OVERVIEW
Growth Remains In The Lead

U.S. stocks are off to a stronger start this Monday, breaking a streak of consecutive gap-down opens in recent weeks. The rebound comes as steel stocks surge following President Trump’s announcement of new tariffs on steel and aluminum imports, with an official confirmation expected later today.

Trump plans to impose a 25% tariff on steel and aluminum from all countries, meaning any company importing these metals into the U.S. will have to pay an extra 25% tax on top of the purchase price. While this is good news for domestic steelmakers, it raises concerns about potential retaliation from other countries, which could lead to new trade tensions. Trump has also suggested that the U.S. will introduce reciprocal tariffs, meaning it will match the duties that other countries place on American products. More details on this are expected by midweek.

Who Benefits & Who Gets Hurt?

✅ Winners:

• U.S. Steel Companies – Domestic producers will benefit because their foreign competitors will be more expensive, potentially leading to higher profits and job growth in the steel industry.

• Short-Term Stock Market Boost – Stocks of U.S. steelmakers are already rising as investors expect these companies to perform better under the new rules.

❌ Losers:

• Companies That Use Steel & Aluminum – Businesses that rely on these materials (like car manufacturers, construction firms, and appliance makers) will face higher costs, which could lead to more expensive products or lower profits.

• Consumers – If businesses pass on these higher costs, everyday items like cars, appliances, and even canned goods could get more expensive.

• Trade Relations & Global Economy – Other countries will retaliate by imposing their own tariffs on U.S. products, potentially hurting American businesses that rely on exports.

At this point, investors seem to be growing less reactive to Trump’s trade announcements, treating them more as negotiation tactics rather than immediate economic shifts. Each time the president makes a new statement on tariffs, the market appears to shrug it off more quickly. However, while stocks may not be panicking over each speech, the bigger concern is that additional tariffs could push inflation higher, which in turn could make the Federal Reserve more cautious about cutting interest rates.

Adding to this concern is the continued strength of the U.S. labor market, which shows little sign of weakness—a key factor the Fed considers when making rate decisions.

The latest January jobs report, released on Friday, underscored this strength. The unemployment rate fell to 4%, marking an eight-month low, while wages grew 0.5% month over month, exceeding the previous month’s 0.3% gain. Additionally, job data for December was revised higher, revealing that the U.S. economy added 100,000 more jobs in December and November than initially reported.

With a resilient labor market and no clear signs of economic slowdown, the likelihood of the Fed cutting rates in the near term appears to be diminishing.

Nasdaq

The Nasdaq saw a notable rejection on Friday, something we covered in detail in the weekend report. Both the capitalization-weighted (QQQ) and equal-weighted (QQQE) versions of the index failed to break above a critical descending resistance level—a key technical level that, if cleared, would have confirmed a shift into a Stage 2 uptrend and ended the distribution phase of the past few months.

However, while the breakout attempt failed, the overall technical picture remains unchanged. We are still trading within the same range, and this rejection likely only extends the breakout timeline by a few days or weeks rather than invalidating the move altogether.

Why We Remain Optimistic

One reason for optimism is the high number of strong setups forming across the market. Additionally, it's important to remember that the Nasdaq is heavily influenced by a small group of mega-cap tech stocks. The QQQ, being capitalization-weighted, is largely driven by companies like Apple (AAPL), Nvidia (NVDA), and Microsoft (MSFT). Recently, these stocks have faced selling pressure, partly due to concerns over DeepSeek, which has raised questions about their lofty valuations.

Despite this, a closer look at QQQE (the equal-weighted version of the Nasdaq) tells a different story. Unlike the QQQ, QQQE has been outperforming, indicating that the average large and mega-cap tech stock is holding up much better than the headline index suggests. This divergence reinforces the idea that while mega-cap names are struggling, the broader market remains resilient.

S&P Midcap 400

Midcap stocks continue to trade sideways, struggling to gain momentum after failing to break above their key resistance level on Thursday. This resistance, which also aligns with the Point of Control (POC)—a critical price level where the most trading volume has occurred—remains a major hurdle.

Friday’s session added to the weakness, with MDY (the S&P 400 Midcap ETF) breaking below both its 10 and 20-day EMAs. This signals short-term weakness, making it crucial to watch whether midcaps can reclaim lost ground this week.

The key focus now is whether MDY can find support at the dense volume levels shown on the Visible Range Volume Profile (VRVP). If buyers step in at these levels, it could indicate demand returning and help midcaps stabilize.

Russell 2000

Small caps are facing a similar technical picture as midcaps, with back-to-back failures on Thursday and Friday to break above their base and Point of Control (POC). As a result, IWM (the Russell 2000 ETF) has slipped back into consolidation territory, unable to sustain upside momentum.

The main thing to watch now is whether IWM can stabilize within its current range rather than continuing to drift lower. Ideally, we want to see buyers step in, build momentum, and create the steam needed for a strong breakout attempt in the coming sessions. Until then, small caps remain in a waiting game, stuck in consolidation mode.

DAILY FOCUS
Don’t Try To Outsmart Your Daily Scans

One of the biggest mistakes traders make is trying to outsmart their own scans. Your daily scans are your most valuable source of information—they tell you exactly where money is flowing and where momentum is building. Yet, too many traders ignore the data in front of them and try to force trades based on what they think should happen rather than what the market is actually doing.

Stocks Drive Indices, Not the Other Way Around

A common misconception is that the indices dictate stock movement, but it’s actually the other way around. Stocks drive indices, not vice versa. If you’re laser-focused on what the S&P 500 or Nasdaq is doing but ignoring the strongest stocks within them, you’re missing the real opportunity. When leaders break out and sustain momentum, that’s when indices follow.

Do Your Homework—Trade When the Odds Are in Your Favor

The best time to find long exposure is not after the market has already run up for two months—it’s after a prolonged period of sideways consolidation. That’s when accumulation happens, risk is lower, and breakouts actually have the power to go the distance. If you’re constantly chasing late-stage moves, you’re trading when risk is increasing, not decreasing.

Focus on Momentum Leaders

Every time you analyze a stock, ask yourself these questions:
✅ Is this the leader in its group?
✅ Is this stock part of a leading industry?
✅ Has this stock been consistently outperforming the market?
✅ Is it showing strong relative strength compared to its peers?

Leaders lead for a reason—big money flows into them, and they move first. If you’re not positioning yourself in the strongest names, you’re making your job harder.

WATCHLIST
Today’s Breakout Watch

DOMH: Dominari Holdings Inc.

• DOMH is emerging as a momentum leader within the financial sector, which itself is one of the strongest-performing groups in the market. However, this trade is slightly different from our usual setups—rather than looking for a fundamentally strong name with high revenue growth, this is a high-volatility, short-term momentum burst play.

• The reason DOMH is on our watchlist is simple: it’s been on fire. Over the last few weeks, the stock has shown explosive movement, and the daily chart confirms strong demand. It recently tested its rising 10-EMA and held, showing buyers stepping in aggressively. Now, with a gap-up open, we’re seeing clear signs of buying pressure.

• We’ll be watching for a 5-minute opening range high entry—but only if we see strong volume confirming the move. If the momentum is there, this could be a fast and powerful trade.

GRND: Grindr Inc.

• GRND continues to stand out as one of the strongest growth names in the market. It has been forming a stellar multi-month base, consistently making higher lows while contracting below overhead supply—a textbook setup that often precedes a major breakout as demand surges.

• One of the key signs of strength is how well it has been respecting its rising 10-EMA on the daily chart for the past two weeks. This indicates strong buying pressure and a clear lack of aggressive selling, further boosting our confidence in the setup.