MARKET ANALYSIS
Here’s What Matters Today

• The market is entering today in a much healthier position than the Nasdaq headline suggests.

• Yesterday looked weak on the surface because the Nasdaq fell 0.66% and semiconductors were hit again, with Micron and Sandisk both down more than 10% after enormous year-to-date moves. But underneath the index-level weakness, the broader tape was not broken.

• The Dow touched a fresh intraday record, the Russell 2000 hit an all-time high, Meta surged on its cloud-compute plans, and Microsoft and Apple both held up well.

• Semiconductors were due for profit taking. Micron is still up more than 260% year-to-date, Sandisk is still up more than 750%, and the broader chip trade had already rallied aggressively through the first half. A sharp pullback after that kind of run is not automatically a structural break. It is the market forcing discipline back into a crowded leadership group.

• The healthier part of the tape is that money is not leaving equities altogether. It is moving. That is the most important distinction. The Dow barely closed lower after touching record highs, small caps remain strong, and 32 S&P 500 stocks traded at new 52-week highs while only five made new 52-week lows. That is not the internal profile of a market rolling over.

• This is the “great rotation” theme in real time. The old winners are cooling, but the bid is spreading into industrials, financials, healthcare, software, select mega-cap tech, and small caps. That broadening is exactly what a bull market needs if it is going to survive beyond a narrow semiconductor-led advance.

• The key macro event today is the June jobs report. Economists are looking for roughly 115,000 jobs added in June, down from 172,000 in May, with the unemployment rate expected to hold around 4.3%. Citi is much more cautious, looking for only 25,000 new jobs.

• That gap matters because it sets up a real volatility event. The market is no longer simply cheering strong data. It is trying to work out whether the economy is cooling enough to reduce Fed pressure without cooling so much that growth starts to become a problem.

• A strong payrolls number would likely bring rate-hike risk back into the tape. A weak number could help bonds and long-duration growth, but if it is too weak, investors may start questioning the economy beneath the surface.

• The ideal outcome is a moderate cooling: soft enough to reduce Fed pressure, but not weak enough to trigger growth fears.

• ADP already gave a softer signal, with private payrolls rising 98,000 in June versus expectations for 110,000, and down from 122,000 in May. That points to slower job creation, but not yet a hard landing. The market will now need confirmation from the official payrolls data.

• The Fed remains the ceiling on risk appetite. Warsh did not give the market much guidance yesterday, but he did say prices are still too high. That is enough to keep investors sensitive to labour-market strength, wage pressure and yields. The 10-year Treasury yield is sitting near 4.49%, so growth stocks still need help from rates if the repair is going to extend smoothly.

• Brent is back near the $70-$71 area and WTI is below $68, with both contracts tracking another weekly decline as U.S.-Iran talks show signs of progress and the market prices less immediate disruption through the Middle East. Brent is now coming off its worst quarter since 2020, which is a major relief for headline inflation pressure.

• Precious metals are starting to stabilize after a brutal quarter. Gold and silver are bouncing slightly this morning, but that looks more like early mean reversion after an extended liquidation phase than a major defensive shift. Gold had its worst quarter in more than a decade, pressured by higher yields and hawkish central-bank risk. A bounce here would be normal, but it does not yet change the broader risk read.

• There are also political and trade risks in the background. The U.S. will not renew USMCA as a long-term 16-year extension, instead moving toward annual reviews. That adds another layer of policy uncertainty for North American supply chains, even if it is not yet the primary driver of the tape.

Nasdaq

54.90%: over 20 EMA | 56.86%: over 50 EMA | 62.74%: over 200 EMA

• QQQ is giving us close to the best-case scenario after last week’s breakdown risk: consolidation above short-term support.

• The ETF is holding above the rising 10-day moving average around $723, while the more important intermediate support, the rising 10-week EMA around $704, continues to hold underneath.

• That 10-week EMA was the key level we needed defended to invalidate the potential Adam & Eve double-top structure that formed from early June into mid-June.

• That structure has now effectively been invalidated. QQQ held the $710 point of control, which was also the neckline area of the pattern, and then bounced from that zone late last week. When a neckline break fails and price reclaims support with buyers stepping in, the read changes. It is no longer a clean topping structure. It is now behaving more like consolidation within the broader uptrend.

• The Magnificent 7 complex confirms that read. MAGS staged a four-day reflex rally of roughly 8.9%, which is very strong relative to its average weekly range of around 5.45%. Yesterday’s session also came on extremely high relative volume, around 191%, and the entire move developed from a reflex bounce off the 50-week moving average.

• That is important because it validates the idea that the recent weakness was more about rotation and profit taking out of the extended mega-cap complex than a full structural breakdown in growth. Money rotated out of stretched mega-cap tech, into areas like financials, and is now selectively returning to large-cap growth as support holds.

• The equal-weighted Nasdaq also supports this. QQQE is performing slightly better than QQQ, with stronger relative strength and a steeper upside gradient. That tells us breadth inside the Nasdaq complex is healthier than the headline mega-cap pressure suggested.

• We still need to watch the $122-$123 zone on QQQE. That area is a dense liquidity shelf on the visible range volume profile. The volume split shows roughly 18,000 shares traded green versus around 4,590 shares traded red, so this is not clean seller aggression, but it is still an area where price has previously done meaningful business. That makes it a logical pause or resistance zone as QQQE pushes higher.

S&P 400 Midcap

63.50%: over 20 EMA | 64.50%: over 50 EMA | 65.50%: over 200 EMA

• Mid-caps remain strong, but they are still frustrating to trade. MDY continues to grind higher in the same choppy structure we have seen for several weeks.

• Price pulls back toward the 20-day EMA or 50-day EMA, mean reverts, then pushes higher again. That keeps the broader trend intact, but it does not create especially clean swing-trading conditions.

• Yesterday’s session showed some short-term caution. At the highs, the visible range volume profile showed roughly 110,000 shares traded red versus about 54,000 shares traded green. That is a clear seller imbalance into strength, and it tells us there is still supply appearing at highs.

• The concern is not that MDY is weak. It is that the path higher remains inefficient. Relative volume is starting to pick up as the ETF rallies, which is constructive. Rising price on improving relative volume is a better signal than the low-volume grind we were seeing previously. But because seller aggression is still stepping in at highs, the cleanest entries remain on pullbacks rather than breakouts.

Russell 2000

71.88%: over 20 EMA | 68.12%: over 50 EMA | 67.01%: over 200 EMA

• Small caps are showing strong relative strength, but they are also becoming stretched.

• IWM printed a gravestone-style doji yesterday, which tells us sellers stepped in at the highs. That mirrors what we are seeing in MDY: the trend is still constructive, but there is supply appearing into strength.

• The important difference is relative strength. IWM is still showing much stronger relative strength versus the SPX, around 76.6, which makes it one of the better risk-appetite signals in the market.

• Breadth is also very hot. Around 72% of Russell 2000 stocks are trading above their 20-day moving average, which is stronger than what we are seeing in the mid-cap and large-cap complexes. That is bullish from a market-health perspective, but it creates a problem for swing entry.

• When that many stocks are already above short-term moving averages, the asymmetry becomes less attractive. A lot of the easy move has already happened. For a swing trader, the issue is no longer whether the group is strong. It is whether there is enough clean upside left to justify fresh long exposure without chasing.

• That is why we prefer being more selective here. Small caps can continue higher, but broad IWM exposure is less attractive after the move unless it comes from a pullback or from a very specific leadership pocket.

FOCUSED GROUP
XLF: Rotate Long Exposure Into Financials

• XLF broke out yesterday on extremely strong participation, with relative volume around 134%. The structure was clean: a textbook volatility contraction pattern, a pullback into the 10-day EMA on Tuesday, followed by immediate expansion higher yesterday.

• That is exactly what we want to see from a leadership group. The candle itself was also powerful. XLF posted an average true range of roughly 2.5%, which is about 1.8x greater than its expected average daily range over the 20-day period. That confirms real expansion, not just a marginal breakout.

• The weekly structure also supports the move. XLF has been consolidating, tightening, and then breaking higher from that base with volume expansion. That is the kind of sector-level setup that can support continuation if the broader market remains constructive.

• The strength is not isolated to one pocket either. Banks, regional banks, insurance, and fintech-related names are all acting well. That matters because broad participation inside the sector makes the breakout more credible.

• The rotation backdrop also supports financials. As money comes out of extended mega-cap tech and semiconductors, it is finding a home in areas that had cleaner bases and better upside asymmetry. Financials fit that perfectly.