MARKET ANALYSIS
Here’s What You Need To Know

• U.S. equity futures are modestly higher this morning following yesterday’s mixed reaction to the January nonfarm payrolls report, with markets still digesting what a stronger labor print means for rate expectations.

• Payroll growth came in at 130,000, comfortably above consensus, while the unemployment rate ticked down to 4.3% from 4.4%, confirming that the labor market remains resilient despite recent softness in consumer data.

• The initial market reaction was relief-driven, as investors feared a material slowdown, but that strength faded as traders recalibrated expectations around Federal Reserve rate cuts.

• A firm labor market reduces the urgency for policy easing, which means tomorrow’s CPI report now carries even greater weight for near-term direction.

• If inflation comes in soft, markets can reconcile solid employment with a gradual easing path; however, if CPI surprises to the upside, “higher for longer” becomes the dominant narrative and volatility is likely to expand sharply.

• Weekly jobless claims are due this morning and are expected to show slight improvement, reinforcing the theme of labor stability rather than deterioration.

• Existing home sales are projected to decline month over month, which supports the view of a cooling but not collapsing economy.

• On the earnings front, guidance continues to matter more than headline beats, as seen with Cisco’s sharp premarket decline despite strong reported numbers, while McDonald’s outperformance highlights continued resilience in defensive consumer exposure.

• Until CPI resolves the inflation question, aggressive directional positioning carries elevated risk, and short-duration, with overnight exposure remaining a bad idea.

Nasdaq

51.48%: over 20 EMA | 50.49%: over 50 EMA | 50.49%: over 200 EMA

• The QQQ continues to respect a clearly defined declining level of resistance drawn from the January 28th high through yesterday’s rejection on February 11th. This is now the fifth test of that trendline, which significantly increases its importance as a structural level.

• Yesterday’s rejection at 617 was not random. It coincided with the declining 10- and 20-day moving averages, the weekly point of control, and prior ascending support from the November 20th structure that had previously held four separate times. That prior support has now flipped into resistance.

• Structurally, this creates a descending broadening wedge, which leaves the NASDAQ in a vulnerable position. If 605–607 fails to hold, especially the 605 level tested earlier this week, the downside opens toward 588 (approximately -4.3%) and potentially the 200-day moving average at 582 (roughly -5.2%), which also aligns with the rising 50-week moving average.

• That said, descending broadening wedges are volatility structures. If this formation breaks to the upside — particularly on expansion following CPI — it can spark a sharp relief rally.

• The equally weighted QQQE is showing the same structural formation as the cap-weighted QQQ — a descending broadening wedge developing over the past several weeks.

• Yesterday, strong demand stepped in at 102, which was a clean test of the rising 20-week moving average. That bounce was constructive and slightly stronger on a relative basis than the cap-weighted QQQ.

• However, both versions of the NASDAQ are now moving in tandem. The critical trigger for new long exposure remains the same: a decisive breakout above the descending resistance trendline.

S&P 400 Midcap

64.82%: over 20 EMA | 67.83%: over 50 EMA | 69.59%: over 200 EMA

• The mid-caps experienced a volatile session yesterday, testing 650 and bouncing, but relative volume remained muted at just 86% of the average. That is not expansion behavior.

• More importantly, we are now seeing clear distribution at highs. Between 659 and 661 — all-time highs — roughly 41,000 shares traded red compared to only 4,000 green. That is a meaningful imbalance and reflects profit-taking pressure at the top of the range.

• This is occurring after mid-caps pushed into historically elevated breadth readings. When you combine stretched breadth with visible supply at highs, short-term volatility becomes increasingly likely.

• We are not calling for a breakdown here, but the leadership group in this market is now showing signs of cooling. If rotation does occur post-CPI, this is likely where liquidity begins to shift away from.

Russell 2000

52.38%: over 20 EMA | 58.13%: over 50 EMA | 64.50%: over 200 EMA

• The IWM is forming a visible double top structure on both the daily and weekly timeframe. This formation has not yet been validated, as the 20-day EMA (around 262) continues to hold.

• Yesterday’s rejection occurred on elevated relative volume at 111%, which increases the importance of the level. If we see a decisive breakdown below 262 and especially below the 10-week moving average at 258, the double top becomes structurally valid.

• According to Bukowski’s data, double tops meet their price target roughly 43% of the time, with an average decline near 16%. They are not guaranteed, but they are statistically meaningful reversal formations.

• Breadth inside small caps has also begun rolling over, following mid-caps lower. If leadership weakens further, small caps will likely follow.

FOCUSED STOCK
APLD: The Strongest Data Centre Stock

ADR%: 12.12% | Off 52-week high: -13.4% | Above 52-week low: +1005.7%

• Our focus stock today is APLD, one of the strongest data center names in the market, currently holding a 99 relative strength rating versus the S&P 500.

• Over the past 12 months, APLD has gained over 1,000%, driven in part by significant acceleration in quarterly revenue growth. This is not just momentum — it is supported by improving fundamentals.

• Technically, the stock has rejected much of the broader growth weakness and continues to build higher lows above its rising 20-week EMA. On the weekly chart, it has constructed a 126-day base dating back to October.

• If CPI triggers a rotation back into growth, APLD is precisely the type of high-momentum, structurally strong name that can lead that move. It should be firmly on watchlists.