OVERVIEW
Confusion Breeds Volatility

The market took a clear pause yesterday as traders and investors positioned themselves for what could be a highly volatile next few sessions. With a flood of inflation and labor market data set to be released between today and the end of the week, uncertainty is running high.

The focus right now is on today’s Consumer Price Index (CPI) report, which will be a key test for interest rate expectations. Fed Chair Jerome Powell has made it clear that the central bank is not in a rush to cut rates, citing persistent inflation and ongoing uncertainty, including political factors. Over the past couple of months, traders have scaled back their expectations for rate cuts, with the market now pricing in just one reduction for the year—a stark contrast to initial expectations of multiple cuts.

The CPI report, set for release at 8:30 a.m. ET, is expected to show:

• Annual headline inflation at 2.9%, with a monthly increase of 0.3%—a slight decline from December.

• Core inflation (excluding food and energy) at 3.1%, the lowest since April 2021.

Right now, the market is moving cautiously, waiting for clear signals from the CPI report before committing to a decisive direction. While investors are closely listening to Jerome Powell, the real catalyst for sustained upside will likely come from earnings growth rather than speculation around rate cuts.

In the meantime, we should expect even choppier price action today and through the rest of the week. This means a higher likelihood of fakeouts, including false breakouts, random gap-ups, and gap-downs, which can make trading conditions frustrating. When volatility is driven by uncertainty rather than a clear trend, the efficacy rate of setups drops, and the probability of getting whipsawed increases. The challenge in this kind of environment is that while there may be one or two stocks that follow through, trying to chase every breakout drastically raises the risk of chopping up your account in the process. This is exactly why patience and selective trading are key until the market finds direction.

Nasdaq

The weekly chart on QQQ provides a clearer perspective on where we stand right now. Too often, traders get overly focused on intraday or short-term price action, losing sight of the bigger picture. But when we zoom out, things become much more apparent.

For the past four consecutive weeks, QQQ has been rejected at the descending level of resistance near its all-time highs. Despite this, we are still trading above the weekly 10-EMA, and we continue to see higher lows and lower highs forming—a classic pattern that often precedes a significant breakout. This means we are currently at a critical inflection point.

From here, there are two likely scenarios:

1. If the market reacts negatively to the upcoming economic data, QQQ will continue lower, potentially testing its Point of Control (POC) level and the rising 10-EMA near $523, and more than likely delay a recovery by at least 1-2 weeks.

2. If we finally break through $530, the next mark-up phase could begin, setting the stage for a larger breakout higher as early as the end of this week

The bigger picture still suggests strength, making a breakout the more probable long-term outcome. However, in the short term, price action remains choppy and uncertain. If the reaction to data isn’t favorable, trading conditions could become frustrating and difficult. Rather than forcing trades in the middle of this uncertainty, the best move is to stay patient and let the market reveal its hand—we don’t need to step in prematurely just to find out.

S&P Midcap 400

The weekly chart on MDY reflects the same make-or-break moment we’re seeing across broader markets. Right now, the 20-EMA on the weekly timeframe is acting as a key support level, attracting just enough buying demand to keep the price from breaking down and invalidating the pennant formation. However, the pressure from overhead supply continues to build, making this a critical juncture.

If we don’t see an increase in buying pressure by the end of the week, a deeper pullback toward $572 looks increasingly likely. This means that, much like QQQ, MDY is at a point where it either gains momentum for a breakout higher or sees a short-term reset before resuming its trend.

Russell 2000

Small caps are in the same position, with a nearly identical setup to MDY. There isn’t much additional analysis needed here—the pattern of rising higher lows remains intact, which is a positive sign. However, once again, the weekly 20-EMA is the final battleground.

This level will ultimately determine whether IWM holds support and continues forming a bullish pennant, or if selling pressure forces a breakdown, invalidating the current structure.

DAILY FOCUS
Try Not To Over Complicate Things

One of the simplest yet most effective questions you can ask before putting on risk is:

"Is someone else likely to buy this stock after I enter?"

If the answer is yes, then you have a higher probability of follow-through. If the answer is no, then you’re likely forcing a trade in unfavorable conditions.

A key way to recognize when the answer is no is to ask:

"Is there an event coming up that could make traders hesitant to buy?"

Right now, with CPI, PPI, and other key economic reports looming, the market is in wait-and-see mode. That means many traders and institutions are staying on the sidelines, waiting for clarity before deploying capital. When uncertainty is high, liquidity thins out, breakouts become less reliable, and the risk of fakeouts and choppy action increases.

You’re Not Predicting—You’re Reacting

It’s important to remember that as a momentum swing trader, you’re not trying to predict price movements—you’re waiting for confirmation that momentum is shifting. That means you need clear evidence before taking action.

Valid confirmation signals include:
✅ A multi-week trading range breakout
✅ Abnormally high relative volume
✅ Key levels getting reclaimed with strength

These signs tell you, "Hey, something is changing here." Without them, you’re just gambling. The goal is to enter after momentum starts shifting, not before, because momentum needs to be in motion before you act—not something you hope will appear after you're in.

What the Current Price Action Tells Us

You can see this hesitation clearly in the market’s price action—it's been moving sideways for weeks, rejecting overhead resistance every time it’s tested and bouncing off ascending support just as consistently.

This tells us two things:

1. Indecision Dominates – Neither buyers nor sellers have taken control. Every breakout attempt fails, and every breakdown gets bought up. This back-and-forth action signals a compression zone, where liquidity builds as traders wait for a decisive move.

2. The Market is Coiling – This type of prolonged consolidation acts like a spring being wound tighter. The longer we trade in this range, the more energy gets stored, meaning that when the breakout finally happens—in either direction—the move is likely to be explosive.

So, what’s the play? Patience. If you’re trying to force trades in a market that isn’t moving, you’re just chopping yourself up. Instead, wait for real confirmation that momentum is shifting, and only then look to get involved.

WATCHLIST
Nothing For Today: Scan For Relative Strength

While broad indices remain choppy, pockets of strength always exist—sectors, industries, or individual names that are holding up well despite uncertainty. These will be the first to move when the market finally breaks out.

What to look for:
✅ Stocks holding near highs while the market chops
✅ Names that refuse to break down despite pressure
✅ Sectors showing leadership (i.e., outperforming SPY/QQQ)

When the market finally makes its move, these are the stocks that will likely lead. Patience now sets you up for better opportunities later.