductor names injected strong doses of euphoria — as if you really need any in this sector these days. Micron surged 20% on Tuesday, courtesy of a UBS price target upgrade, and ARM benefitted from a Mizuho upgrade on Thursday. If that wasn't enough, the AI-adjacent play delivered astonishing fireworks on Friday, with Dell skyrocketing more than 32% after reporting a very strong quarter driven by AI server demand.
Tired Legs
Among all the resilience, upgrades and rosy outlooks, I noticed some fatigue in the Philadelphia Semiconductor Index on Friday — it simply didn't have the legs to participate in the broad daily bounce seen across the indices. Worth keeping an eye on. That said, the SOX still finished the week up over 5%, essentially repeating the previous week's feat.
More Popcorn
Big week ahead for semis, with Broadcom reporting on Wednesday. Economic data every day except Thursday — I'll be focused on Job Openings on Tuesday, and Unemployment and Payrolls to close out the week.