Hello everyone, welcome back to the U.S. stock analysis channel. I’m lorder.

Overall market sentiment was positive today, with the Nasdaq leading gains and the majority of S&P 500 constituents advancing. The PPI data came in below expectations, bolstering market expectations that the Federal Reserve will pause rate hikes. At the individual stock level, we focused on the technical patterns and fundamental dynamics of stocks in the storage, streaming, electric vehicle, and consumer staples sectors. We believe that if the software sector ETF IGV breaks out first, it will drive a synchronized upward move in the semiconductor sector ETF SOXX.

Let’s start with two data points. The July PPI was flat month-over-month, below the expected 0.2 percent, and the year-over-year increase fell from 5.5 percent to 4.7 percent, below the expected 4.9 percent. Core PPI rose 0.2 percent month-over-month, below the market expectation of 0.3 percent, and the year-over-year increase dropped from 4.7 percent to 4.2 percent, in line with expectations. Overall, this lower-than-expected producer-level inflation data bolstered market expectations that the Fed will hold rates steady in September.

Another data point: initial jobless claims for the week of August 8 increased from 199,000 to 209,000, higher than the expected 202,000. Continuing claims fell to 1.777 million, below the 1.795 million expectation.

Eight of the eleven S&P 500 sectors advanced today, while three declined. Sectors that rose on increased volume included Financials, Consumer Discretionary, and Consumer Staples. The Consumer Staples ETF, XLP, gapped up on heavy volume, breaking through 85.3, indicating institutional capital inflows.

There was an interesting phenomenon in today’s sector rotation: IGV outperformed SOXX, a reversal from yesterday’s direction. However, I believe SOXX’s short-term weakness is not the norm. If the software sector breaks through, the market should collectively resonate higher and continue to hit new highs, with SOXX catching up later. This would be a better outcome for the overall market—a scenario where all sectors flourish.

First, let’s look at SNDK. The company announced a massive buyback program and strong forward guidance, sending the stock sharply higher on heavy volume. A confirmed break above 1681 would signal the downtrend has ended, with potential to challenge the prior high of 1824. In the storage space, Micron MU shows a technical pattern similar to SNDK, approaching its downtrend-breakout confirmation level at 969, and has already risen in after-hours trading.

In streaming, Netflix broke above 78.2 on heavy volume today, ending a three-week consolidation, which we view as a valid breakout. However, constrained by slowing growth next year and strong overhead resistance, we assess the stock will trade in a wide range. The upper valuation ceiling lies in the 100 to 107 range; beyond that, there is an even stronger resistance zone representing a heavy supply of trapped buyers. From a long-term perspective, if your cost basis is below 77, there is a profit opportunity over a one-year or longer horizon.

Tesla is now near 368, at the upper boundary of its consolidation range. It is not advisable to chase before a breakout. A confirmed breakout would target the 415 to 465 range on the upside; otherwise, a pullback to the lower boundary around 315 is possible.

The Consumer Staples sector is strengthening. Walmart, as a heavyweight, is testing the strong resistance zone between 117 and 121. The stock is hesitating near its 200-day moving average. A breakout would complete a bottoming structure, turning the technical structure bullish with an upside target at the prior high of 135. However, the current market price already far exceeds forward valuation estimates, presenting a risk of overvaluation.

Finally, let’s look at the sector indices. IGV showed strong momentum on heavy volume today and is just one step away from breaking through 107. A breakout would boost overall market sentiment. SOXX is currently near 550, lagging other indices in the short term, but fundamentals including capital expenditure and earnings growth provide support. If IGV breaks out first, we expect SOXX will follow, breaking through the 580 resistance level.

IGV is showing a daily SI indicator bearish divergence. Even if it breaks through the key 107 resistance, a subsequent pullback to repair overbought conditions is possible. This bearish divergence needs to be resolved either by a decline or a sharp rally, but after a sharp rally into severely overbought territory, a decline to repair the condition is still required. Therefore, once a breakout occurs, there is no need to chase immediately—the necessary technical repair will happen eventually. The question is simply whether the repair comes via an initial decline or a rally followed by a decline.

Other points to note: Tesla and Walmart are both near critical resistance levels. If they fail to break out effectively, stock prices may pull back. For high-volatility stocks like memory chip names, using high leverage in trading can lead to massive losses or even forced liquidation if the trend reverses. Netflix’s future growth depends on the development of its advertising business, and current growth rate expectations are relatively slow, presenting uncertainty. The semiconductor and software sectors have recently shown a seesaw effect, and rapid shifts in capital flows may amplify short-term volatility.

That’s today’s market update and analysis. We’ll see you at the same time tomorrow.