OVERVIEW
What You Need To Know

Macro

• Shutdown resolution restores key data flow — stabilizing liquidity into FOMC.

• Labor softening + SoftBank’s Nvidia exit signal AI capital rotation, not collapse.

Nasdaq (QQQ)

• Failed follow-through above $624; light volume = weak conviction.

• Support sits near $604 (10-week EMA).

S&P 400 (MDY)

• Strong rebound off $592 confluence zone.

• Needs sustained acceptance above $595 to confirm trend turn.

Russell 2000 (IWM)

• Rejected at $246 resistance; demand active near $244.

• Watch for breakout or tight base to form before continuation.

Focused Stock – IBM

• Holding above all EMAs — textbook relative strength.

• Needs more tightening before next leg higher.

Focused Group – XLE (Energy)

• Broke out above year-long base on rising volume.

• Energy rotating into early Stage 2 leadership.

MARKET ANALYSIS
The Trend-Following Danger Zone

• The macro environment just cleared a critical bottleneck: The U.S. government shutdown resolution removes a key data blackout risk into the December FOMC.

• This ensures policymakers can operate with full visibility again — a subtle but powerful liquidity stabilizer that reduces tail volatility in both rates and equities.

• Labor dynamics are quietly deteriorating: ADP’s updated tracker implies net private payroll contraction of ~11K/week in late October, contradicting prior mid-month strength.

• This marks the first implied negative print since mid-2022, hinting that the labor market’s “final leg” of resilience is weakening. Historically, similar soft inflections (mid-2019, Q1 2023) preceded easing financial conditions within 1–2 months as rate expectations moderated.

• AI complex entering capital-diffusion phase: The SoftBank exit of its entire $5.8 B Nvidia stake signals not just profit-taking, but a structural portfolio rotation away from peak concentration.

• Second-tier AI infrastructure names like CoreWeave are now under scrutiny as cost cycles invert. This is a redistribution of AI exposure across the liquidity curve, from hyperscalers to semis to mid-cap enablers and shouldn’t be seen as a signal for collapse.

Nasdaq

% over 20 EMA: 41.17% | % over 50 EMA: 50.00% | % over 200 EMA: 54.90%

• QQQ pushed to $624 yesterday but failed to follow through; the expected pullback into $613–$612 (gap-fill / prior supply zone) hasn’t played out (yet).

• The rising 20-day EMA held intraday, but volume was only 99% of the 20-day average meaning participation was light for a true continuation move.

• Price remains in a fragile equilibrium below $625; momentum neutral, not breakout.

• Weekly view shows the structure still bullish, but a clear gap exists down to the rising 10-week EMA near $604 and this is a realistic test level if pressure builds.

• Bias: short-term neutral; intermediate trend still constructive while above $604 support but we would need more evidence before getting excited and beginning to press.

S&P 400 Midcap

% over 20 EMA: 46.13% | % over 50 EMA: 38.15% | % over 200 EMA: 53.61%

• MDY staged a clean reversal off $592, aligning precisely with the rising 10-week EMA and a tight EMA cluster (10, 20, 50-day) which is a strong confluence support zone.

• The red diagonal resistance zone dating back to mid-September acted as a rejection ceiling, but the sharp rebound from the EMA cluster suggests aggressive dip absorption and this is what we call a character shift (prior resistance, flips to supply = trend likely to change).

• Relative volume came in at 108% of the 20-day average which is clearly not explosive, but importantly not showing weakness, confirming participation was present on the reversal.

• Structure remains constructive but not confirmed and now we’re watching for price acceptance around the POC (~$595) before expecting a sustained leg higher.

• Weekly view: still not out of the woods; trend remains fragile but improving as long as $592 holds (10 week EMA).

Russell 2000

% over 20 EMA: 44.28% | % over 50 EMA: 40.64% | % over 200 EMA: 54.12%

• IWM pushed into the red-box supply zone and reversed intraday, showing clear resistance at that level.

• A long lower wick formed on the daily candle which is evidence of active demand defending sub-$244, right around the daily 10-EMA.

• Relative volume came in light at 80% of the 20-day average which is a reminder that participation remains thin and conviction limited.

• Structure remains in trend-proving mode still as much as this was the best-case scenario for bulls, but confirmation is still lacking and we are within a choppy weekly structure.

• Next key tells:

  • A decisive push through $246 on high relative volume would confirm trend continuation, or

  • A period of tightness and volume contraction here would be even healthier by signaling acceptance and base-building before any leg higher.

FOCUSED STOCK
IBM: What Relative Strength Looks Like

ADR%: 3.31% | Off 52-week high: -2.7% | Above 52-week low: +55.4%

• IBM has formed a tight daily consolidation following its late-October breakout on blowout earnings, showing classic post-breakout digestion.

• While the broader indices (Nasdaq, S&P 500) have been drifting lower, IBM continues to hold firm above all key daily and weekly EMAs.

• On the weekly chart, IBM is slightly extended above its rising 10-week EMA, so a bit more tightness or sideways movement here would be constructive before the next leg.

• This is a stock for the watchlist, not necessarily for immediate entry and what we want to see it base or tighten further before any secondary breakout.

• Ask yourself: which stocks have refused to break below their rising 10- and 20-day EMAs while the market has dipped these past few weeks? Those are your true market leaders.

• We suggest everyone runs scans on this looking for the strongest names in the last 1, 3, 6 and 1 year period that consistently stay close to their 52 highs, have linear pullbacks and rising volume on rallies.

FOCUSED GROUP
XLE: Building Toward a Major Base Breakout

• XLE has been accelerating higher over the past two sessions, following a clean breakout two days ago that took out its Point of Control (POC) on the daily chart.

• Yesterday, price pulled back intraday to retest that same POC and its rising 10-EMA, where demand stepped in strongly, driving a reversal higher on rising volume which is a great sign this is likely to keep climbing.

• On the weekly chart, XLE has been basing for over a year, forming a broad Stage 1 accumulation structure.

• When we start to see large groups like Energy break above multi-month bases with confirmation on the daily trend cycle, it often marks the early transition into an intermediate (Stage 2) advance.

• This is exactly the type of structure we want to identify early as this where a short-term breakout could evolve into a long-term trend expansion, and is where we can get very high trade asymmetry on a long position.

• The sector is now back above all major EMAs, and relative strength is beginning to turn higher versus the S&P 500- another early leadership cue.