OVERVIEW
Markets Grinding Higher, Leadership Expanding

🟢 Risk-On: QQQ hits fresh all-time highs. MDY and IWM break out on volume.

🕰️ Short Week, Big Data: Markets close early Thursday (1 p.m. ET). Friday closed. June jobs report Thursday will shape Q3 rate cut expectations.

📈 Participation Rising: Strength is broadening beyond mega-cap tech into mid and small caps which is a hallmark of trending bull markets.

⏳ Patience Pays: This is not a time to force trades, let fresh setups form as capital rotates into new leaders.

MARKET ANALYSIS
Participation Broadens Beneath the Surface

The market continues to grind to all-time highs, shrugging off every headline. From Middle East tensions to tariff chatter and mixed economic signals, none of it has disrupted the underlying trend. Dips are getting absorbed. Leadership is holding. That’s what matters.

The week ahead is short, but not quiet. Thursday’s jobs report will shape rate cut expectations heading into Q3. Markets close early Thursday and remain shut Friday, so expect volume to thin out and any moves post-data to be exaggerated.

But zoom out and the structure is clean: trend is up, tape is healthy, and the market is telling you it wants higher. That doesn’t mean there won’t be pullbacks, it just means the burden of proof is still firmly on the bears.

This is not a market to short.

Nasdaq

QQQ is leading the market, and last week’s breakout on the weekly chart was the key trigger we had been watching. We highlighted this repeatedly as the setup kept tightening just under 530 with a two-week low-volatility coil. That was the tell with a clear VCP right below all-time highs.

This is why we stayed bullish on the large and mega-cap tech space. QQQ tracks exactly that, and the structure was telling us big money was preparing to move.

🧠 The Weekly Chart Was the Signal

Weekly charts often get ignored, but they are critical for spotting the real inflection points. In this case:

• Price contracted tightly over two weeks with declining volume

• That was followed by a breakout on very strong relative volume

• The volume was second only to the April reversal that launched the last two months of strength

This is classic behavior at the start of a new leg higher. Quiet, tight consolidation followed by a powerful expansion tells us institutions are coming back in with size.

📈 Still Early in the Move

This is not a late-stage extension. We have only just cleared all-time highs. Price is entering discovery mode with room to run, and volume is confirming demand.

QQQ continues to be the strongest major index on the board. As long as this leadership holds, the trend remains firmly intact and risk-on.

S&P 400 Midcap

Midcaps are finally starting to show real strength. MDY broke out last week on the weekly chart, clearing a key supply zone around 560 that had capped the group for several months.

The most important signal came from the 7-week volatility contraction pattern (VCP) that formed right on top of the 10, 20, and 50-week EMAs. Last week’s price action opened with a test of that moving average cluster, and demand stepped in aggressively. From there, MDY powered higher and confirmed the breakout with strong follow-through into the close.

🧠 Why This Matters

This space is still early in its uptrend, even more so than QQQ. Large caps moved first, but midcaps are now starting to catch up, and these types of second-wave breakouts often offer more room to run as capital rotates down the risk curve.

The structural breakout, confirmed demand at key levels, and fresh trend alignment all suggest that midcaps could become a core part of the next leg higher in this bull market.

Russell 2000

Just like midcaps, small caps (IWM) broke out last week as we saw them pushing through their weekly 10, 20, and 50 EMAs on significantly higher relative volume. That volume matters as It reflects growing interest in risk-on names beyond the mega-cap space.

That said, IWM still has overhead supply between 220 and 221 which is a key level from earlier this year. Clearing that zone would open the door for more sustained upside and confirm broader participation.

🧠 Context Across QQQ, MDY, and IWM

Looking at QQQ, MDY, and IWM together, we see a clear pattern:

• QQQ continues to lead, driven by large and mega-cap tech

• Midcaps and small caps are now breaking out, showing rising participation

That shift is critical. It suggests that we may soon see rotation out of overextended large-cap leaders and into fresh breakouts in the small and midcap space, especially in high-growth sectors.

FOCUSED STOCK
ODD: Early Stage 2 Leader in Motion

ODD operates in the online retail space for cosmetics and beauty products, placing it at the intersection of consumer retail and tech which are two themes showing strong momentum in the current market.

The stock recently broke out of a long-standing base that began forming in late 2024, doing so on very high relative volume following a strong earnings report- a clear signal of institutional accumulation.

Since then, ODD has begun forming a Volatility Contraction Pattern (VCP), riding up its rising 10- and 20-day EMAs and bouncing cleanly off its Point of Control (POC) — an early Stage 2 uptrend.

Subsequent contractions on stocks in stage 2 offer very low-risk entry points, either on tight breakouts or controlled pullback buys as the stock builds momentum in its new leadership phase.

FOCUSED SECTOR
XLY: Cyclicals & Retail – Back in Focus

The XLY sector, which tracks consumer discretionary stocks, broke out on Friday above both its Point of Control (POC) at $215 and a multi-week base that had formed as part of a large cup-and-handle structure.

The Visible Range Volume Profile shows very light volume between $215 and $230, meaning there's limited overhead supply in this zone- a setup that often allows for smoother, faster continuation once a breakout clears. Given that we’re in a growth-led bull market, this kind of upside extension in discretionary makes sense and could accelerate quickly.

🔎 Also Watching: Retail (XRT)

Retail (XRT) is showing a nearly identical pattern, with a clean cup-and-handle formation developing. While it hasn't broken out yet, volume has contracted neatly as price has tightened in a classic volatility contraction pattern.

This setup looks ready. And since retail often moves in tandem with XLY, it’s a key group to have on radar.

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