Wednesday delivered an important stabilization after Tuesday’s tough start to September. The S&P 500 gained 0.46% to 7666.60, moved back above the 7620–7638 pivot zone, and returned to the upper trading range.
That prevented yesterday’s potential bull-trap reversal from receiving the sustained downside follow-through required for confirmation.
The market is not fully repaired, however. Defending 7620 prevented follow through. At least for today. Reclaiming 7700 would begin confirming the bull case.
Executive Read
S&P 500: 7666.60: +0.46%
Nasdaq 100: 29143.33: +0.23%
Dow: 53061.95: +0.56%
Russell 2000: 2953.17: +1.13%
Nasdaq Composite: 26217.83: +0.45%
10-year Treasury: 4.78%
WTI: $91.01: +0.9%
Brent: $95.63: +1.0%
September Fed hike probability: 70.2%
Bias: Wednesday stopped the immediate technical deterioration, but it did not provide an all-clear. S&P 500 7620 remains the key defensive level, while 7700 is now the first meaningful upside confirmation.
The Price Action
The most important development Wednesday was not the size of the rebound. It was the absence of bearish follow-through.
Tuesday put the S&P 500 directly into the 7620–7638 pivot zone and created another potential bull trap above the prior summer trading range. Confirmation required sellers to maintain control, push the index decisively beneath the June high near 7620, and generate sustained downside follow-through.
Instead, over-eager buyers stepped in. (sigh)
The S&P 500 moved back into the upper trading range, small caps outperformed, market breadth improved and semiconductors stabilized. That keeps the August breakout alive and preserves the technical foundation behind the path toward 8003.
Today’s rebound should not be overstated. Nvidia alone contributed more than half of the S&P 500’s advance, while cybersecurity remained weak and new lows remained elevated.
Wednesday improved the setup, but defending support and restoring upside momentum are not the same thing. 7620 prevented confirmation of the bear case. Reclaiming 7700 would begin confirming the bull case. Until then, the market remains in a stabilization phase rather than a renewed breakout.
Market Snapshot
Wednesday’s rebound was healthier internally than Tuesday’s selloff.
NYSE advancers led decliners 1.78-to-1, while Nasdaq advancers led 1.85-to-1. The Russell 2000 gained 1.13%, outperforming the large-cap indexes, while semiconductors recovered following Tuesday’s broad decline.
The improvement was not uniform. Nvidia supplied more than half of the S&P 500’s gain, and new lows continued to exceed new highs on both major exchanges.
That makes Wednesday constructive, but not yet the kind of broad-based recovery that would justify declaring the September pullback finished.
Key Takeaways
1) The bull-trap reversal did not confirm
The S&P 500 failed to produce the sustained downside follow-through required to validate Tuesday’s bearish setup.
Price reclaimed the 7620–7638 pivot zone and returned to the upper trading range.
That keeps the August breakout alive.
2) 7700 becomes the next confirmation level
Holding 7620 was the first requirement.
Now the market needs to demonstrate that buyers can do more than simply defend support.
A reclaim of 7700, followed by sustained trade above it, would begin shifting the setup from stabilization toward actual technical repair.
Until that occurs, Wednesday should still be viewed as a rebound within the September pullback rather than a fully restored breakout.
3) Small caps improved the quality of the move
The Russell 2000 gained 1.13%, substantially outperforming the Nasdaq 100.
If it hadn’t bounced back from its most extreme oversold reading of the year, it would have been a negative tell, but instead it rallied back.
That is encouraging because a durable market advance is healthier when participation extends beyond a handful of mega-cap stocks.
Reclaiming 3000 would make the small-cap message considerably stronger.
4) Oil moved into the danger zone
Brent closed at $95.63 and WTI at $91.01.
The $95 Brent warning level is no longer theoretical. Crude has entered the $95–$100 zone, where the inflation, Treasury-yield and Fed-policy implications become increasingly difficult for equities to ignore.
5) Labor is weakening while inflation risk remains elevated
ADP reported only 38000 private jobs added in August, reinforcing the picture of companies reluctant to hire even though layoffs remain relatively restrained.
The Fed is therefore facing an increasingly uncomfortable combination:
slower hiring + elevated oil + stubborn inflation risk.
That makes Friday’s employment report particularly important.
AI and Technology
Wednesday may have provided one of the clearest snapshots yet of the current AI cycle:
Demand remains exceptionally strong. The market is becoming ruthless about expectations and economics.
Dell surged after disclosing a $95 billion AI-server backlog and raising full-year revenue guidance to $192 billion. Snowflake jumped more than 20% after hours as product revenue grew 37% and management sharply increased its annual outlook.
Those are strong signals that AI spending remains healthy both at the infrastructure layer and farther up the stack into enterprise data and software.
But the stock reactions elsewhere were equally instructive.
Broadcom delivered enormous AI semiconductor growth and still fell after hours because forward revenue guidance missed an extraordinarily high bar. Palo Alto delivered strong results and sold off. Credo beat estimates and collapsed as investors focused on weaker forward expectations.
This is becoming a more discriminating environment for stock selection, where strong AI fundamentals alone are no longer enough.
The market increasingly cares about revenue acceleration, margins, free cash flow, profitability, forward expectations and ultimately return on invested capital.
Another opportunity layer is also becoming more important: power and cooling infrastructure. Larger and denser AI clusters require transformers, power-management systems, advanced cooling, grid equipment and other infrastructure that determines how quickly compute capacity can actually be deployed.
The AI opportunity continues spreading well beyond the GPU.
Important Stock Moves
Dell Technologies (DELL): +15.8%. Dell surged after raising full-year revenue guidance to $192 billion and disclosing a $95 billion AI-server backlog. The reaction provided one of the strongest confirmations yet that hyperscaler AI capex is translating into physical server and data-center deployment.
Nvidia (NVDA): +3.2%. Nvidia rebounded as Dell’s results reinforced confidence in AI infrastructure demand. The stock also supplied more than half of the S&P 500’s daily gain, making the rebound constructive but still unusually dependent on one major leader.
Credo Technology (CRDO): -21%. Credo collapsed despite beating quarterly estimates as investors focused on weaker optical expectations and concerns about slowing cable growth. An intact AI thesis is no protection when forward expectations begin softening.
Palo Alto Networks (PANW): -9.3%. Strong results and guidance were not enough. The price reaction reinforces the current earnings rule: good fundamentals without positive price confirmation deserve caution.
CrowdStrike (CRWD): -5.4%. CrowdStrike surrendered part of its recent post-earnings advance as investors reduced exposure to expensive software stocks.
Snowflake (SNOW): -4.3% regular session; +20% after hours. Product revenue grew 37% and fiscal-year guidance increased sharply. The reaction provides important evidence that enterprise AI spending is increasingly moving from infrastructure toward data management and applications.
Broadcom (AVGO): -0.6% regular session; -3.5% after hours. AI semiconductor growth remained exceptional, but fourth-quarter revenue guidance fell slightly short of consensus. The reaction shows just how demanding expectations have become for premium AI infrastructure stocks.
Hewlett Packard Enterprise (HPE): +1.9% regular session; lower after hours. Revenue increased 34%, networking revenue surged and management raised longer-term forecasts, but investors focused on supply constraints and the stock’s already substantial advance.
Sector Leadership
Materials, regional banks, airlines and semiconductors performed well, while real estate and software remained weaker.
Small-cap and regional-bank strength improved the internal character of the session, suggesting investors were willing to reengage with more economically sensitive groups.
Technology itself remains highly selective.
The AI trade increasingly rewards businesses demonstrating both strong fundamentals and positive price confirmation rather than lifting the entire sector together.
Rates / Fed / Volatility
The 10-year Treasury eased to 4.78%, ending a five-session run of higher yields and giving equities some breathing room.
That stabilization helped Wednesday, but the underlying macro problem remains.
Markets continue pricing a 70.2% probability of a September Fed hike, while ADP showed only 38000 private jobs added during August.
Friday’s employment report therefore carries unusually asymmetric implications.
A softer report could reduce Treasury yields and Fed-hike expectations, which would help equities.
But a genuinely poor report could shift the narrative from slower hiring toward broader economic weakness.
Conversely, a strong report would reduce recession concerns but could send yields and hike expectations higher again.
Commodities and Dollar
Brent closed at $95.63, while WTI finished at $91.01.
This deserves greater attention than another small daily percentage change.
$95 Brent is no longer a warning level. It has been reached.
Crude has entered the $95–$100 zone where the inflationary and policy consequences become more serious. If Brent remains here into Friday’s employment report, the Fed will be weighing softer hiring against an energy shock capable of keeping inflation pressure elevated.
Above $100, oil would become an increasingly important broad-market risk catalyst unless the move reverses quickly.
The relationship worth watching remains simple:
oil + Treasury yields.
If both rise together, financial conditions become less forgiving.
If both retreat, the equity setup improves quickly.
Crypto
Crypto remains secondary to the broader macro story.
Bitcoin continues trading below its recent $80000 breakout attempt while higher oil, elevated yields and geopolitical uncertainty restrain broader speculative risk appetite.
For now, there is no need to force a separate crypto narrative into the equity outlook.
Technical Picture
S&P 500
Close: 7666.60
Primary support: 7620
Secondary support: 7550–7500
First resistance: 7685–7700
Larger resistance: 7758–7800
Upside objective if repaired: 7857
Larger objective: 8003
Wednesday’s defense of 7620 was important because the market refused to provide the sustained downside follow-through required to confirm Tuesday’s potential bull trap.
The breakout structure therefore remains intact.
But defending support and restoring an uptrend are two different things.
The next confirmation is 7700.
A sustained reclaim of that level would show that buyers are beginning to regain control rather than merely defending the old breakout zone.
Until then, this remains a rebound inside the September pullback.
The bearish setup would return if price falls back beneath 7620 and, unlike Tuesday, sellers are able to maintain control and produce sustained follow-through lower.
Nasdaq 100 / QQQ
Nasdaq 100 close: 29143.33
Immediate support: 29000
Secondary support: 28750–28800
Larger support: 28500
First resistance: 29400–29500
Major resistance: 30000
Nvidia helped keep 29000 intact Wednesday.
Broadcom’s negative after-hours reaction complicates Thursday’s setup and makes renewed semiconductor follow-through worth watching carefully.
Russell 2000 / IWM
Russell 2000 close: 2953.17
Immediate support: 2900–2925
First resistance: 2975–3000
Larger resistance: 3050
Wednesday’s 1.13% rebound was encouraging.
A move through 3000 would provide much stronger evidence that broader risk appetite is recovering.
Quality of the Move
Wednesday was clearly better than Tuesday.
Breadth improved, small caps outperformed, semiconductors stabilized, regional banks strengthened and the S&P 500 defended its August breakout zone.
Most importantly, sellers failed to produce the follow-through necessary to confirm the potential bull trap.
But there is an important qualification.
Nvidia alone contributed more than half of the S&P 500’s gain. New lows also remained elevated, cybersecurity weakened and the Nasdaq 100 advanced only 0.23%.
So Wednesday deserves respect, but it is not an all-clear.
The market stopped deteriorating.
Now buyers need to prove they can take control.
Daily Scenarios
Bull Case: The S&P 500 continues defending 7620, reclaims 7700–7750, semiconductors and small caps strengthen, Brent retreats below $95, and Friday’s employment report reduces Fed-hike pressure without triggering serious growth concerns. (30% probability)
Base Case: The market consolidates through early September as powerful AI fundamentals offset higher oil, elevated yields and softer labor data, producing continued rotation and choppy price action rather than a decisive trend break. (45% probability)
Bear Case: Brent remains above $95 and pushes toward $100 while Treasury yields stay elevated, eventually causing the S&P 500 to lose 7620 and finally produce the sustained downside follow-through needed to confirm the failed-breakout setup. (25% probability)
How Probabilities Improve
The bullish case improves with the S&P 500 reclaiming 7700, Nasdaq 100 clearing 29500, Russell 2000 moving above 3000, improving new-high/new-low participation and continued semiconductor strength.
Macro confirmation would come from Brent falling back below $95 and the 10-year Treasury moving comfortably beneath 4.75%.
Strong earnings gaps in Dell and Snowflake holding would provide additional confirmation that investors remain willing to reward genuine fundamental acceleration.
How Probabilities Weaken
The bearish case strengthens if the S&P 500 returns below 7620 and this time produces sustained downside follow-through.
Additional warnings would include Nasdaq 100 below 29000, Russell 2000 below 2900, Brent moving toward or through $100, renewed Treasury-yield pressure, deterioration in breadth and strong earnings gaps beginning to fail broadly.
Portfolio Posture
The market was given an opportunity to confirm Tuesday’s bearish reversal and refused to do so. That deserves respect.
Nevertheless, there wasn’t much to do with today’s relief bounce other than admire how everyone sets their buy orders just below a prior low.
At the same time, Brent is above $95, Treasury yields remain elevated, employment momentum is weakening and Fed policy uncertainty is increasing.
The preferred posture remains selective rather than broadly aggressive.
Continue holding leaders behaving properly, maintain buying power, favor stocks where both fundamentals and price reaction confirm, and avoid chasing extended earnings gaps before they have had an opportunity to consolidate.
Dell and Snowflake currently pass the fundamental-plus-price-reaction test.
Broadcom, HPE, Palo Alto and Credo require more evidence.
Potential Opportunities
SPY: The breakout retest remains intact. Setup: successful throwback with failed bearish confirmation. Confirmation: sustained reclaim of 7700. Invalidation: break below 7620 followed by sustained downside follow-through.
IWM: Small-cap participation is improving. Setup: rotation and potential breakout repair. Confirmation: Russell 2000 clears 3000 with improving breadth. Invalidation: break below 2900.
SMH: Semiconductors stabilized following Tuesday’s broad decline. Setup: potential shakeout recovery. Confirmation: continued relative strength and Nasdaq 100 reclaiming 29500. Invalidation: renewed semiconductor breakdown.
DELL: One of the strongest AI infrastructure confirmations of the quarter. Setup: earnings-gap momentum. Confirmation: the gap holds and price begins forming a constructive continuation pattern. Invalidation: meaningful earnings-gap failure.
SNOW: AI monetization is expanding farther into enterprise software and data. Setup: earnings-gap breakout. Confirmation: the 20% gap holds through the first controlled pullback. Invalidation: full gap failure.
AVGO: AI demand remains extraordinary but price reaction disappointed. Setup: post-earnings watch rather than immediate entry. Confirmation: selling pressure fades and price reclaims the earnings breakdown. Invalidation: continued weakness despite strong underlying AI growth.
AI Power & Cooling: Data-center expansion is increasing demand for transformers, power-management systems, grid equipment and advanced cooling. Setup: emerging second-order AI infrastructure leadership. Confirmation: sustained earnings acceleration and relative strength among suppliers exposed to increasing data-center power density. Invalidation: weakening hyperscaler capex or evidence that infrastructure capacity is being built faster than demand.
A Trend That Stinks, Literally
The fertilizer sector deserves our attention because several forces are beginning to line up at the same time. The conflict surrounding Iran and the Strait of Hormuz is disrupting fertilizer exports and natural-gas supplies, tightening an already concentrated global market. Because natural gas is the primary feedstock used to manufacture nitrogen fertilizer, rising international gas prices are increasing costs for overseas producers while strengthening the competitive position of North American companies with access to cheaper domestic gas.
Agricultural economics are also becoming more supportive. Higher corn and other crop prices improve farmers’ ability to absorb rising input costs and give them a greater incentive to protect yields through normal fertilizer application. This creates a potentially favorable combination for producers: constrained global supply, firmer selling prices, resilient demand, and unusually attractive margins for the lowest-cost operators. CF Industries offers the most direct exposure to the nitrogen and natural-gas advantage, while Mosaic and Nutrien provide broader exposure to phosphate, potash, and tightening global fertilizer supplies.
Just as importantly, the stocks are beginning to confirm the improving fundamental story through relative strength. CF has pushed to new highs, while Mosaic and Nutrien are attracting stronger buying interest as capital rotates toward commodity and agriculture-related companies. We should not chase extended moves, particularly because progress toward reopening Gulf shipping could quickly remove some of the scarcity premium. But when a neglected sector begins outperforming while its underlying economics are improving, it belongs on the opportunity board.
Pullbacks, consolidations, and constructive breakouts in CF, MOS, NTR, IPI, and the broader MOO agriculture ETF are now worth watching closely.
Next Key Events
Thursday: Weekly jobless claims and ISM Services.
The services report deserves particular attention because another elevated prices-paid reading could reinforce the Fed-hike case.
Thursday will also provide the regular-session reactions to SNOW, HPE and AVGO, giving investors another useful test of how aggressively the market is distinguishing among AI winners and losers.
Friday: August payrolls, unemployment and wage growth.
After ADP’s 38000 reading, the risks increasingly lean toward another soft hiring report.
Wage growth may matter almost as much as payroll growth because the Fed is balancing deteriorating hiring against persistent inflation pressure.
The largest unscheduled catalyst remains Iran, the Strait of Hormuz and crude oil.
Need To Know
S&P 500: 7666.60
Primary support: 7620
First meaningful repair: 7700
Bull-trap reversal: not confirmed
Russell 2000: +1.13%
Nvidia: +3.2%
DELL: +15.8%
SNOW: +20% after hours
AVGO: -3.5% after hours
Brent: $95.63
WTI: $91.01
10-year Treasury: 4.78%
Payrolls: Friday
Bottom Line
Wednesday stopped the immediate technical deterioration, but it did not remove the macro risk.
The S&P 500 defended the 7620 breakout area, returned to the upper trading range and denied sellers the sustained follow-through needed to confirm Tuesday’s potential bull trap. Small caps outperformed, semiconductors stabilized, and strong results from Dell and Snowflake reinforced the underlying AI demand story.
But this was not an all-clear. Nvidia supplied more than half of the S&P 500’s gain, new lows remain elevated, and Brent has now moved above $95, putting crude into the $95–$100 danger zone.
The technical roadmap is increasingly clear:
7620 prevented confirmation of the bear case.
7700 would begin confirmation of the bull case.
Friday’s employment report is the next major macro test. The best combination would be softer-but-not-collapsing labor data, lower Treasury yields, Brent moving back below $95, and strong earnings gaps continuing to hold.
Preferred posture: remain selective, patiently preserve buying power and favor stocks where fundamentals and price action agree (like in the fertilizers).
Wednesday improved the technical setup, but oil above $95 and the 10-year Treasury near 4.8% still argue against declaring the coast is clear and this September bear raid is done.
“Calm mind brings inner strength and self-confidence.” — Dalai Lama
Howdy Big Dave!
The indicator I used for the chart display is "Pivot Levels" by BigBeluga with the default parameters.
More info here: https://kirkopps.com/r/MU95LjgG26
Hope the storms down your way have missed you my friend.
Hello Charlie,
What’s the “area plot” on the chart? It reminds me of Landry Light. Rather than plot it as a histogram, it would be cool to recreate the indicator on the chart itself.