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- AMAT's 11% rebound sets the stage for Thursday's earnings, where AI demand could determine whether shares break above $380.
- CSCO's 5% rebound sets up an earnings test, with AI demand in focus and a break above $99.40 potentially opening the way toward $101–$104.

Quick Market Overview

US stocks staged their strongest rally in months as investors aggressively bought the recent dip, pushing the SPX500 up 2.38% and the NAS100 3.63% despite weakness in Nvidia. For investors, the breadth and heavy volume behind the rebound are encouraging signs that appetite for beaten-down technology and other risk assets may be returning. The next test comes from major tech earnings and October inflation data, which will determine whether improving sentiment can survive renewed scrutiny of profits, valuations and the Federal Reserve's rate outlook.

General Equity Market Health (SPX500)

SPX500 has bounced sharply from last week's sell-off and reclaimed 7,500, which now stands out as near-term support. The latest daily candle is holding above that level, but the recovery still needs confirmation: RSI has rebounded from oversold territory to the mid-40s and needs to push above 50 and stay there to show improving momentum. The faster EMA is still below the slower one, so a bullish crossover would add support to the recovery. A sustained move above 7,615 would be constructive and could open the way toward the 7,700 area; a failure at resistance followed by a close back below 7,500 would weaken the bounce and put the recent low near 7,300 back in focus.

Yesterday's rally was broad, with all 11 S&P 500 sectors higher. Falling oil prices helped ease inflation fears, though that reflected investor sentiment rather than confirmation that inflation had cooled. Attention now turns to October's US CPI report, due later today, which could shift expectations for Federal Reserve policy. Investors are also weighing whether the returns from the costly AI data-centre build-out will justify the spending. The rally is encouraging, but Nvidia's decline shows that concerns have not disappeared.

Potential Trade Setups

Applied Materials and Cisco Systems are attempting to recover, but neither chart has fully turned the corner. With earnings approaching, watch whether support holds and resistance gives way, while listening for signs that AI demand can carry the momentum further.

Applied Materials (AMAT.us)

Technicals: AMAT's 11.4% jump to $370.55 marks a sharp rebound, but the chart has not yet confirmed a trend reversal. RSI is rising from oversold territory but remains below 50; the share price has moved above the faster EMA and is testing resistance around $375–$380, where the slower, falling EMA sits. A sustained break above that zone would strengthen the recovery. If the bounce fails, $343 is the first level to watch, followed by the recent low near $320.

Fundamentals: Applied Materials reports after the close on Thursday. Its Q4 guide is $10.25 billion in revenue, give or take $500 million, and $4.02 in non-GAAP EPS, give or take $0.20. Both figures are roughly in line with current consensus. That makes the outlook, particularly management's comments on 2027 AI-related demand for leading-edge logic, DRAM and advanced packaging, a key potential share-price driver. Investors will also watch margins and any comments on China-related restrictions.

Cisco Systems (CSCO.us)

Technicals: CSCO's 5.1% rebound to $98.65 is a welcome lift, but the chart has not yet confirmed a reversal. RSI is turning up from oversold territory, and the price has edged above the faster EMA; the slower EMA and descending trendline still cap the recovery. A break above $99.40 would be an early positive, while a sustained move through $101–$104 would make the chart look stronger. If the bounce falters, watch $95 and then the recent low near $93.

Fundamentals: Cisco reports after the close on Thursday. Investors will weigh results against guidance of $18.0–$18.2 billion in revenue and $1.32–$1.34 in non-GAAP EPS, with particular attention to AI networking demand, orders and margins. Cisco's $9.3 billion in AI infrastructure orders last fiscal year and $7.5 billion AI revenue target for FY2027 set a high bar; the share-price reaction will depend on whether results and the outlook give investors confidence that growth can continue.

Hot News, Cold Logic

US stocks staged a powerful rebound, but investors still face significant uncertainty around the AI trade, particularly Nvidia. While semiconductor names such as AMD and Broadcom rallied sharply, Nvidia remained under pressure as a reported national-security investigation involving CEO Jensen Huang added a new governance risk on top of concerns about AI spending, regulation and recent political changes. For investors, the key question is whether this proves to be a company-specific issue or another reason to reduce exposure to an already volatile AI theme, even as the broader market recovery remains intact.

Final Thought

Markets have rediscovered some resilience, but the burden of proof remains high. Lower oil prices have taken some pressure off inflation and helped broaden the rebound beyond technology, yet doubts over AI valuations and the prospect of another Fed rate increase mean investors can no longer rely on falling rates or expanding multiples to do the heavy lifting. The bull case remains intact, but its next leg will increasingly depend on earnings delivering enough growth to justify expectations that have become much harder to impress.