U.S. Futures & World Markets

US equity futures are slightly higher premarket as the market tries to continue its bounce during this holiday-shortened week. Judging by my out-of-office replies, most people were smart to take this week off.

I rarely rehash yesterday's action since I'd rather focus on what's ahead, but Monday was a wild ride. Semiconductor stocks were all over the place before staging an impressive reversal. The Philly Semiconductor Index (SOX) was down more than 2% before closing the session up 3.8%. The "Lag7," my new favorite nickname, finally showed some life and finished solidly in the green, with Amazon +3.2%, Tesla +8.4%, and Google +4.8%. That is the definition of a bounce, although it shouldn't be surprising that we're seeing more volatility on lower trading volumes ahead of the July 4th holiday.

As for the AI trade and what lies ahead, here are some comments from Datatrek Research that lined up perfectly with yesterday's charts: "As the AI trade widens out, it has driven US Big Tech's correlation with the S&P 500 to its lowest level since 2017, suggesting investors are increasingly focused on company-specific AI fundamentals rather than macro risks. With returns still moderate and capital becoming more selective, we view this differentiation as a healthy sign of a fundamentally driven bull market."

In other words, investors are becoming more picky about where they put their AI dollars. Not every company with "AI" in a press release gets a free pass anymore.

S&P Futures vs. Fair Value: +15.00  |  10-Year Yield: 4.39%

CORE Headlines

Charts & Data

Equity positioning trimmed to slightly below neutral — discretionary modestly underweight, systematic modestly overweight. Deutsche Bank via Daily Chartbook: "Our measure of aggregate equity positioning (-0.08sd, 36th percentile) was trimmed to slightly below neutral." A cleaner setup after the recent volatility.

Mag 7 net sold for a fifth straight week — gross and net exposures near 3-year lows in the 4th and 6th percentiles. Robbie Stankard, Goldman Sachs via Daily Chartbook: the rotation out of the Lag7 continues to show up clearly in positioning data.

Energy funds saw the largest outflow since April 2025. BofA via Daily Chartbook: capital continues to flee the energy complex even as oil prices stabilize.

Put/call ratio for single-stock options rising as demand for puts jumps higher. Simon White, Bloomberg via Daily Chartbook: investors are paying up for protection after last week's volatility spike.

S&P 500 gamma dropped sharply into negative territory — points to greater volatility and de-risking. Simon White, Bloomberg via Daily Chartbook: the technical backdrop supports continued choppiness in the near term.

High-beta momentum volatility gap vs. S&P at 97th percentile since 1999. Luke Kawa, Sherwood via Daily Chartbook: "Goldman's high beta momentum long index has been up or down nearly 3% per day, on average, over the past 21 sessions — about 2.2 percentage points bigger than the S&P's average daily move." Extreme dispersion at the single-stock level.

6 of 11 S&P sectors improving relative trends — money rotating into new leaders, not exiting broadly. Grant Hawkridge via Daily Chartbook: "If the market were entering a broad correction, I'd expect to see weakness spreading across most sectors. Instead, I'm seeing money leave yesterday's leaders and flow into new ones." The healthiest possible read on the current rotation.

51% of S&P stocks above both 50-day and 200-day moving averages — up from prior readings. Grant Hawkridge via Daily Chartbook: "More stocks are getting back into established uptrends, and fewer are stuck in long-term downtrends. That's exactly the direction bulls want to see."

S&P 500 vs. equal-weight: "trading as a collection of individual stories, not one index." Goldman Sachs via Daily Chartbook: "Raising importance of stock selection / creating much richer backdrop for dispersion / single-stock volatility through earnings." The stock-picker's market many have waited years for.

After a 10%+ Q2 gain, Q3 was positive 8 of 9 times (median +7%) and full year posted a 100% hit rate with median +26%. @bluekurtic via Daily Chartbook: a historically strong setup for the second half of the year following this quarter's gains.

S&P's Q2 gain ranks in the 93rd percentile of all quarters since 1990 — Semis, Tech Hardware, Transportation, and Banks all top decile. Bespoke via Daily Chartbook: just eight industry groups posted below-median quarterly returns — a remarkably broad-based rally by historical comparison.

S&P forward earnings hit another record high, but 2026/2027 consensus estimates edged down slightly. Yardeni Research via Daily Chartbook: "FEMO (Fabulous Earnings Momentum) may be starting to lose a wee bit of its mojo." A small crack worth monitoring, though still confirmed by 88.4% of companies showing positive forward revenue revisions and 85.8% positive forward earnings revisions.

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This content does not constitute legal, tax, accounting, or other professional expert advice. Everything published is believed to be reliable, but its accuracy or completeness is not assured. Past performance does not indicate future results. The opinions expressed herein are subject to change without notice and are solely those of the author as of the date indicated.