OVERVIEW
Expect Some Choppiness

Yesterday's trading session reinforced the prevailing bullish sentiment. Following a five-week period of subdued activity from mid-December, the market decisively broke out of its slump. This upward trajectory is evident in the consistent gains of the S&P 500 (SPY) and Nasdaq 100 (QQQ), both of which have now risen for six consecutive days. The current bullish backdrop is supported by a confluence of positive factors. These include a resilient economy, easing inflationary pressures, a stabilization in interest rate hikes, a strong start to the earnings season, and a diminished focus on tariffs under the current administration. This combination of favorable conditions has created a fertile ground for continued market growth

Several leading stocks within our focus, particularly within the technology sector, exhibited strong performance. Notable examples include Applovin (APP) and CommScope (COMM), both of which experienced significant upward breakouts. However, it's crucial to acknowledge the inherent volatility of the market. Sustained aggressive upward movements are rarely seen without periods of consolidation or even minor pullbacks and now that we have such as a pronounced push higher, it is only healthy for some consolidation to take place.

Nasdaq & S&P 500

The recent surge in the QQQ and SPY, which track large-cap companies, signifies a robust bullish trend in the stock market. This upward momentum is particularly evident among larger companies. However, underlying this bullish sentiment are potential signs of a forthcoming slowdown or even a reversal.

The QQQ, which tracks the Nasdaq 100, has breached a critical resistance level. Yet, it encountered selling pressure near the $534 mark yesterday, casting doubt on whether the gap created by yesterday's strong opening will be filled. This hesitation suggests a potential pullback.

Similarly, the SPY, which tracks the S&P 500, exhibits a comparable pattern but with even more pronounced resistance. It also faced selling pressure near the $608 level, a point where it previously experienced a significant decline during the December sell-off. This reinforces the possibility of an impending market correction.

While the market has demonstrated impressive strength recently, it's crucial to acknowledge the potential for a technical pullback here to allow for some digestion of recent gains.

S&P Midcap 400

The mid-cap market, as represented by the MDY ETF, is showing signs of weakness. Prices have extended beyond their moving averages, indicating overbought conditions. Furthermore, the pre-market trading has failed to hold above the critical $600 level, a level previously identified as significant from both a technical and psychological perspective.

Yesterday's trading session exhibited weakness. An initial high-volume move pushed the MDY slightly higher, but this was followed by profit-taking and aggressive selling. At the time of writing, the MDY is showing signs of potential further decline. Ideally, bulls would want to see the MDY find support at $600, a key pivot point for the mid-cap sector. This would require a strong influx of demand to counteract the current selling pressure.

Russell 2000

Small-cap stocks are currently consolidating within a significant supply zone and yesterday's low-volume trading suggests a mere intraday contraction rather than any real substantial shift in market sentiment.

This is important to remember as the longer term picture very much is strong for all of the market segments we have discussed.

DAILY FOCUS
The Power Of Sitting Back

The market currently finds itself in an uptrend following a significant pullback. While a short-term retracement is highly probable, it's an entirely natural and healthy part of the market cycle. In fact, some of the most explosive breakouts occur after a period of consolidation or a minor pullback.

Ideally, we would like to see the market retest prior resistance levels, ideally met with a high volume of buying aggression. This would significantly bolster market confidence and pave the way for a continued march towards new highs.

Often, the most effective way to gauge market behavior is by closely examining the performance of leading stocks. These stocks act as leading indicators, providing valuable insights into the overall market trend. Currently, stocks like PLTR and SOFI, which have recently experienced breakouts, are showing signs of extension and appear poised for a potential pullback before resuming their upward trajectory. It's crucial to remember that these leading stocks drive the indices, not the other way around.

Given our existing open exposure in two market-leading stocks, we will adopt a risk-off approach today. We will observe market behavior before committing any further capital.

WATCHLIST
No Viable Entries For Today: Watch & Wait

Today, we are not identifying any high-quality entry opportunities for our trading strategies. The market has experienced a significant and rapid upward movement.

Many of the stocks on our focused list are still in consolidation phases, or their recent breakouts have extended significantly, making them less attractive for entry at this time.

For Swingly Pro members, you have access to our updated focused list within the Circle platform. This list includes all the top-performing market-leading stocks we are actively tracking.

If you're interested in gaining access to these updates, learning more about our market scanning techniques, entry and exit strategies, or our overall trading approach, please click here.

We are currently working on several updates to the Swingly Pro offering and plan to revamp the platform's design in the coming weeks.