OVERVIEW
Things Are Looking Very Bullish

Momentum is finally making a comeback, and yesterday’s action was a big step in the right direction. We’re starting to see a shift back into equities, with the broader market turning up and key stocks breaking higher.

For the past few months, the market has been stuck in a cycle of uncertainty, with constant headlines about tariffs and economic concerns keeping investors on edge. But now, that’s starting to change. Investors are focusing less on the noise and more on what truly matters—earnings and growth.

One of the biggest signs of improvement? Market-leading stocks are moving first. This is exactly what we want to see because strong individual names breaking out often lead the way for the entire market. On top of that, intraday pullbacks are getting shorter and less intense, meaning fear is fading, and buyers are stepping in more aggressively.

It’s also important to remember a simple truth—stocks have an upward bias. Yes, corrections and pullbacks happen, but over the long run, markets tend to rise because businesses grow, create value, and drive stock prices higher. With momentum returning and sentiment improving, we appear to be on the verge of the next major move up.

Nasdaq

The Nasdaq is showing solid momentum with a strong three-day bounce. Yesterday’s session was particularly impressive, as it opened right at its POC (Point of Control) level of $521. From there, we saw a surge of buying pressure with little to no signs of aggressive selling. This type of price action is starting to build our confidence that the market is on the verge of turning, and we might be just moments away from the beginning of the next bull rally.

Today, the key focus is on the overhead resistance level at $527. If the market breaks above this level, it would mark a move out of the multi-month, choppy range the QQQ has been stuck in. While we’re in the midst of a three-day momentum burst, it's important to remember that there’s always a possibility of some digestion or consolidation before we can push through that resistance.

If you're looking to add exposure today, keep in mind that a short pause or pullback wouldn’t be surprising, nor would it invalidate the bullish thesis.

S&P Midcap 400

The midcaps are still rangebound and will likely need more time before they can break above the overhead supply level at $600, which is a significant psychological level. Until we see a clean breakout above this point, the rangebound action is likely to persist.

One concerning factor is the volume over the last three sessions—it’s been significantly lower as the price h±as risen. Typically, this kind of divergence isn’t ideal. It suggests that while prices are moving up, there isn't aggressive buying happening behind the scenes. Instead, it’s more likely a lot of people are simply holding their positions rather than new buyers stepping in.

This lack of fresh buying pressure could mean that the rally in the midcaps is less sustainable without a strong surge of volume to back it up. We’ll need to watch closely to see if we get a volume pickup to support any potential breakouts.

Russell 2000

The small caps are also exhibiting rangebound action, similar to the midcaps, but like the MDY, they’re showing strength and resilience. In fact, both bounced exactly where they needed to, with the IWM finding solid support right at its POC level. Since then, it has managed to break above its 10, 20, and 50-EMAs with minimal resistance. This price action indicates a bullish trend with strong underlying support.

Now, the Russell 2000 is hovering just below its overhead supply at $230—a key breakout zone. If the IWM can push above this level, it could trigger a major upward breakout, setting the stage for a significant rally in small caps. The setup is looking promising, and a break above $230 would likely mark the start of a new leg higher for the small-cap sector.

DAILY FOCUS
Let The Leaders Guide You

For the past few weeks and months, you’ve likely been sitting on your hands, waiting for the right moment to strike—and that moment is now. The time to get aggressive has arrived, but only with the right stocks—the momentum leaders.

We’re not looking to chase just anything; we’re focusing on the top performers—the stocks with an RS rating >95, those that have outpaced the market and are showing the strongest price action. These stocks have been moving higher for months, and they’re poised to continue leading the charge.

Here’s how you identify them:

• Look for stocks that have outperformed the broader market over the last 1 year, 6 months, and 3 months.

• They should have an ADR% above 3%, showing strong daily movement and volatility.

• Ideally, they’ll have quarterly revenue growth of >25% YoY, signaling strong fundamentals that will fuel further momentum.

• If they don’t have the revenue growth yet, they’re still in play if their price action and volume is leading the charge.

Now is the time to prioritize the stocks that are already moving, especially those that have proven themselves as former momentum leaders. These are the stocks you want to get into first—they lead the market higher, and as the market starts to turn, they’ll continue to push upward while others play catch-up.

Don’t wait for lagging stocks to show signs of life. When the market is shifting, the leaders are the ones that will drive the next rally, and they’re the ones you should be positioned in. This is your opportunity to take action. Get into those momentum leaders now before they break higher, and ride the wave to the next leg up.

WATCHLIST
Today’s Breakout Watch

DAVE: Dave Inc.

• DAVE has been one of the top-performing financial growth stocks, and it’s now setting up for a potential breakout. Over the last few months, DAVE has been trading in a sideways consolidation, finding support along its rising weekly 10-EMA. Throughout this consolidation, it has been building a series of higher lows, which is a bullish technical signal. Now, as we look at premarket action, DAVE is testing a significant breakout level above $103.

• For this breakout to hold, we’ll need to see volume pickup today. A breakout without volume doesn’t carry the same weight, so that’s something to watch closely. However, just looking at the price action alone and considering that the financial sector (both XLF and RSPF) is performing well, this sets up as a high-probability play.

RUM: Rumble Inc.

• RUM is currently setting up as a textbook Volatility Contraction Pattern (VCP) on the weekly chart. The stock has been finding support on its rising 10-EMA, and we’re seeing a noticeable contraction in price range, which is typically a precursor to a powerful move. Alongside this price action, volume is drying up, signaling that the stock is building up energy for a breakout. Now, RUM is getting dangerously close to a point where it will have to make a big move in either direction.

• Given that RUM is a strong fundamental and momentum-leading stock, we have a bullish bias here. The fundamentals and price action both suggest that the next move will likely be upward, especially as the stock has shown the ability to perform well in a rising market.