OVERVIEW
🟨 Neutral Risk

Macro: PCE steady at 2.9% — inflation backdrop unchanged, Fed still on course for cuts; keeps chop in play into quarter-end.

Tech stress: QQQ rejected at $595 supply on heavy volume — leadership is stretched, risk of bull trap elevated.

Breadth fracture: MDY lost its $596–$600 demand shelf (distribution confirmed). IWM holding $239–243 pocket, but short-term breadth deterioration signals fragility under the surface.

Rotation lens: Tape is sector-dependent with growth taking a break and energy pushing.

Leaders: SEDG pressing highs while indices chop (solar/clean energy strength). Quantum group (QTUM, RGTI, IONQ, QBTS, QUBT) remains the clearest momentum cluster and must be watched for relative strength.

MARKET ANALYSIS
PCE On Target: Expect Some Chop Today

Stocks head into Friday’s session looking for direction after a week of choppy trading. The Fed’s preferred inflation gauge, PCE, landed right on target at 2.9% — steady with last month and in line with expectations. That takes away the risk of a surprise but doesn’t change the cautious tone we’ve seen in markets.

Tech has been the weak spot all week, with names like Oracle, Meta, and Tesla under pressure as investors rethink stretched AI valuations. That drag helped push both the S&P 500 and Nasdaq down close to 1% on the week.

Still, the bigger picture hasn’t changed: inflation is stable, the Fed remains on track for more cuts, and the market is pausing to digest after a strong run. The question is whether today’s data can steady sentiment heading into quarter-end.

Nasdaq

% over 20 EMA: 45.54% | % over 50 EMA: 40.59% | % over 200 EMA: 58.41%

Yesterday’s session in QQQ printed on very high relative volume, but the character was indecisive. Price dipped into the rising 20-day EMA, found responsive buyers, and drifted back into the 10-day EMA, only to meet rejection. That mix of heavy volume with indecision is a clear sign of stress inside leadership.

As of pre-market, the PCE report has lifted QQQ toward $595, but that level coincides with a visible supply shelf. Traders should be cautious here — the risk of a bull trap is elevated if this early strength fades.

Bigger picture, the message is that cracks are appearing inside the mega-cap tech complex, which QQQ embodies. Leadership is no longer as dominant, and the market is showing early signs of shifting from a vertical run into a digestion phase. From a structural standpoint, consolidation here would be healthy, as it would allow stretched leaders to reset without destabilizing the broader tape.

The long term structure is still bullish as we’re in a defined uptrend, but the channel is steep and prone to sharp givebacks.

Volume expanded on the recent sell-off, suggesting more than just routine digestion. A decisive break below $590 would expose deeper liquidity down near $576–$580, where the volume profile shows heavier demand.

S&P 400 Midcap

% over 20 EMA: 28.82% | % over 50 EMA: 46.36% | % over 200 EMA: 58.39%

For weeks, MDY respected the $596–$600 demand shelf that had held since 25 August. That shelf cracked decisively this week, confirming that the prior sideways action was distribution.

The breadth has also collapsed, with only 28.82% of components above their 20-day EMA, 46.36% above their 50-day EMA, and 58.39% above their 200-day EMA. That erosion of sponsorship confirms sellers are gaining control.

The breakdown drove price directly into the rising 50-day EMA, leaving behind an unfilled upside gap at $595 from Wednesday’s lows. Today’s PCE-driven bounce may attempt to backfill that gap, but context matters: this is reactive strength inside a deteriorating structure, not a constructive reset.

Midcaps are particularly sensitive to liquidity and credit conditions, and the inability to hold such a well-defined support shelf signals sponsorship is leaving the space. That contrasts sharply with the large-cap indices, which are still holding up near highs.

Russell 2000

% over 20 EMA: 39.81% | % over 50 EMA: 57.41% | % over 200 EMA: 59.87%

IWM has pulled back into its 20-day EMA around $239, catching short-term support after three heavy distribution days. The VRVP shows a low-volume pocket extending up toward $243, which means price can move quickly within this zone, but it also suggests there’s demand waiting to stabilize price here before heavier resistance comes back into play.

Breadth is also weakening here, with only 39.81% of components above their 20-day EMA, but the longer-term picture is steadier (57.41% above 50-day, 59.87% above 200-day). This tells us that while near-term momentum has cracked, the broader structural advance is not broken.

This echoes the message from midcaps: the daily charts look worrying with clear signs of distribution, but zooming out to the weekly timeframe reminds us how far these indices have come off their summer bases. The Russell in particular has advanced over 11% in the last 3 months and so some consolidation at the 20-day is part of that process, even if they feel heavy in real time.

FOCUSED STOCK
SEDG: Solar Showing Relative Strength

ADR%: 7.71% | Off 52-week high: 3.6% | Above 52-week low: +270.1%

The clean energy complex (ICLN) which is supported by solar peers (inside TAN) continues to show strength even as the broader market chops sideways. Within that group, SEDG is emerging as one of the clearest leaders.

Price has been making new highs while the indices are declining showing a strong tell of relative strength.

The stock bounced off the rising 10-EMA near $35, with both price and volume contracting into dense support. This is the kind of healthy action that tells us during a time in which the entire market was gapping lower, SEDG didn’t feel the pressure.

Fundamentally, SolarEdge Technologies develops inverter solutions to maximize solar power generation, alongside products in energy storage, EV charging, and monitoring software.

With solar ETFs like TAN already breaking higher and ICLN showing clean energy continues to push, SEDG fits neatly into the leadership theme.

FOCUSED GROUP
QTUM: By Far The Strongest Growth Group

If you run momentum scans daily, you’ve almost certainly seen RGTI, IONQ, QBTS, QUBT lighting up the boards. These stocks have dominated the growth complex in recent weeks, showing the kind of relative strength and expanding volume you want to see when leadership is emerging.

Yesterday’s bounce in QTUM off its daily 10-EMA which was backed by rising relative volume was a big tell; not to mention the rising relative volume throughout the rally since the early Sept breakout itself.

After an incredibly powerful rally, this group is still drawing sponsorship and showing follow-through. Among all growth segments right now, quantum is by far the strongest.

This is where you want a shortlist of leaders ready. Don’t fall into the trap of “I missed the breakout.” Momentum doesn’t end with the first thrust as it cycles through pullbacks, retests, and fresh setups.

Your job is to track the leaders inside the group and stalk suitable entries when the next windows open.

Q&A
Got a trading question? Hit reply and ask!

Q: “It’s really frustrating when I get into a stock and I execute my entry correctly, only to watch the stock make a big move then just reverse and I make no money. Is that normal? How can I smooth my equity curve out?”

A: It’s absolutely normal and it’s not about “bad luck.” It’s just how breakouts behave.

When you look at thousands of setups across history, you’ll see three buckets:

• Many trades give you 1–3 days of strength, then stall or fade.

• A smaller percentage turn into multi-week trenders (the big winners).

• A lot will fail almost immediately.

The key is that you don’t know which bucket your trade will fall into. That’s why traders often feel cheated when a “perfect” entry still fades.

This is where trade management changes the math. Instead of trying to guess the rare big winner, you shift the distribution of outcomes in your favor:

1. Sell into strength. Take 30–50% off during that first surge. That’s the part of the move with the highest probability of success.

2. Move the stop to breakeven on the rest. Now, if the trade fails, you’ve already banked profit and the remainder scratches flat. If the trade runs, you’re still holding size.

Think in terms of expected value (EV):

• EV = Expected Value (average outcome per trade)

• probability of win = Chance that a trade is profitable

• average win = Average size of a winning trade (measured in R or % gain)

• probability of loss = Chance that a trade is unprofitable

• average loss = Average size of a losing trade (measured in R or % loss)

Here’s a simple illustrative example (not fixed numbers, this is just a model to show you the idea):

If you hold every trade all-in/all-out:

• 70% fail = –1R

• 20% small win = +1R

• 10% big win = +4R

EV=−0.1R (slightly negative)

If you scale out + use breakeven stops:

• 70% “fail” = +0.3R (because you banked partials)

• 20% small win = +1R

• 10% big win = +4R

EV=+0.8R (positive and compounding)

👉 The numbers here are just examples. Every trader’s stats will look different and your EV will likely be much higher than the example above (as you should get much larger than +4R on your big winners), but the theory is correct.

The point is that by adjusting exits, you change the shape of the payoff curve. You cut the left tail (losses), you keep the right tail (winners), and you let math smooth the equity line over time.