OVERVIEW
McDonald’s Faces Toughest Quarter Since Covid 🍟 

McDonald’s reported its weakest quarterly performance since the height of the pandemic, with sales declining for a second consecutive quarter amid growing economic uncertainty. In the U.S., same-store sales fell 3.6%—the steepest drop since 2020—driven by a sharp pullback in consumer spending.

Net income for Q1 dipped slightly to $1.87 billion from $1.93 billion last year. The company noted that 2024 had a Leap Day, giving it one extra day of sales, which slightly skewed comparisons. Still, CEO Chris Kempczinski admitted consumer sentiment has dropped more than expected, blaming “geopolitical tensions” and “economic uncertainty” for reduced traffic across key markets.

The decline is most pronounced among low-income customers, whose visits dropped nearly double digits compared to a year ago. More recently, even middle-income consumers have started pulling back at similar rates—a sign that inflation and financial strain are affecting a wider demographic.

McDonald’s isn’t alone. Its commentary aligns with recent weak results from other food giants like Chipotle, Domino’s, and Starbucks, all citing softening demand.

The chain has been leaning on promotions to attract budget-conscious diners. A recent Minecraft Movie tie-in briefly boosted foot traffic, and McDonald’s is hoping upcoming product launches, including the return of fan-favorite chicken Snack Wraps and new customizable drinks, will help reignite sales.

Despite the downturn, Kempczinski remains optimistic, stating that McDonald’s is well-positioned to outperform competitors even in a challenging environment.

MARKET
Bullish Momentum Remains In Control

We’re heading into today’s session with a fresh batch of macro data — and overall, the tone remains cautiously bullish.

This morning’s payrolls report showed 177,000 new jobs added in April, which is notably stronger than the 133,000 economists had forecast. While that’s a slowdown from March’s 228,000 print, it’s still a solid number that suggests the labor market is cooling gradually — not collapsing. The unemployment rate came in at 4.2%, matching expectations and showing no major cracks in employment just yet.

That said, the full week’s data paints a mixed picture. On Wednesday, we saw a negative GDP print: the U.S. economy shrank by 0.3% in Q1 on an annualized basis — the first contraction in three years. Jobless claims also spiked to 241,000, and ADP’s private payrolls report came in weak. So while today’s jobs number was firm, it comes in the context of broader signs that the economy is slowing.

But that’s not necessarily a bad thing for markets — especially in an environment where rate cuts are on the table. Slower growth and falling inflation open the door for the Fed to ease monetary policy. That’s exactly what investors are starting to price in.

On top of that, we got an unexpected boost in global sentiment from China. Chinese officials signaled they may be open to restarting trade talks with the U.S., provided the U.S. rolls back some of its tariffs. While this is still early stage posturing, it’s a step toward thawing tensions, and the market is welcoming it.

Add it all up, and the backdrop supports continued risk-on behavior — and today, we’re leaning into that strength.

Nasdaq

The Nasdaq managed to reclaim its 200-day EMA for the first time since late March — a key technical milestone that signals improving strength under the surface. Although we did see an intraday fade, largely driven by MSFT and META failing to hold their post-earnings gap-up opens, the fact that the index still closed above the 200-EMA is meaningful.

This type of action is similar to what we saw on April 23rd: a gap up that initially faded, but then led to a slow, steady grind higher over the next two weeks — a move we were well-positioned for and capitalized on.

What we’re watching for now is whether this zone (around the 200-day EMA) starts to act as a new support level. This is a key concept we’ve been emphasizing lately: character change. When prior resistance levels — like the point of control (POC) or a major moving average — start to hold as support, that’s one of the clearest signs that sentiment is shifting and a real trend reversal is taking shape.

S&P Midcap 400

Midcaps continue to underperform, with price action clearly struggling to break above the overhanging 50-day EMA. Yesterday’s session saw a rejection at that level on relatively low volume — a sign that buyers weren’t yet stepping in with enough conviction. If you look at the visible range volume profile (VRVP), you’ll see that this area is a dense zone of supply, meaning there’s a lot of overhead resistance that will require strong buying pressure to push through.

While premarket action is currently showing the 50-day EMA being reclaimed, it’s important to take that with a grain of salt. Premarket volume is only a small fraction of what we see during the regular session, so it doesn’t always give us a reliable read on how the market will behave once things are in full swing.

Russell 2000

Small caps saw the strongest relative volume rejection yesterday, and that largely comes down to the fact that nearly all of the strength we've seen—and capitalized on—over the last two weeks has been concentrated in large and megacap names. That includes primarily tech, but also growth-focused segments like consumer discretionary and communication services. The recent corporate earnings cycle has mostly spotlighted those large caps, which has naturally drawn the majority of market attention and capital flow.

That said, small caps shouldn’t be overlooked. In fact, we want to stress the importance of keeping them on the radar. When the next true bull cycle begins—whether that’s today, next week, or even next month—it will likely be these ignored, beaten-down small cap names that deliver the biggest moves. These are the stocks capable of +100% gains in a matter of hours, simply because they’re deeply undervalued, under-owned, and tend to have the highest average daily ranges (ADR%) in the market. And when momentum returns to this corner, it tends to return fast and violently.

WATCHLIST
Today’s Main Focus

RGTI: Rigetti Computing, Inc.

• RGTI — a quantum computing stock we've been tracking since late 2024 — continues to flag itself as one of the most promising setups in the entire market. It has built out a textbook multi-month base, one of the cleanest we’re seeing across all names. What stands out most is the clear contraction in both price and relative volume, suggesting that supply is drying up while demand is quietly building.

• Over the past month, RGTI has consistently formed higher lows, and now in premarket, it's breaking through the declining resistance trendline that’s been in place since late December 2024. Given how explosive this stock can be — capable of +100% intraday moves — it remains a top priority for us today. If we see a valid breakout trigger, we’ll be looking to take immediate action.