NEWS
Tesla Owners Are Jumping Ship — and Lucid Is Cashing In 🚘

Lucid Motors is having a moment — and a lot of it has to do with disenchanted Tesla owners. With the launch of its new Gravity SUV, Lucid is seeing a noticeable uptick in interest from people ready to move on from Elon’s empire.

According to interim CEO Marc Winterhoff, more and more Tesla drivers are trading in their vehicles for Lucid’s luxury EVs — especially the sleek Air sedan and now the bigger, bolder Gravity SUV. “Tesla buyers have always been a source of our sales,” Winterhoff said. “But now they’re looking for something new. Something better.”

The Gravity could be the hit Lucid’s been waiting for. It starts just under $80,000 — right on the line to qualify for federal EV tax credits — and hits showrooms with deliveries beginning in April. Unlike the niche Air sedan, the Gravity targets a much larger crowd: SUV lovers who want luxury, performance, and something a little different than a Tesla.

It doesn’t hurt that Tesla is facing its fair share of issues. Slower sales, particularly for the Model Y, and growing backlash around Elon Musk’s political moves — including his vocal support of Donald Trump and role in the White House’s DOGE commission — have pushed some loyalists to rethink their options.

Lucid is also in a sweet spot politically. All of its vehicles are made in Arizona, which means they’re safe from the 25% tariffs on foreign cars being floated by Trump. Even core components like battery packs are made stateside.

The company plans to roll out 20,000 vehicles by the end of the year. If the early buzz around the Gravity is any indication, Lucid might have a real shot at grabbing a bigger piece of the EV pie.

MARKET
Are We Finally Seeing Some Capitulation?

In the current market, we may be seeing the end of a prolonged phase of selling pressure—what could be a sign of capitulation. This occurs when the selling that’s been driving the market lower begins to lose its momentum. Those who have been selling (likely taking profits from the market's decline) may be running out of positions to offload, and once that selling pressure exhausts itself, the market might have space to stabilize or even begin pushing higher.

Given the current event risks, especially with the upcoming tariff announcements from the White House, there's room for a potential relief rally, particularly if the tariffs end up being less aggressive or more targeted than anticipated. However, the broader risks still remain tilted to the downside, as markets may not have fully priced in the potential fallout from these trade policies.

Today, the White House is expected to unveil new reciprocal tariffs on goods from nearly all of the U.S.’s trading partners. This has been a key driver behind the market sell-off in recent months. The crucial question is whether these tariffs will be blanket tariffs across all trading partners or tailored to specific countries. What’s almost certain, however, is that the effective U.S. tariff rate could rise to levels not seen in nearly a century, which would add significant strain to an economy already facing slower growth and persistent inflation.

Despite these risks, yesterday’s market performance showed signs of relative strength, with stocks climbing higher. This could be a sign that the market is absorbing the negative news and is potentially ready to reverse course. We’ll now turn to the technical analysis to see if this newfound strength can be sustained or if more challenges remain ahead.

Nasdaq

The Nasdaq has been the clear underperformer compared to other capitalization segments, including small and midcaps. This underperformance is largely due to the significant weakness in large and mega-cap growth stocks, which are heavily weighted in the QQQ ETF. These stocks have been hit hardest, and as we’ve discussed before, this is a major reason behind the Nasdaq's struggles.

However, in yesterday's session, we saw some notable strength in the QQQ. After gapping lower and pushing down to the $457 level, the QQQ managed to recover and drift higher on high relative volume. This price action is particularly important because $457 is not a random level. Looking at the Visible Range Volume Profile (VRVP), we can see that this level aligns with a dense demand zone, characterized by much more "green volume" (buying pressure) compared to "red volume" (selling pressure).

What makes this especially noteworthy is the surge in relative volume, which indicates that there was significant participation at this level—higher than we've seen in the past three weeks. This is an important development, but it's essential to note that the goal isn't necessarily to time the bottom aggressively. Instead, we should be patient and wait to see if sustained strength materializes. This will show up as a series of higher lows, leading stocks in the group tightening up and pushing higher, all backed by continued high relative volume on any potential move higher from this level.

That being said, it’s important to stay cautious and be prepared for this setup to fail. A near-term bottom is still uncertain, and we need further confirmation not just a one day hold before taking any significant positions.

S&P Midcap 400

The midcaps are currently showing what could potentially be a double bottom formation at a key Point of Control (POC) level. This level has been significant before, as we saw the midcaps bounce off this very same level just a few weeks ago. The fact that the market is testing this level once again heightens the importance of the potential for another bounce here.

That said, while we will delve deeper into double bottoms shortly, it’s worth noting that the relative volume during yesterday's session wasn't particularly strong. This is a crucial detail, as a lack of strong volume could indicate that the bounce is not fully confirmed yet. However, there is still room for this to change in the coming sessions. If the market begins to see stronger buying pressure, supported by higher relative volume, the double bottom formation could be validated. For now, we’re looking at this as a potential scenario, but further confirmation is needed before considering it as a solid setup.

Russell 2000

The small caps did indeed experience a surge in relative volume, similar to what we saw with the QQQ. However, even with this increase in volume, it’s important to note that we still need to break above the overhead supply at the Point of Control (POC). The demand level at $195, where we saw yesterday’s potential bounce hold, is a key level to watch.

One quick but important note: just because volume appears green doesn't necessarily mean it's all buying volume. It's crucial to remember that for every buyer, there is a seller. The context around volume is what truly matters. So, while higher volume can be a positive sign, we always need to consider the broader market dynamics and the actual participation to get a clear read on the strength of the move.

DAILY FOCUS
Don’t Rush: Let The Set-Ups Come To You

We still have a lot of significant events lined up for the rest of the week, including Jerome Powell’s speech and, of course, Trump’s tariff announcements. These are both major factors that could influence market sentiment and price action. It’s important to keep these on your radar, as they have the potential to either validate or invalidate the setups we’re seeing in the market right now. So, while it may seem tempting to jump into trades based on current patterns, patience will be key—especially when we have such event risk hanging over the market.

As we mentioned, one of the patterns we’ve been monitoring in the SPY, MDY & IWM is the potential beginnings of a double bottom. The double bottom is considered one of the more statistically significant and reliable reversal formations. It’s a pattern that typically suggests a shift from a downtrend to an uptrend, as it reflects exhaustion in selling pressure and the potential for buying to take control. However, just because we may be seeing a double bottom does not guarantee that the market will reverse in the way we expect. We're simply arming you with the potential information, but market conditions—such as upcoming announcements and confirmation from price action—will ultimately determine whether this setup holds.

Understanding the Double Bottom Pattern:

• Psychology Behind the Pattern: The double bottom formation occurs when a stock or index makes a sharp decline, then bounces, followed by another drop to roughly the same level as the first low, and then a second bounce. The key idea here is that after the second decline, sellers may be exhausted, and buyers step in, reversing the trend.

• Confirmation Criteria: For the pattern to be reliable, we need to see certain conditions met:

  1. Higher Volume on the Bounce: This indicates that there is genuine buying interest and momentum as the price moves higher.

  2. Break of Resistance: After the second low, the price should break above the prior peak, signaling that buying pressure has overtaken selling pressure.

  3. Volume Confirmation: As the price moves past the previous resistance level, you want to see sustained high relative volume confirming that the breakout is genuine.

In our case, we’re looking for confirmation in a few key areas: higher lows, tightening of the leaders in the group, and again, higher relative volume. If we don’t see these confirmations—especially the break of resistance levels with strong volume—the potential for a reversal might not materialize.

It’s important to note that while double bottoms can be a strong indicator, they are not foolproof. The key to trading these setups is confirmation. We need to see consistent volume, higher lows, and price action moving upward before we can confidently say a reversal is in place.

WATCHLIST
Our Top Relative Strength Leaders

CRK: Comstock Resources, Inc.

• CRK, which belongs to the energy sector, has been performing relatively well, especially considering that the energy sector has been one of the leaders in the market over the past quarter. As an oil and gas company, CRK has benefited from the volatility brought about by the Trump administration’s policies. Over the last few months, CRK has been building higher lows, showing an overall uptrend, and is currently contracting below the $20.75 resistance level.

• Yesterday, CRK experienced a high relative volume day, signaling increased participation in the stock. However, it was met with a rejection at its breakout level, which suggests there is some resistance to overcome before it can push higher. Even though this rejection occurred, the fact that CRK is in a leading sector and demonstrating relative strength makes it a stock to watch closely.

SE: Sea Limited

• SE, a Chinese online gaming and retail company, has been showing some positive signs lately. It has been building a series of higher lows and consolidating along its moving averages on the daily chart, finding support on the 50-day EMA. This suggests that SE is in a bullish trend, at least in the short term.

• China’s equity market has been one of the strongest performers year-to-date, significantly outperforming U.S. equities. This has made Chinese stocks like SE particularly appealing. However, it's important to note that the Chinese market has recently experienced some profit-taking (as seen with the GXC chart), which could limit the immediate follow-through for stocks like SE.

• The key risk here is the broader Chinese market trend. If we start to see a decline in Chinese stocks, especially as the U.S. market begins to pick up, there could be a rotation of capital from China to U.S. equities. While this would be beneficial for U.S. stocks, it may present challenges for SE and other Chinese names. Furthermore, stocks like BABA and others have been making stronger relative moves whilst SE lagged behind, potentially showing SE to not be a leading name in the segment.