MARKET ANALYSIS
Here’s All You Need To Know

• U.S. equity futures are opening higher to start the first full trading week of 2026, but this bounce should be treated with caution rather than enthusiasm.

• The rally is coming after several consecutive weak sessions and into clearly defined technical support, which makes the rebound largely expected rather than indicative of fresh upside conviction.

• The market continues to show very erratic price action, with sharp overnight moves followed by weak or inconsistent follow-through during cash sessions.

• This environment strongly favors shorter-timeframe positioning over swing-style exposure, as directional moves are failing to sustain beyond one or two sessions.

• Geopolitical developments in Venezuela are driving cross-asset reactions, but the equity response remains measured. Venezuela accounts for less than 1% of global oil supply, which explains why crude prices are largely unchanged despite the headlines. The more notable reaction is sector-specific, with energy equities seeing strong bid activity on policy expectations rather than spot price movement.

• U.S. oil and energy stocks are outperforming after comments from President Trump regarding potential U.S. involvement in restoring Venezuelan oil production. This is a policy-driven equity move, not a supply shock, and should be viewed through a tactical lens rather than a broad macro shift.

• Precious metals are pushing higher again, extending a trend that has been intact for months. Gold and silver strength continues to reflect uncertainty, geopolitical risk, and positioning, rather than inflation expectations alone. Importantly, this bid has remained persistent even as equities attempt to stabilize.

• The AI complex is providing selective support to index futures, particularly after strength in suppliers and semiconductor names. However, this is not broad-based buying. Recent breakouts across AI and mega-cap tech have repeatedly failed to generate sustained momentum, which remains a key concern.

• Despite today’s gap higher, the market has not demonstrated marginal buying pressure at highs. Recent sessions have consistently shown strength being sold into rather than expanded upon. Until that behavior changes, gap-up opens should be viewed as potential liquidity events rather than confirmation signals.

• Volatility remains suppressed on the surface, but underlying dispersion is elevated, with sharp moves in individual names and sectors occurring alongside index indecision. This reinforces the need for tighter risk management and realistic expectations around follow-through.

• The key focus today is not the open, but how price behaves after the first retracement. If this bounce is going to matter, the market must hold its gap-up lows and show acceptance above key intraday levels. Failure to do so would reinforce the ongoing consolidation and corrective regime.

Nasdaq

37.62%: over 20 EMA | 41.58%: over 50 EMA | 54.45%: over 200 EMA

• The QQQ experienced a particularly painful session on Friday, marked by a very wide range and elevated volatility. The ETF recorded an ADR% of approximately 1.07%, with an intraday high-to-low swing of roughly 2.21%, underscoring how aggressive and emotional the price action has become at these levels.

• Friday’s weakness followed yet another rejection at the declining resistance level near $622, a level that has repeatedly capped upside attempts since the late October peak. This rejection reinforces the broader message that upside follow-through has remained elusive despite multiple technically “clean” setups.

• Importantly, downside pressure was met with clear demand at the $610 area, where price bounced directly off the confluence of the rising 10-week EMA and the rising 50-day EMA. This zone continues to act as the most critical structural support on the intermediary trend and explains why sellers have struggled to push materially lower.

• While the short-term trend remains difficult and choppy, it is important to acknowledge the constructive underlying structure. Since mid-November, the QQQ has continued to print higher lows, even as upside progress has stalled. This is a key feature of the current contraction and should not be ignored.

• The market is now approaching a resolution point in this intermediary trend contraction. Weekly volatility, as measured by ADR%, has been compressing, and weekly volume has continued to decline, both of which are the expected characteristics of a market coiling for a larger move.

• Today’s gap-up open will be closely watched, but the open itself is far less important than how price behaves throughout the session and, critically, how the QQQ closes. Recent history has shown that gap-ups have frequently failed, offering liquidity rather than continuation.

• This context is especially important given that Friday produced a large number of failed breakouts across high-quality technology names, including Google, Apple, and Nvidia. These were technically strong setups that nonetheless failed to attract sustained marginal buying pressure.

S&P 400 Midcap

49.00%: over 20 EMA | 62.25%: over 50 EMA | 57.75%: over 200 EMA

• When looking at the MDY, we continue to see tremendous relative strength in the mid-cap complex, which remains one of the strongest segments in the market right now. This strength was clearly on display during Friday’s session.

• The MDY staged a meaningful recovery on Friday on approximately 103% relative volume. While that number may not appear extreme in isolation, the location of that volume is what matters. The bounce occurred precisely at the rising 10-week EMA, which is exactly where demand needed to step in to keep the mid-caps structurally intact.

• From a relative strength perspective, mid-caps continue to materially outperform Nasdaq-heavy growth names, and this divergence has been persistent rather than episodic. This is an important signal, particularly in a market environment where leadership has been narrowing.

• One of the most constructive technical developments is that the 10-week EMA level that held on Friday is the same price zone that capped MDY repeatedly from late August through early autumn. Former supply has now been cleanly flipped into demand, which is a sign of healthy trend progression.

• As long as MDY continues to hold above this reclaimed support zone, the probability strongly favors higher highs ahead. The structure, relative strength, and behavior around key moving averages all point toward continued leadership from mid-caps.

Russell 2000

29.52%: over 20 EMA | 51.84%: over 50 EMA | 59.41%: over 200 EMA

• The IWM largely mirrored the behavior we saw in the mid-caps, although it is important to highlight that small caps are still exhibiting weaker relative strength. This is evident in their greater distance from the 52-week highs, with IWM sitting roughly 3.3% below, compared to MDY at approximately 1.5% below.

• Small caps also experienced a steeper retracement during the most recent pullback phase. While this places them in a less constructive position relative to mid-caps, it is still important to remember that these two segments tend to move in tandem once broader market direction reasserts itself.

• From a technical standpoint, Friday’s session was encouraging. The IWM successfully held the rising 10-week EMA at $245.75, which also aligns precisely with the rising 50-day EMA. This confluence is a critical support zone, and demand responded exactly where it needed to.

• The session printed a green hammer candle on roughly 100% relative volume, which signals active participation rather than a low-liquidity bounce. This gives additional credibility to the move off the lows.

• From here, the key level we are monitoring is $249. A push back above this area would allow the IWM to reclaim all of its major daily moving averages, which would materially improve the short-term technical posture.

• While small caps remain the weaker sibling relative to mid-caps, Friday’s action was a constructive response to support, and the segment continues to show resilience despite broader weakness in large-cap and mega-cap technology.

FOCUSED STOCK
SOFI: A 3 Month Long Base In Leading Group

ADR%: 3.65% | Off 52-week high: -16.1% | Above 52-week low: +219.3%

• SoFi is one of the strongest stocks in the market right now from a pure base-building and structure standpoint.

• On the weekly chart, SoFi has been forming an exceptionally tight contraction for just over 105 days, which is a long time to coil without breaking character.

• From a thematic perspective, SoFi sits inside financials, which remains one of the strongest sectors in the market right now. Technically, the stock has shown very linear, repeatable bounces off its rising 20-week EMA, with the most recent test occurring on Friday.

• Price came down into that moving average around 26.18, found demand immediately, and pushed back higher into both the weekly and daily point of control. That is exactly how strong bases behave when they are being accumulated rather than distributed.

• At this point, SoFi is trading in an extremely tight range, roughly 0.6% wide, and is pressing directly into the upper end of its multi-month range. A clean breakout would occur above 27.66–27.78, which has capped price for nearly a month.

• Friday’s move was especially constructive because it came on the highest relative volume since December 12, while higher lows continue to form underneath price.

• That said, it’s important to stay disciplined here as pullbacks have consistently been higher-probability entries than breakouts for months, and SoFi is no exception.

• If price opens strong and extends aggressively, patience is warranted. The preferred approach would be either an intraday pullback to fill a gap or a secondary retracement that allows risk to be defined.

• Even so, SoFi remains one of the leading stocks inside a leading sector, and this is exactly the type of structure that tends to lead once conditions improve.

FOCUSED GROUP
XLI: Industrials Leading A Stage 2 Rally

• Industrials continue to stand out as one of the most constructive areas of the market, and XLI’s action last week reinforced that view.

• On Friday, price pulled back directly into its rising 10-week EMA around 154.90, found immediate demand, and reversed higher. That move closely mirrors what we like to see following a confirmed breakout.

• The more important context is the weekly breakout that occurred during the week of December 8. XLI cleared a base that had been forming since early July, and last week’s pullback successfully retested prior resistance around 155 and flipped it into support.

• This type of resistance-to-support transition is one of the most reliable continuation signals in technical analysis, especially when it occurs on higher timeframes.

• What makes Industrials particularly compelling right now is relative strength. While technology and other growth segments continue to chop and fail to produce consistent follow-through, Industrials are holding gains, respecting key moving averages, and attracting steady demand on pullbacks.

• Our internal scans are also flagging a growing number of industrial names beginning to push out of bases, which adds confirmation beneath the surface.

• From our perspective, Industrials are firmly a top-three group to be tracking right now.