Range BREAKDOWN With Oil +35% & Jobs -92k
The S&P closed below the bottom end of the balance range last week!
Price is down 0.95% from Monday’s open, and we finally have the long awaited break. The icing on the cake is that Friday did ultimately give us a gap fill reversal confirming a change in tone from Monday and Tuesday’s gap down.
Should price develop into a more meaningful downtrend, the next target lower is 653 on the higher timeframes. More on this later.
A Record Breaking Oil Move – $90/BBL
Crude futures made history last week with a +35.5% gain over 5 trading days. This is the largest weekly since WTI began trading in 1983.
WTI closed over $90, Brent near $93 and XLE is now up 23.92% YTD, more than double the the next best sector (XLP +10.41%).
As discussed last week, the “closure” of the Strait of Hormuz is effectively constraining about 20% of the global oil supply. Our “Situation B” is playing out forcing a repricing of input costs across many sectors.
Two must watch levels have developed as of last weeks news flow.
The first is the “Escort Level” sitting ~$72. This is the price level that futures fell to when Trump commented that the US Navy would help escort ships across the Strait.
The second is “China Cooperation Level” ~$82. This is the price level that futures fell from as China urged the Strait to remain open allowing stability in their energy prices.
China is the primary importer of oil that needs to travel through the Strait. Impacts to China’s energy market of course will translate to impacts in US imports of everything from consumer electronics to apparel.
If price can get back below the two references noted above, that would mark improving conditions from this energy shock.
AI Still Works, But Has A $500B Problem
Broadcom reminded markets that AI infrastructure demand is still real, with a double beat and raise, noting that they’ve got $100B in AI chip revenue forecast for 2026.
Marvell followed suit with a strong message beating analysts expectations and projecting revenue at $11B for FY2027 (30% growth).
These may not be Nvidia numbers, but it reinforces that the AI trade isn’t dead.
What is dead is the Oracle / OpenAI datacenter expansion at Stargate in Abilene, Texas. Bloomberg reported the expansion has ended the additional build out of 800-megawatts.
Oracle’s stock erased the entire day’s gain falling 4.73% on the announcement.
The drama seems to be in the fall out with Nvidia paying Crusoe (the site developer) a $150M deposit to keep AMD from filling the facility, and trying to work with Meta as a replacement tenant.
The entire Stargate project isn’t derailed, and its still worth noting the original 4.5GW build is on track. More so a hit to confidence, rather than game over.
Pair this with the Anthropic Pentagon ban from earlier this week, and we can start to see that the AI buildout is messier and perhaps more fragile than originally thought.
The theme was apparently priced to perfection (think NVDA earnings vs market response), and we’re not seeing perfection in execution.
The Fed’s Nightmare
February payrolls: -92,000. Consensus was +55,000. Unemployment ticked to 4.4%. GDPNow’s Q1 estimate fell from 3.0% to 2.1%.
Pair these numbers with $90 oil ($100 as of Sunday open).
Cut rates and you pour fuel on an inflation fire (though the Fed is suggesting oil is not an input). Hold and you accelerate a labor market already showing cracks.
Lloyd Blankfein (prior CEO Goldman Sachs) used the term no one on Wall St. wants to hear last week…
…stagflation.
Inflation numbers this week alongside hot much longer the Strait stays closed hold the key as to where expectations go next.
As it currently stands, the Fed’s two mandates are at odds, and we know they’ll side with a recession to snuff out inflation rather than jump to save the labor market.
Fun times.
Trade Brigade Live Squawk
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Check out this recording for a taste of what each morning session is like: 07/09 Live Squawk
Broad Market Analysis
SPY – Weekly
Last week’s candle is a red-bodied inverted hammer that closed in the lower third of the weekly range, beneath the 20 SMA, and beneath the bottom of the multi-month balance range. That is the first weekly close below that range. Structure and location are now both bearish.
The broken support near 675 to 676 becomes resistance. The next structural target is the equal lows at 653. A look-below-and-fail that reclaims 676 with conviction returns the read to neutral, but at face value this is a weekly trend reversal.
SPY – Daily
Price is in a confirmed daily downtrend with lower highs and lower lows beneath the 20 and 50 SMAs. Friday is the most telling bar of the week. A perfect gap fill reversal and red close with a prominent upper wick, meaning buyers had an opportunity to push back through the range and failed.
664.25 is the first downside target, followed by a date with the daily 200 SMA, which has not been tested since the April tariff tantrum. Any acceptance back above 676.25 flips the stance to neutral immediately. From there we’d consider look below and fail triggered on acceptance over 680.25.
Two separate Fibonacci sequences on this chart converge on 676.25 and 680.25 as the gatekeepers to keep the bear case in play.
SPY – Hourly
The hourly is back in a downtrend. Friday’s close sits beneath the entire anchored VWAP stack, and those VWAPs are set to converge near 676.25 as the week opens, meaning early rallies run directly into overhead supply. The setup is a lower high print near 680.25, rejection back below 676.25, then continuation toward the equal lows and eventually 664.25.
Any acceptance above 680.25 pivots the near-term path toward mean reversion into the moving average stack. Until then, sellers have the easier trade.
Market Internals – NYSE
Wednesday posted acceptable volume inflows alongside the rally. Thursday and Friday reversed that entirely. Cumulative volume shifted to outflows, the advance/decline line spent the majority of the week in trend-lower territory, and the cumulative tick built small but consistent negative closes into the weekend. No bullish tick divergence at the lows.
The internals are confirming the price structure rather than suggesting another look below and fail. This breakdown is starting to look trustworthy, but lets keep going through more data points.
Market Profile
Early in the week, value actually closed higher on multiple sessions despite the gap downs. That was a legitimate reason to stay open-minded and not overcommit short.
Thursday and Friday erased that completely. Value printed lower both sessions, and Friday’s value area closed beneath the prior day’s low of day entirely.
Semiconductors (SMH)
Breaking below the 50 SMA with key components under declining moving averages. Think about memory more recently… SNDK, MU, WDC, STX all moving lower. This has been the market’s primary support and it is starting to fail more meaningfully.
Market Breadth
The total breadth indicator printed its first sub-50% reading on stocks above their 50D SMA in the S&P 500. New highs versus new lows are pinned to the zero line, and drifting negative. Both of these conditions are deteriorating.
The equal-weight S&P was producing new highs through late November and into December, which was a key reason the cap weighted index held up inside its balance range for so long. That tailwind has reversed. Equal weight breadth is now in poor shape. This removes one of the primary structural supports that kept the S&P from breaking lower months ago.
The equal-weight NASDAQ is sitting at the midpoint of its range. A failure below 99.75 would be a significant development for the broader breadth picture.
Volatility Futures Term Structure
By Wednesday’s close, the curve had briefly moved back into a slight contango of around 10 cents. By Friday’s close, backwardation had returned aggressively, printing several dollars of inversion.
When and if that curve comes back through zero and returns to contango, that will likely be a more reliable bottoming signal than any single price hammer on the S&P chart.
If you want the full take, including all of the nuance of breadth, risk appetite and much, much more, check out the weekend episode here:
Economic & Earnings Calendar
Top Watch: A hot inflation print from CPI on Wednesday will spook the market after the abysmal labor report last week.
Top watches: ORCL, AVAV, ADBE, RBRK, S
Swing Stock Scans
Let me start by saying with the official range low break in the S&P 500, swing trading long only will become increasingly difficult. Scans will become few and far between unless we have a massive failure pattern on the weekly.
ATO – Daily
Utilities are at least on the defensive side of the ledger. First flag forming up and out of the prior range high. Pullbacks remain valid over 180. ATH above.
HCA – Daily
REIT in the healthcare space. So still technically defensive. Cup with handle forming over 20 SMA. ATH above this structure. Not interested if price starts spending more time under 20 SMA / range low at 525.00.
XEL – Daily
Back to utilities. Same idea as ATO.