OVERVIEW
A Very Resilient Stock Market

The market put in another strong session yesterday, closing relatively flat but continuing to show solid underlying momentum. While the major indices didn’t make significant moves, market leaders remain in control, with many stocks breaking out and pushing higher. Some are entering fresh Stage 2 markup phases, while others continue their well-established uptrends. This steady progression beneath the surface is a positive signal, reinforcing the strength of the current market environment.

The most important event on today’s agenda—and one that could bring some volatility, hopefully to the upside—is the pre-market release of the Non-Farm Payroll (NFP) report and the unemployment rate. These economic indicators are closely watched as they provide insight into the health of the labor market and can significantly influence market sentiment and Federal Reserve policy.

For today’s report, expectations are for 170K jobs added, a slowdown from the previous 256K. Meanwhile, the unemployment rate is forecasted to remain unchanged at 4.1%.

Quick Breakdown of Each Measure:

• Non-Farm Payrolls (NFP): Tracks the number of jobs added or lost in the U.S. economy, excluding farm workers, government employees, private households, and nonprofit workers. It’s a key gauge of job market health and overall economic strength.

• Unemployment Rate: Measures the percentage of the labor force actively seeking work but unable to find a job. A rising rate can signal economic weakness, while a declining rate suggests a strengthening labor market.

Both metrics are critical because they shape Federal Reserve policy. Right now, companies are approaching hiring with caution, almost as if bracing for a slowdown. The labor market is cooling—not due to mass layoffs, but because businesses, especially small ones, are scaling back on job postings.

Recent data from the December Job Openings and Labor Turnover Survey (JOLTS) showed that job openings fell from 8.16 million in November to 7.6 million in December. This drop reflects a slowdown in hiring rather than an uptick in job cuts, as layoffs remain historically low. Businesses appear hesitant to expand aggressively, likely waiting for more clarity on the economic outlook before making bigger hiring commitments.

Nasdaq

The Nasdaq has continued to perform exceptionally well, posting a strong end to the week as it comfortably cleared its weekly Point of Control (POC). It is now hovering near the upper end of its multi-month range and is approaching a critical breakout level around $530. This is where the dense supply zone ends, and a decisive move above this level could trigger a sharp rally in the QQQ, pushing it higher with momentum.

The focus today isn’t necessarily on seeing the QQQ break out—though that would certainly be ideal. Instead, the key is to get a strong weekly close that sets up QQQ for a potential breakout early next week. So far, volume on the weekly candle remains relatively low, indicating that most market participants are either holding their shares or staying on the sidelines. Selling pressure has also been minimal, which is a positive sign, as it suggests that there isn’t much resistance preventing a move higher.

S&P Midcap 400

The MDY has also had a strong week and looks increasingly likely to break out next week. The index has reclaimed its rising 10- and 20-week EMAs, signaling renewed strength. However, it now faces a key test as it approaches a dense layer of overhead supply between $592 and $600. A decisive move through this zone could open the door for further upside, but for now, the focus remains on how price reacts to this resistance in the coming session.

Russell 2000

Small caps had a very strong close yesterday, with $230 serving as the final major resistance level.

Volume this week has been solid—nothing exceptional, but still notable given where we started. At the beginning of the week, IWM was in a precarious position, trading right on its Point of Control (POC) and just below the rising 10- and 20-week EMAs. This setup made it vulnerable to further downside. However, instead of breaking lower, we saw a powerful surge in demand, signaling that buyers are stepping in and pushing back against the recent downtrend.

DAILY FOCUS
When In Doubt, Always Zoom Out

The reason we analyzed the weekly chart today instead of the daily is to emphasize the importance of stepping back and looking at the bigger picture. It’s easy to get caught up in intraday price swings—or even daily fluctuations—but when a stock or index is forming a much larger base, those short-term moves can be misleading. Focusing too much on minor pullbacks or temporary volatility can shake you out of high-probability setups, even when the broader trend remains intact.

Right now, we remain risk-on, and the market continues to present strong opportunities. We have a long list of stocks we’re closely tracking, many of which are setting up well for potential breakouts. The breadth of valid setups continues to expand, further reinforcing the underlying strength of the market.

For those of you in Swingly Pro, you have access to our complete, updated Market Leaders List and Daily Focused List—where you’ll notice the increasing number of strong setups coming through.

WATCHLIST
Today’s Top Breakouts

RCAT: Red Cat Holdings, Inc.

• RCAT has been forming a long sideways consolidation base since initially distributing in late November/early December 2024. Since then, it has consistently outperformed both the broader market and its industry group, Aerospace and Defense (XAR).

• Now, RCAT is starting to push higher and is approaching a breakout above its descending level of resistance, with an estimated entry range around $11.20–$11.30. However, we've received several questions about price targets, and we want to emphasize that you cannot set a specific target before the market opens.

• Price action will dictate how the stock performs in real-time, which is why we always stress using the 5-minute opening range high as the trigger for entry. Let the market provide confirmation rather than making assumptions in advance.

SES: SES AI Corporation

• SES is a slightly different setup, as this is purely a momentum play. Unlike other setups with strong fundamental growth backing them, SES is more of a momentum burst trade. Here, we’re watching to see if it can break above its descending level of resistance and potentially trigger another aggressive leg higher.

• With a 23% average daily range (ADR), SES is an extremely volatile and explosive stock. This can work in our favor if we manage to secure a low-risk entry, as it has the potential to surge over 100% in just a few days. In fact, during its last breakout, SES skyrocketed +450% in just three sessions.

• If an entry is triggered, we plan to lock in profits quickly—closing 1/3 of the position by the end of the day if we see a strong and volatile move higher. This helps reduce overnight risk while keeping us positioned for further upside.