MARKET ANALYSIS
What You Need To Know

• U.S. equity futures are higher to start the week following a choppy period driven by rotation out of mega-cap tech and into lower-valuation areas of the market.

• Dow futures are leading, reflecting continued strength in value and cyclical exposure, while tech-heavy benchmarks lag on a relative basis.

• Last week reinforced the rotation theme:

  • S&P 500: −0.6%

  • Nasdaq Composite: −1.7%

  • Dow Jones: +1.1%

• The underperformance in tech was concentrated in AI-linked names, with Broadcom and Oracle leading the downside and the S&P 500 tech sector falling over 2%.

• Market leadership continues to broaden away from the Magnificent 7, aligning with stronger performance in non-tech components of the index.

• This shift supports the idea of a “broadening-out” market rather than a market rolling over.

• The macro focus now turns to a heavy economic data slate this week:

  • Tuesday: November Nonfarm Payrolls and October Retail Sales (delayed due to the government shutdown).

  • Thursday: November CPI.

• These releases will be key in shaping expectations around the pace of future rate cuts after the Fed delivered its third consecutive cut last week.

• Fed commentary continues to lean toward easing bias, with policymakers framing labor market risks as more pressing than inflation risks.

• From a market structure perspective, the combination of:

  • easing financial conditions,

  • rotation into value and cyclicals,

  • and leadership from the “other 493”
    supports risk appetite outside of crowded mega-cap tech.

Nasdaq

62.37%: over 20 EMA | 51.48%: over 50 EMA | 58.41%: over 200 EMA

• Friday was a sharp and uncomfortable session for the cap-weighted Nasdaq, driven by a clean rejection from overhead supply.

• From a narrative standpoint, this spooked participants given QQQ’s visibility and its heavy influence on SPY.

• Price sold off roughly 1 ADR, filling a low-volume pocket on the visible range volume profile between ~618 down to ~611.

• Buyers stepped in at the 50-day moving average (~610), which also aligns closely with the 10-week moving average.

• There is still a realistic scenario where QQQ pushes slightly lower toward ~608, where volume density and structural support increase.

• A brief undercut of the 50-day / 10-week would not be abnormal in this context.

• Short-term volatility remains painful for tech exposure, which reinforces why large and mega-cap tech has not been an area to press.

• Zooming out materially changes the picture:

  • Price remains comfortably above the 10- and 20-week moving averages.

  • The broader structure still resembles an intermediate trend contraction, not trend failure.

S&P 400 Midcap

73.31%: over 20 EMA | 65.58%: over 50 EMA | 61.59%: over 200 EMA

• Relative strength in mid-caps remains obvious, despite Friday’s sharp pullback.

• Friday’s range measured ~1.86%, exceeding the ETF’s ~1.5% ADR, which explains the short-term mean reversion showing up pre-market.

• From a tactical standpoint, this is not an area to press exposure:

  • Price is still roughly ~1.4% above the nearest structural support.

  • That support sits near ~608, which also aligns with the rising 10-day moving average.

• A retest of that level would be healthy and expected following the recent breakout.

• Despite short-term caution, the relative performance versus large caps remains clearly superior.

• The key takeaway is not weakness, but extension.

Russell 2000

78.32%: over 20 EMA | 67.58%: over 50 EMA | 65.06%: over 200 EMA

• Friday’s sell-off occurred on 136% relative volume, following a strong run into all-time highs.

• Price undercut Thursday’s lows, similar to mid-caps, and is now stabilizing.

• Since the Morning Star reversal near ~229, IWM is still up over 13%.

• Nothing moves in a straight line, particularly after that magnitude of expansion.

• Short-term overheating across breadth metrics made some mean reversion inevitable.

• This reinforces an important behavioral point:

  • Pressing exposure at marginal highs in a volatile tape tends to produce poor outcomes.

• The most important thing to monitor going forward:

  • Whether relative strength versus QQQ continues to widen.

• As long as that relationship holds, small-caps remain structurally constructive despite near-term noise.

FOCUSED STOCK
SHOP:

ADR%: 4.38% | Off 52-week high: -9.9% | Above 52-week low: +135.1%

• Shopify experienced a sharp shakeout on Friday, broadly in line with the rest of the market, with a wide intraday range and aggressive downside pressure early in the session.

• Price sold directly into the point of control around 158–159, overlapping with the rising 20-day moving average, a level Shopify has consistently respected throughout December.

• The most important detail was not the selloff itself, but the response. Despite an intraday range of just over 3.3%, Shopify closed down only -0.34%, signaling heavy absorption and strong demand into weakness.

• Volume confirmed this behavior, showing buyers stepping in decisively rather than passive drift lower.

• On a higher timeframe, Friday’s low also aligned closely with the rising 10-week moving average, reinforcing the idea that institutions continue to defend this trend.

• Supply remains present above current price, particularly into the 167–168 zone, which capped last week’s breakout attempt and should be treated as near-term resistance.

• Above that level, volume profile shows a thin supply zone into ~173, implying that acceptance above 168 could allow for a relatively fast upside move.

• With an ADR of roughly 4.4%, Shopify is fully capable of covering that distance in a single session if momentum returns.

• Relative strength versus the S&P 500 remains elevated at 92 and rising, keeping Shopify firmly in the leadership bucket.

• Whether price breaks immediately or digests further, Shopify remains one of the strongest large-cap growth names in the market and a stock that should stay on the front page of any watchlist.

FOCUSED GROUP
KIE: This Is The Next Leadership Group

• Insurance continues to stand out as one of the most resilient pockets within financials, despite receiving relatively little attention compared to banks or brokers.

• The group has been building a large base for over a year, dating back to November 2024, which provides meaningful structural context for any upside resolution.

• While price has remained capped beneath overhead supply near 61, recent behavior shows a clear change in character.

• Last week’s pullback held both the 10- and 20-week moving averages, with price finding support near the weekly point of control rather than accelerating lower.

• Volume has been steadily expanding since late September, a critical signal that participation is increasing rather than fading as price compresses.

• Notably, KIE showed relative strength on Friday, remaining firm while broader indices experienced a sharp shakeout.

• If KIE can decisively clear 61 and hold above that level, it would mark acceptance into a new price zone following a prolonged base.

• Given the duration of the consolidation and the recent volume expansion, any confirmed breakout is likely to be multi-month in nature, not a short-term trade.

• From a top-down perspective, insurance should remain a priority group to monitor, especially as capital continues rotating into more stable, economically levered areas of the market.