MARKET ANALYSIS
Here’s All You Need To Know

• The market is starting June in a strong position, with futures higher across the major indices and Nasdaq once again leading the move.

• The key message this morning is that AI is still overpowering the macro fear trade. Nvidia and Microsoft are both pushing higher after Nvidia announced a new AI chip for personal computers in collaboration with Microsoft, and that is helping keep the growth trade firmly bid.

• This is important because the market is still dealing with plenty of macro uncertainty. U.S.-Iran tensions remain active, oil is bouncing again, and traders are still waiting for more clarity on the May jobs report later this week.

• Despite that, equities are not acting fragile. The market continues to reward AI, semiconductors, software, data center infrastructure and the major growth leaders.

  

  WTI VRVP Daily & Weekly Chart

• Crude is pushing higher this morning, but only modestly in the bigger picture. The more important point is that WTI is still bouncing from its rising 20-week EMA, and oil still carries a 90 relative strength rating versus the SPX.

• That means we should not dismiss energy just because oil pulled back recently. The trend is not broken. It has cooled, reset, and is now trying to hold higher-timeframe support.

  

  XOP VRVP Daily & Weekly Chart

• This is why we are watching XOP very closely. XOP, the oil and gas exploration ETF, is sitting around a key area near $161, where it is holding the 20-week EMA and bouncing from the point of control on both the weekly and daily structures.

• If XOP begins to expand from this area, that would confirm that energy is still a live leadership theme rather than just a failed war trade.

• Don’t forget that the market can support both AI strength and energy strength at the same time, but the implications are different. AI strength supports risk appetite. Oil strength keeps inflation risk alive.

• If oil continues grinding higher while AI remains strong, equities can keep pushing, but the market may become more rotational and less forgiving beneath the surface.

• For now, the tape remains constructive. AI leadership is intact, futures are firm, and the market is still choosing growth over fear.

• But the oil chart deserves respect. A bounce from the 20-week EMA with a 90 RS rating is not something to ignore.

• Specifically for today, we’d watch whether Nvidia and Microsoft can hold the AI bid, watch whether oil continues to build off its 20-week EMA, and watch XOP around the $161 level. If XOP expands, energy names may quickly come back onto the long side watchlist.

Nasdaq

55.44%: over 20 EMA | 55.44%: over 50 EMA | 56.43%: over 200 EMA

• QQQ remains deeply extended, sitting at 9.33 ATR multiples above its 50-day moving average, which equates to roughly a 13.08% price extension from the 50-day EMA.

• At this level, the Nasdaq is firmly in mean reversion territory. That does not mean the primary trend is weak, but it does mean the short-term asymmetry is no longer attractive for fresh long entries.

• We already started to see this last week in semiconductors. XSD pulled back after a very powerful Stage 2 continuation rally from the 50-week moving average bounce at the end of March 2026. That was not a structural breakdown, but it was exactly the type of cooling we would expect after such a sharp move.

• The same issue is now visible across several leading semiconductor names. AMD, for example, is now roughly 57.2% above its 50-day EMA, which is materially extended on both the short-term and intermediate trend cycles. Other leading semiconductor names are also sitting around 11.35 to 13.8 ATR multiples above their 50-day EMAs.

• That does not damage the longer-term trend, but it does matter for short-term momentum traders. At these levels, we should expect more weakness, more pullbacks, and more failed breakout attempts across the growth complex.

• The MAG7 complex is also starting to look more vulnerable in the short term. The group attempted to push higher after reclaiming the 10-day moving average on May 27th, but the visible range volume profile is now showing a roughly 2 to 1 imbalance in favor of seller aggression at the highs.

• GOOGL is particularly important here because it has been one of the leading names inside the MAG7 complex. On Friday, GOOGL sold off on 155% relative volume, which was the highest relative volume session since its earnings reaction on April 30th. That suggests the stock is now likely to test its 50-day moving average and 10-week moving average area around $306.50.

• That matters because GOOGL is one of the highest-weighted stocks inside the Nasdaq. If it continues lower, it will weigh on the AI complex and the broader QQQ structure.

• Tesla is also showing weakness. The stock pulled back aggressively toward its 10-day EMA on Friday and now looks vulnerable to forming an Eve-style double top on the daily chart. If that structure confirms, we would expect a move lower toward the 10-week moving average and 50-day EMA area around $357.

• The message for QQQ is clear. The trend is still powerful, but the leadership is extended, and several major components are beginning to show short-term exhaustion. This is not the place to chase growth exposure. It is a place to protect profits, wait for pullbacks, and avoid buying marginal highs.

S&P 400 Midcap

53.00%: over 20 EMA | 58.75%: over 50 EMA | 58.00%: over 200 EMA

• The mid-cap complex remains in a much healthier technical position than the Nasdaq or SPY.

• MDY has continued to consolidate near highs, with the average true range tightening and price holding up well. Relative volume has been more sporadic on the daily structure, while weekly relative volume is declining near highs.

• That type of action is not necessarily bearish. In fact, after a strong rally, declining volume during consolidation can be constructive if price continues to hold support.

• The most important point is that MDY is nowhere near as extended as the mega-cap indices. QQQ is sitting at 9.33 ATR multiples above its 50-day EMA, while SPY is around 8.2 ATR multiples. That creates much worse long-side asymmetry in the large-cap indices.

• Mid-caps do not have the same issue and breadth is also holding up better underneath the surface. The percentage of mid-cap stocks above their 50-day and 200-day moving averages remains steady, which tells us the intermediate trend is still supported.

• We still believe MDY is likely to continue higher, and the mid-cap complex remains one of the better areas of the market for fresh long exposure because it has cleaner asymmetry than the more extended mega-cap growth trade.

Russell 2000

60.49%: over 20 EMA | 64.13%: over 50 EMA | 60.70%: over 200 EMA

• IWM remains the strongest major capitalization group on a relative strength basis, with an 81 relative strength rating versus the SPX.

• The Russell 2000 is currently sitting around 4.59 ATR multiples above its 50-day EMA, which is elevated, but not extreme compared with QQQ, SPY, or the semiconductor complex.

• We are still seeing consolidation after a nearly two-month rally, with relative volume declining across roughly 57 trading days. There was a failed breakout last week on the intermediate cycle, and on the short-term cycle we are seeing demand hold around $288, while supply continues to build near the highs.

• That said, IWM remains much better positioned than the mega-cap indices and small caps are still holding their structure, still showing high relative strength, and still acting like one of the better expressions of risk appetite in the market.

• We would not view this as a bearish setup. The more likely scenario is continued consolidation followed by another attempt higher, especially if liquidity continues rotating away from the most extended mega-cap and semiconductor areas.

FOCUSED GROUP
XLV: Key Healthcare Groups Turning Higher

• Our focus group today is healthcare, using XLV as the main proxy and XLV is starting to become interesting because it is holding the 20-week moving average around $158, which was tested and bought last week.

• Friday’s session came with the highest relative volume since May 13th, and the candle range was around 0.8 times ADR. The candle itself was a doji near highs, which signals some indecision, but the bigger point is that healthcare is starting to show signs of demand at higher-timeframe support.

  

  XPH VRVP Daily & Weekly Chart

• The more important strength is beneath the surface as XPH, the pharmaceutical ETF, is one of the strongest areas inside healthcare. It is consolidating well on both the weekly and daily structures, holding the rising 10-day moving average, and showing buyer aggression on dips.

• On Friday’s lows, XPH saw roughly 3.3K shares traded green versus around 2.7K shares traded red, which tells us buyers are still defending the pullback.

  

  XBI VRVP Daily & Weekly Chart

• XBI, the biotech ETF, is acting even better. Biotech is pushing higher and has formed a Morning Star reversal pattern across the last three weeks of price action.

• Morning Star formations are one of the strongest bullish reversal structures in candlestick analysis, and the pattern becomes even more useful when it appears after a reset into higher-timeframe support.

• This matters because as long-side asymmetry decreases in the most extended growth groups, we should expect capital to start looking for cleaner rotations. Healthcare is more defensive than semiconductors or quantum, but biotech can still offer strong upside when risk appetite is present.

• The key point is that healthcare is beginning to improve at the exact moment when the growth complex is becoming more extended.

• We are not saying the market is going fully defensive. We are saying that relative asymmetry is starting to shift. Growth leadership is still intact, but healthcare, pharmaceuticals and biotech are now showing enough strength to deserve close attention.

• If XLV continues to hold the 20-week moving average and XBI continues confirming its reversal, healthcare could become one of the more attractive rotation trades as extended growth names begin to cool.