Sunday said the first pullback would test where buyers live. Monday delivered. ES dipped to 7,085, held the 7,070 pivot, and snapped back to 7,171. Two days, one test, one answer.
Earnings drew a sharper line than the index. UNH rallied 10%. Lam Research confirmed the semi thesis at $5.32B (+28% YoY). Boeing rallied 5%. Margins expanded, losses narrowed, stocks got bought. Vertiv beat and raised. Stock fell. IBM beat. Stock fell. ServiceNow beat. Stock fell 14%. Pricing power got rewarded. Revenue alone got punished.
Why now? Oil at $92 and the Hormuz blockade are raising input costs. When costs rise, revenue can grow just because prices went up. That does not mean the company is making more money. Margin expansion is how you tell the difference. It proves pricing power, not just a higher top line. Semis and minerals pass that test. That is the filter, and the trade, for earnings season.
The Lie stays at +2 (CONSTRUCTIVE). Was +2 Sunday. Thursday tells us: does earnings momentum push ES toward the next resistance level, or does the rally pause here?
The updated game plan, five levels, and the full earnings read are below the fold.
