OVERVIEW
Stay Vigilant: The Tide May Be Shifting

🟨 Mixed Risk Posture: We’re shifting to Risk-Off on growth and speculative names — particularly in extended tech — but maintaining Risk-On in defensive sectors like energy and gold. After weeks of strength, market leaders are starting to show signs of exhaustion, and volume divergences are stacking up. That doesn’t mean a top is in — but it does demand caution.

🔄 Rotation In Motion: Small caps (IWM) are testing key moving averages after a strong rally; midcaps (MDY) are hesitating at a major breakout level; and large caps (QQQ) are flashing early warning signs of a potential short-term cool-off.

📌 What to Do Now: It’s time to take a more tactical approach. That means trimming into strength, avoiding new exposure in extended names, and watching how the tape responds to today’s PPI data.

Don’t lose sight of the broader trend — but recognize when the short-term tone has changed. The best traders aren’t bullish or bearish. They’re reactive.

MARKET ANALYSIS
Today’s Reaction To PPI Is Key

Wednesday gave us a cooler-than-expected CPI report — headline and core inflation both came in slightly soft — yet the market didn’t respond with strength. That in itself is important information.

When a positive catalyst gets a muted or even negative reaction, it tells you a lot about positioning, expectations, and the market's appetite for risk.

Today, we get the next key piece of the inflation puzzle: the Producer Price Index (PPI). Unlike CPI, which measures what consumers pay, PPI reflects the price businesses pay for goods and services.

It's essentially upstream inflation — if producers face rising costs, they often pass those on to consumers, which eventually hits CPI. That’s why these two reports are often viewed together. PPI can be a leading signal for inflation trends down the road.

Markets are forward-looking. Whether the PPI print is a little hot or cold doesn’t matter as much as how stocks respond.

• Do we see buying on weakness?

• Selling into strength?

• Are leaders getting bid?

• Are defensives rotating?

Keep in mind: many of the strongest stocks and sectors — especially tech and semis — have run hard over the past few weeks. We’re seeing signs of fatigue: relative volume thinning out, failed breakouts, more indecision candles. This doesn’t mean a crash is coming. It just means we’re likely entering a digestion phase.

📌 What to Watch:

• If PPI comes in soft and the market rallies — that’s confirmation of buyer support.

• If PPI comes in hot and the market shrugs — that’s risk-on.

• But if the market sells off regardless of print? That’s a warning.

The best traders aren’t trying to interpret the data itself. They’re watching how the tape responds — that’s the only truth that matters.

Let price tell the story. Stay nimble & open minded.

Large Cap Tech (QQQ) — Grinding Higher, but Signs of Exhaustion Appear

The Nasdaq 100 (QQQ), which tracks large and megacap tech, has been grinding higher for weeks on persistently low relative volume. That in itself isn’t necessarily bearish — but it does suggest participation is narrowing, and we should remain on alert for signs of fatigue.

🔄 Yesterday’s session looked like it might be a breakout day, with strong early momentum — but that move reversed intraday. The resulting candle was tight and orderly (not a panic), and QQQ is still holding comfortably above its rising 10-day EMA.

☕ Technically, the cup and handle pattern is still fully intact and being respected. There’s no reason to panic here — but there’s also no reason to press aggressively.

🔍 Internals showed some cracks emerging in the extended leadership names. We’re not seeing broad tech weakness, but some of the most overbought names may be signaling the need for a breather.

📌 What to Watch:

• A decisive PPI reaction today could be the catalyst for the next leg — either higher or into contraction.

• If we see weakness, the ideal scenario is a pullback into the rising 10/20-EMAs or a healthy handle continuation.

• If we rip higher without volume or confirmation, don’t chase. Let price prove it.

We’re still risk-on overall, but this is not the moment to add fresh tech exposure blindly. Be selective, and wait for the next clean pattern.

Midcaps (MDY) — Another Test of Key $565 Resistance

The midcaps pulled back modestly yesterday after another rejection near the ~$565 zone — a level that’s now acted as resistance three separate times since mid-May 2025. This repeated rejection is significant: it tells us there’s meaningful overhead supply here that hasn’t been absorbed yet.

🟡 Relative Volume was low on yesterday’s red session, which is constructive. When price pulls back but participation dries up, it usually signals a lack of strong selling conviction.

🟢 Technically, MDY held its rising 10-day EMA on the pullback — another sign that dip buyers are still active and demand hasn’t disappeared.

📌 What to Watch:

• A clean breakout over ~$565 on increasing relative volume would finally clear this lid and confirm a fresh leg higher.

• A breakdown below the 10-day EMA would shift the tone and suggest the index needs more time to consolidate — or that a deeper pullback is unfolding.

Midcaps remain stuck in a tightening coil just below breakout territory. Stay flexible: there’s no clear trend breakout here yet, but that’ll change quickly if bulls push through resistance with force (or the bears…).

Small Caps (IWM) — First Real Test in the New Uptrend

The small caps pulled back yesterday, printing a bearish engulfing candle — a classic sign of short-term exhaustion. This comes after a strong multi-week run that pushed IWM well above its rising 10-day EMA.

So while the red day might look ominous in isolation, context is everything: the index was stretched, and this kind of pullback was both healthy and expected.

🟠 Relative Volume has steadily declined the last few sessions as price pushed higher. That’s a tell that participation was thinning — which often precedes a fade or reset.

📉 Premarket action today is soft, and IWM looks likely to test the rising 10-day EMA. This is a critical area — it’s been a magnet and springboard throughout the rally.

📌 What to Watch:

• A sharp bounce off the 10-day EMA with increased relative volume would signal demand remains strong and the uptrend is intact.

• A weak close below the 10-day EMA would mark a change in character — the first crack in this new Stage 2 rally. That would shift the short-term tone from “buy the dips” to “wait for confirmation.”

🧠 Mindset Check: Confidence Is a Strategy, Not a Feeling

One of the most overlooked edges in trading isn’t a chart pattern, a system, or a setup. It’s confidence — real confidence — rooted in preparation and process. And if you’ve been struggling, it’s probably not because you lack talent… it’s because you’ve chipped away at your own confidence without realizing it.

Here’s the reality: confidence is cumulative. It builds when you review your trades, execute based on your plan, and stay present in the market. But the opposite is also true — every time you hesitate on a valid setup, every time you chase a name out of FOMO, or skip your post-trade analysis, you send yourself a signal that says, “I can’t trust myself.”

That signal compounds. And then you hesitate again. Miss the next A+ setup. Exit early. Get stopped out. And suddenly you’re not just lacking confidence — you’re questioning your entire process.

This is the part nobody wants to hear — but it’s the truth:

You don’t get conviction by reading about setups; you get it by living them. By seeing how price reacts at key EMAs. By watching how volume kicks in around the point of control. By sitting through the fakeouts, the clean moves, the traps, the winners. Over and over.

🧭 The Fix:

• Start small, but be consistent. Win or lose, trade your plan and show up for review. The process is what rebuilds trust.

• Tune out the noise. It doesn’t matter what’s working for someone else if it doesn’t fit your playbook. Their confidence won’t cash your P&L.

• Capital is limited, but opportunity is not. This is the most important mindset shift you can make. You don’t need to “catch up.” You need to be ready.

Confidence is earned in silence. In the scan you run every morning. In the discipline to not overtrade when it’s not your spot. In the humility to say, “I’m not ready today — and that’s okay.”

FOCUSED STOCK
KGC: Kinross Gold Corporation

Gold continues to behave as a classic rotation play in the event of equity pullbacks — and that narrative is gaining traction again. If we see another bout of volatility in high-growth equities, capital often rotates into perceived "risk-off" havens like precious metals. That makes the gold miner group (GDX) especially important to track right now.

KGC is emerging as one of the cleanest technical names within the space.

🔥 Why it Stands Out:

• Yesterday’s action showed strong character: KGC pulled back to its rising 20-day EMA and reclaimed the 10-day EMA — a classic technical entry point for momentum traders.

• Relative volume picked up, showing intent from institutional buyers stepping in at a key demand zone.

• The visible range volume profile shows light overhead supply up to the $16 zone, which is the next key resistance to clear. If price can chew through that, there's room for a trend leg higher.

🧭 How to Frame It:

This isn’t about gold as a macro hedge — it’s about money flow. If tech and cyclicals take a breather, the miner group could become one of the primary beneficiaries. We're not trying to call the breakout in KGC, but rather stalk a second-entry or ORH (opening range high) opportunity on strength.

📌 What to Watch:

• Any pullback that respects the rising 10/20-day EMAs can offer a low-risk setup.

• Watch how GDX behaves as a group. If rotation is real, you'll see other leaders like NEM, AEM, or GOLD start to tighten and break.

FOCUSED SECTOR
XLE: Energy

The Energy sector (XLE) just delivered a powerful two-day surge off its Point of Control (POC) — a level it’s consolidated around for nearly two months. This breakout move came on high relative volume and has now brought XLE directly into its declining 200-day EMA, which acts as key overhead resistance.

💥 What’s driving the move?

This isn’t isolated — it’s broad-based. USO (oil) and FCG (natural gas) are both leading with strength. Meanwhile, nuclear names like SMR and NNE have surged, and the uranium ETF URA has quietly started to build a multi-week base. The entire non-renewable complex is catching strong bids.

📌 What to Watch Now:

Short term, we’re a bit extended. A brief pause or digestion under the 200-day EMA would be constructive and increase the probability of a clean breakout. This is a great moment to turn scans toward the Energy sector and identify leaders tightening just below their breakout levels — that’s where risk/reward is best.

🧠 Remember: Sector flows really matter. Don’t chase extended names — look for the strongest setups in the strongest groups. Energy is officially back on the radar.

Q&A
Got a trading question? Hit reply and ask!

Q: “How do you know which sectors or groups to go long vs. short?”

This is arguably the most critical skill in momentum-based swing trading — and one of the least talked about.

The short answer: Follow the flow of capital.

Swing trading isn’t just about spotting chart patterns — it’s about identifying where institutional money is rotating and aligning yourself with it. Markets are driven by flows, and those flows are constantly shifting between sectors, groups, and styles.

📊 What do we look for?

We track relative strength, rising EMAs, expanding volume, and clean contraction patterns — but always in the context of where the strongest flows are. If semiconductors (XSD) are breaking out while biotech (XBI) is fading, our edge is in semis. If financials (XLF) are catching bids on rising rates while tech is compressing, we pivot accordingly.

We don’t guess. We follow price and volume — the only two true indicators.

💡 Why does this matter?

Because stock selection starts at the top of the pyramid. Sector → Group → Stock. When the right groups lead the market, your win rate, risk-to-reward, and conviction improve drastically. Buying the strongest stock in the weakest group is a recipe for frustration. But buying the strongest name in the strongest group? That’s where alpha lives.

📌 How we help at Swingly PRO:

Every single day we scan 50+ sector and group rotations to identify the top momentum flows. Then we go bottom-up to pinpoint the best contraction patterns and breakout candidates in those areas. We give you the roadmap — so you can focus on execution. 

Want to try it free for 30 days?→ see what’s included