OVERVIEW
The Fed Is Expected To Cut Rates

Yesterday’s market session exceeded expectations with remarkable strength. All major indices closed solidly in the green, adding an impressive $1.3 trillion to the U.S. equities market in just one day. This surge in market value reflects optimism that’s hard to ignore and sets the stage for potential trends moving forward.

One factor on investors’ minds is the possible return of policies known to spur business growth. Donald Trump has historically been viewed as a pro-business leader. His policy preferences often include lower corporate tax rates, deregulation, and initiatives aimed at boosting domestic economic growth. Such moves can act like jet fuel for the economy, supporting riskier investments like stocks.

If we look back to the 2016 presidential election, the S&P 500 Index gained nearly 5% from the day before the election until the end of that year. This sharp rally, dubbed the “Trump rally,” was a clear indicator of how the market embraced the potential of his pro-business stance. With similar dynamics possibly at play now, we could be seeing the early signs of another period of stock market enthusiasm driven by these expectations.

Today’s Interest Rate Decision

U.S. stock futures are ticking up this morning as everyone waits for a big announcement: the Federal Reserve’s decision on interest rates set for Thursday. This comes right after a strong market rally driven by the surprising news of Donald Trump’s return to the presidency for a second term.

Traders are already expecting a 0.25% interest rate cut, which has been mostly factored into current prices. The main thing everyone is watching now is what the Fed’s statement will say about the future. Will this rate cut be the start of more rate reductions to come, or just a one-time event?

Usually, before such an important decision, the market gets a bit tense and cautious as traders prepare for potential surprises. But today feels different. U.S. stock futures are staying calm, and with yesterday’s strong market performance combined with the high 96% chance of a rate cut already expected, anxiety seems lower than usual.

Adding to this calm is the VIX, or the volatility index, which measures market uncertainty. Right now, it’s at its lowest point in months, trading below 16 and under its 200-day moving average.

This suggests that traders don’t anticipate major market swings at the moment which is a very strong sign that we are likely to continue a trend continuation higher.

Nasdaq

The Nasdaq showed strong momentum in yesterday’s session, with the QQQ (an ETF tracking the Nasdaq 100) breaking through its previous resistance level. What stood out was how it pulled back intraday to test that breakout zone, and buyers jumped in right away, pushing major tech stocks to new record highs, well above the $500 mark.

Volume was notably high, which is crucial for confirming price movement and trends. This solid volume gives us confidence that the Nasdaq is likely to continue on an upward path in the coming weeks.

As for today’s session, a mild pullback or sideways movement wouldn't be surprising, especially with the anticipation surrounding the Fed’s upcoming announcement. However, we still expect a strong finish. The current level of demand and aggressive buying is so robust that a weak session or a retest of yesterday’s lows seems very unlikely especially with the high number of setups that currently exist in the market.

S&P Midcap 400

The midcap stocks stole the show yesterday, outperforming even the large tech names with an extraordinary surge. The MDY (an ETF tracking midcap stocks) posted one of the highest trading volumes in its history, propelling midcaps to new all-time highs and closing at a record level.

There was a brief intraday dip as some traders took profits, which led to a few stop-outs on positions (we experienced some ourselves). However, buyers quickly stepped in with strong demand, regaining control and pushing prices past the $600 mark for the first time ever. This aggressive buying shows the strong conviction behind the move, highlighting continued momentum in the midcap space.

Russell 2000

Small-cap stocks followed a similar trend, but with even more impressive volume. They’re now just 3% away from reaching all-time highs. The incredible strength we’re seeing in both midcap and small-cap stocks deserves serious attention. For swing traders, recognizing how bullish investors are on these more speculative segments of the market is crucial.

Let’s take a moment to break this down:

When investors show strong interest in small-cap stocks, it signals confidence in riskier assets. This generally points to a strong appetite for growth and can be a sign of overall market optimism.

Small and midcap stocks tend to significantly outperform large and mega cap stocks during periods of robust economic growth, typically when inflation is low and borrowing costs are cheap. In such periods, institutional investors—the ones who truly drive market movement—are confident in the health of the U.S. economy and bet on the most volatile and high-growth stocks performing best. This explains the higher trading volumes in the MDY (midcaps) and IWM (small caps) compared to the QQQ (large-cap tech).

This development is exciting for swing traders because smaller-cap stocks often have higher average daily ranges (ADR%). This means they can make larger and quicker price moves compared to their larger-cap peers.

For example, a mega-cap stock like Apple (AAPL) has an ADR% of about 1.5%, while a small-cap stock like EH has an ADR% of 7%. To put this in perspective, for Apple to see a 50% move, it would need an inflow of over $1.5 trillion due to its massive market cap of over $3 trillion. On the other hand, EH, with a market cap of around $1 billion, would only need about $500 million to make the same 50% move.

DAILY FOCUS
Seize The Momentum: Market is Ripe for Action

The market is running on all cylinders right now, and as a swing trader, it’s crucial to be sharp and ready to move at the right moment. The current trend is strong, and momentum is really picking up—especially in mid and small-cap stocks. This is a high-speed market, and precision is key. Every second counts. Now is the time to act decisively, find the best setups, and capitalize on the opportunities that are right in front of you. Let’s break it down:

1. Zero In on the Best Setups

With the rally pushing through, mid and small-cap stocks are clearly leading the charge. These sectors are seeing impressive volume and strong breakouts, making them prime candidates for our next moves. Look for stocks that are breaking above resistance or showing strong signs of accumulation—like volume spikes. These are the stocks that have the best chance of continuing their upward trajectory.

Beyond the breakouts, pay attention to those that are pulling back to support zones or consolidating after a recent rally. These “rest periods” often provide great opportunities for re-entry before the next leg up. Your job is to be early—find those setups that are just about to launch.

2. Be Aggressive in Your Entries

Speed is crucial here. The market is moving fast, and hesitation can cost you. When you spot a high-confidence setup, take action. Don’t wait for the perfect confirmation. Trust your analysis, and pull the trigger. Yes, you’ll need to be selective, but don’t overthink it—if the chart looks strong and the trend is clear, execute the trade.

Aggressiveness doesn’t mean carelessness. Be deliberate in your actions, but when a trade is confirmed, take it with conviction. Timing is everything, and waiting for an overly cautious confirmation can lead to missed opportunities.

3. Adjust Position Size for Market Conditions

In a volatile, high-growth environment like this, you should be ready to adjust your position sizes. The market is offering strong growth potential, but that comes with some risk, especially in small-cap stocks. If your setup is solid and the stock shows clear momentum, don’t be afraid to increase your position size. But always keep risk management in mind. Make sure you’re comfortable with the potential loss if things don’t go as planned.

Position size is not a one-size-fits-all approach. A high-confidence breakout trade might warrant a larger position size, whereas a stock that’s in a consolidation phase might call for a more conservative entry. Size up your risk with the trade’s strength but never let emotions or greed dictate your position sizing.

4. Stick to the High-Quality Trades

In a market this fast, it’s easy to get excited and jump on everything. Resist that urge. Stick to your plan and focus on the stocks that are showing the best setups. Quality always beats quantity. You don’t need to trade every stock that moves—focus on the ones that align with your criteria and the current market strength. Avoid chasing stocks or jumping on trades that don’t fit your strategy.

Remember: every trade should have a clear reason. If you can’t explain why you’re in the trade, then it’s time to step back and re-evaluate. Discipline is crucial—don’t get distracted by every market move.

5. Trail Your Stops and Let Profits Run

Once you’re in a trade and the stock is showing strength, let it run. Don’t be quick to sell just because you’re in profit—allow the trend to unfold. Use trailing stops to lock in profits while giving the stock room to continue its move. If the stock keeps pushing higher, your stop can automatically adjust, securing more profit.

At the same time, be ready to add to your position if the stock keeps showing strength. Momentum stocks often have multiple breakouts, so if you’re in one that’s still moving, consider scaling in at new buy points. Be sure to adjust your stops to reflect these new positions.

6. Don’t Fear Minor Pullbacks—They Could Be Opportunities

Minor pullbacks or periods of consolidation are normal during a strong uptrend. These pauses don’t mean the trend is over—they often mark opportunities to buy more as the price tests key support levels. Don’t panic if you see a small retracement; instead, treat it as an opportunity to scale into your positions or add more size. If the stock is holding above key support and showing no signs of weakness, this is your chance to get more aggressive.

Watch for stocks that are retesting breakout zones or pullbacks to previous levels of resistance (now turned support). These are often the best entry points for the next leg higher.

Want to See the Setups We’re Watching?

As a member, you’ll get access to all the top setups we’re watching, with detailed analysis on entry points, targets, and risk management.

Plus, we’ll show you which industry groups money is flowing into, so you can focus on the most promising sectors with the strongest momentum.

In addition, we provide you with a comprehensive breakdown of our trade management strategy—from position sizing to trailing stops and scaling in. We’ll help you stay on track and make confident decisions as the market moves. 

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WATCHLIST
A Handful Of Today’s Strong Stocks

RIVN: Rivian Automotive, Inc

• FUTU, a China finance stock, is primed for a breakout as China stocks and the XLF financial sector are both rallying. After several weeks of sideways trading on low volume, it’s now testing the $102 level in premarket.

• We're watching for a 5-minute Opening Range High (ORH) break above this level to trigger a full-sized position. This setup has high breakout potential, and we’ll be ready to execute once the confirmation comes through.

CYN: Cyngn Inc.

• CYN has been struggling for a while, but there’s a glimmer of hope with the recent announcement of Marty Petraitis joining the sales team. According to William O'Neil’s CAN SLIM strategy, new leadership can be a game-changer, and this could be what CYN needs.

• We’re seeing strong buying action premarket, with CYN breaking above its 50-EMA and a long sideways base. This sets up a Story Entry Pivot (EP), which can be powerful but risky.

• We’ll be watching the 5-minute opening range for a potential entry. While it’s a high-risk setup, the technicals suggest a possible breakout if momentum continues.