OVERVIEW
There Is A Lot To Unpack…

OVERVIEW

• Government shutdown 70% likely Wednesday, would delay Friday's jobs report leaving Fed without data

NASDAQ (QQQ)

• Thursday's 146% volume reversal (highest in 5 weeks) shows institutions defending support

• Breadth improving rapidly (40% to 53% above 20-EMA) but $600 resistance caps immediate upside

S&P 400 MIDCAP (MDY)

• Weakest index with only 40% above 20-EMA, but gapping above $597 resistance premarket

• Binary outcome today: hold $597 targets $606, fail it drops to $586 fast

RUSSELL 2000 (IWM)

• Volume void between $238-244 sets up explosive 2.5% move if triggered

• Best risk/reward today: 14-point breadth divergence (47% vs 61%) signals coiled energy

FOCUSED STOCK (DAVE)

• High & Tight Flag pattern with 82% historical success rate and 39% average gain

• Break above $225 targets $305+ but expect 67% chance of throwback for second entry

FOCUSED GROUP (XLU)

• Utilities pushing all-time highs ($87+) but on declining volume = exhaustion not accumulation

• AI data center power demand transforming utilities from bond proxies to growth plays

MARKET ANALYSIS
A Very Messy Few Days

The government shutdown deadline Wednesday has 70% odds on Polymarket, which would delay Friday's jobs report and leave the Fed flying blind into October.

Last week delivered the first losses in four weeks (S&P -0.3%, Nasdaq -0.7%), but the real damage was beneath the surface. AI stocks cracked on circular spending concerns while Trump's October 1st tariff announcements added another uncertainty layer.

Yet September remains solidly green: S&P +2.8%, Nasdaq +2.9%, keeping the quarterly uptrend intact.

The macro picture turned hawkish after jobless claims missed and GDP got revised higher, pushing December rate cut odds down to 61% from 83% two weeks ago.

Translation: Good economic news is bad market news again. Without Friday's jobs data (if the government shuts down), the Fed loses its final puzzle piece.

This creates a fascinating setup: as maximum uncertainty into month-end and quarter-end rebalancing. Institutional money has to position without complete information and that's when technical levels matter most.

Nasdaq

Thursday's reversal came on the highest volume in 5 weeks with 146% of the 20-day average and with a long tail that rejected lower prices.

Friday confirmed with 112% relative volume and another hammer candle. When you get back-to-back high-volume reversals with long wicks, that's typically a great sign of accumulation on the panic.

Breadth Confirms the Bounce Don't let the mixed percentages fool you… this breadth is constructive:

• 61.38% above 200-EMA = The majority of stocks remain in long-term uptrends

• 53.46% above 20-EMA = We've crossed back above 50%, signaling short-term momentum shift

• 47.52% above 50-EMA = The laggard metric, but watch for this to turn positive next

The key insight: We bounced from having only 40% above the 20-EMA earlier last week to 53% now. That's a rapid breadth thrust off oversold conditions and exactly what launches sustainable rallies.

S&P 400 Midcap

% over 20 EMA: 39.84% | % over 50 EMA: 54.63% | % over 200 EMA: 61.40%

Midcaps are flashing a critical divergence. While Thursday's 50-EMA bounce at $586 lacked conviction, Friday's surge into $597 brought the buyers out in force. The premarket gap above this triple confluence zone: prior demand, declining 10-EMA, and volume node, sets up today's binary outcome.

Breadth Breakdown With only 40% of components above their 20-EMA, MDY shows the deepest deterioration among major indexes.

Yet 61% remain above their 200-EMAs, suggesting the longer-term structure hasn't completely failed. The gap between short and long-term breadth this wide typically resolves violently in one direction.

The $597 Pivot Today's gap above $597 creates an immediate test. This level combines:

• Prior horizontal support turned resistance (green box from August)

• Declining 10-EMA dynamic resistance

• High-volume node from recent distribution

Hold above it and $606 becomes magnetic. Fail it and Thursday's low at $586 comes fast.

Russell 2000

% over 20 EMA: 47.30% | % over 50 EMA: 61.46% | % over 200 EMA: 61.72%

Small caps present the day's cleanest momentum trade. The VRVP structure between $238 and $244 shows a glaring absence of transaction history and a 2.5% price gap where virtually no shares changed hands.

This structural void, combined with breadth divergence (oversold short-term, stable long-term), creates conditions for explosive upside.

Volume Profile Architecture Last week's 20-EMA defense at $238 marked the lower boundary of a liquidity desert extending to $244. In market microstructure terms, these zones act as price accelerators as no resting orders means bids chase offers higher without natural friction points.

Breadth Divergence Signal The 14-point spread between 20-EMA breadth (47%) and 50-EMA breadth (61%) indicates compressed short-term selling within an intact intermediate trend.

FOCUSED STOCK
DAVE: Wedge Breakout or Rejection Trade

ADR%: 6.19% | Off 52-week high: -23.9% | Above 52-week low: +483%

DAVE's been carving out a clear wedge since its July peak at $290, and right now we're kissing the upper trendline at $218. But here's the kicker, this isn't just any wedge.

It's forming after a 222% explosion from $90 to $290 in under 2 months. That makes this a potential High & Tight Flag, which Bulkowski's research shows succeeds 82% of the time.

• Overall performance rank (1 is best): 30 out of 39

• Break even failure rate: 15%

• Average rise: 39%

• Throwback rate: 67%

• Percentage meeting price target: 82%

The Volume Story See those two massive volume spikes? May's explosion launched the move from $90. August's spike at $180? Classic accumulation.

Since then, volume's been drying up as the wedge compresses which is exactly what you want before a breakout.

Bulkowski confirms: declining volume during consolidation = better performance.

Why This Setup Is Elite High & Tight Flags have just a 15% failure rate with an average 39% gain post-breakout. DAVE checks every box:

• Price more than doubled (222%) in under 2 months ✓

• Consolidating below the high for 3 months ✓

• Volume declining during consolidation ✓

Critical Levels

• Full Confirmation: Close above $250 (recent rejection high) → Target $305-400

• Early Entry: Break above $225 (wedge resistance) with volume

• Support: $210 (20-EMA and lower wedge)

• Pattern Failure: Below $205 invalidates everything

If/Then Roadmap:

• Bullish Breakout: Clear $225 with volume → First target $240, ultimate target $305+

• Throwback Entry: Even if it breaks out, expect a retest for a second entry

• Failed Pattern: Lose $205 → Quick flush to $180-190

FOCUSED GROUP
XLU: Defensive Rotation or Exhaustion?

XLU bounced perfectly off the historic demand zone at $83 (green box), but the warning sign is clear as the relative volume has been shrinking for the past 1-2 weeks. Look at those volume bars below: they're getting progressively smaller even as price pushes above $86.

What's Really in XLU? Utilities aren't just sleepy dividend stocks anymore. NextEra Energy (NEE), Southern Company (SO), Dominion Energy (D), these companies are becoming AI infrastructure plays. Data centers need massive power, and utilities are the picks and shovels of the AI gold rush.

The sector's transformed from 3-4% dividend yield plays to growth enablers for the computing revolution.

Reading the Chart

• Point of Control: $82 on the black line where the biggest positions have been built

• Historic Support: $83 green box held perfectly on the bounce.

• Resistance: $87+ is uncharted territory with price pushing into all-time highs premarket

• Volume Profile: Notice how thin it gets above $85, that means fast moves (the same goes for a failure to hold $84).

If/Then Roadmap:

• Bullish Path: Break $87.50 with volume surge (+100% relative) → Opens door to $90+ on momentum

• Bearish Path: Reject at $87.50 with continued weak volume → Likely retests $85-84 support zone