Weekly Playbook: July 21st
Markets climb as breadth fades. $TSLA and $GOOGL take center stage. BTC cools off, ETH stays inflated.
Key Takeaways This Week
Indexes hit fresh highs, led by tech, but breadth continues to deteriorate as equal-weight indexes lag.
Bitcoin consolidates after big breakout; ETH outperforms but nears key resistance.
DXY continues to climb, suggesting broad rebalancing and possible trend shift underway.
Synopsys-Ansys merger closes, driving notable closing auction action and M&A-induced volatility.
Upcoming earnings in focus: Tesla, Alphabet, ServiceNow, and IBM all report this week.
Market Overview
The market powered through headline risk to post fresh highs, but beneath the surface, cracks are forming. The S&P 500 gained 0.6%, the Nasdaq added 1.5%, and tech stole the spotlight again as Nvidia ripped higher on relaxed chip export rules. The Dow slipped 0.07%, and equal-weight indexes quietly underperformed, another reminder that breadth is thinning and momentum is narrowing fast.
Tariffs remain the headline risk with teeth. Trump formalized 30% duties on the EU and Mexico starting August 1 and is threatening 100% “secondary” tariffs on nations trading with russia. India, Brazil, and China are squarely in the crosshairs. Add a looming August 12 tariff snapback on Chinese goods, and the policy path looks anything but stable. Markets aren’t pricing in a full-blown escalation yet, but these aren’t just symbolic shots anymore.
Meanwhile, Trump’s campaign against Powell is getting louder. He’s pushing hard for rate cuts to reduce federal interest costs, tossing around shaky math and eyeing replacements if Powell doesn’t comply. The logic may be weak, but the political pressure is building. Waller’s dovish comments gave the market hope for a July cut, though the Fed still appears more likely to hold until September. All eyes will be on Powell’s speech Tuesday, with the ECB rate decision to follow on Thursday. The July 30 rate decision and Treasury refunding schedule could also be pivotal.
Liquidity remains plentiful. M2 hit record highs, capital flows into U.S. assets are strong, and the new stablecoin law is quietly boosting demand for T-bills. That’s supporting asset prices across the board, even as the panic/euphoria model inches closer to the danger zone.
Retail sales surprised to the upside again, reinforcing the consumer’s strength. Real spending is up, inflation looks contained for now, and the Fed still has cover to be patient. But the breadth divergence is telling its own story, one where a handful of AI names are doing all the heavy lifting while cyclicals and mid-caps lag.
Banks posted strong Q2 earnings, showing the economy is holding up better than expected. Consumer credit remains solid, deal pipelines are active, and profits are up. Still, management remains cautious, flagging CRE risk and softening capex plans in tariff-sensitive sectors.
In streaming, Netflix delivered solid numbers but lost more ground to YouTube, which now commands 12.8% U.S. viewing share. The real competition isn’t content, it’s monetization model and scale. With YouTube now pulling in more subscription revenue than many legacy platforms, the shift in viewer behavior is accelerating.
Sectors were split: tech (1.92%) and utilities (1.71%) led, while health care (3.54%) and energy (3.54%) lagged. GE Vernova continued its outperformance, reminding investors that not all AI plays wear a hoodie.
The message is clear: the market wants to rally, but it’s leaning on fewer and fewer names to do the work. Policy risk is climbing, breadth is fading, and positioning is stretched. That doesn’t mean a top is in, but it does mean the bar for disappointment is a lot lower than it looks.
For more details, visit Barron’s.
Block will replace Hess in the S&P 500 after Chevron’s acquisition closed, sending the stock up 11% in after-hours trading. The choice over larger names like Robinhood and Applovin surprised many and reinforced a familiar lesson: S&P inclusion isn’t based on a strict formula. When passive flow hits on unexpected news, price reacts fast.
Meanwhile, Synopsys completed its $35B acquisition of Ansys, clearing the final hurdle with China’s conditional approval. The deal sparked notable closing auction activity, once again showing how single stock M&A can disrupt market on close dynamics. I broke down the mechanics and implications of this in a separate writeup.
Episode 200 of The Compound and Friends echoed many of these market themes. Positioning, not macro noise, is what matters. Despite new highs, hedge funds and asset managers are still underweight, with sentiment skewed and short interest piling up in places like small caps and biotech. It’s a setup where liquidity, not valuation, is doing the heavy lifting.
The overlooked driver here is misunderstood positioning data. As the episode highlighted, few know how to read or normalize short interest, missing asymmetric setups forming in plain sight. Combine that with synchronized global equity breakouts and commodity strength in copper and gold, and the tape looks more resilient than headlines suggest.
The takeaway? If you’re waiting for logic or lagging indicators to validate this rally, you’ll be late. This is a flow driven market climbing a wall of disbelief.
Watch the full episode here:
Earnings & Interesting Movers Recap
Elevance Health ELV 0.00%↑ -18.66% 1W
ELV broke cleanly below the 310 to 318 support zone on earnings and saw solid follow-through the next session. There’s potential for a bounce near 265, but the tape looks heavy enough that it could slice through. Judging by the broader weakness across managed care and health services, it looks like investors have had enough. Just compare the action to names like UNH 0.00%↑ and the recent retail favorite OSCR 0.00%↑.
Netflix NFLX 0.00%↑ -2.88% 1W
NFLX didn’t move much post-earnings, but it did gap below key daily trendlines. Bigger support levels sit near 1178 and 1150. The next move likely hinges on broader tech sentiment and follow-through in streaming peers.
Here is our quick take on the earnings report:
PepsiCo PEP 0.00%↑ +5.9% 1W
PEP cleared initial resistance at 139.25 in early premarket, then pushed toward 142 before accelerating higher. That said, the move lacked follow-through the next day. Both levels are now key zones to watch. If they hold on a retest, they could offer attractive bounce setups.
Here is our quick take on the earnings numbers:
Key Index Charts
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