OVERVIEW
Sometimes Doing Nothing Is Best

Yesterday's session saw the intraday pullback we had been anticipating, particularly in the major capitalization groups. Over the past few weeks, we've seen strong leadership from certain sectors, such as the Bitcoin-related stocks. However, as expected, these stocks have begun to pull back as they become more extended. We're now entering a period of rotation, where some of the previous market leaders may lose momentum, and we may see fresh leadership emerging in other areas.

The main focus today will be on a series of crucial economic reports that are set to be released. These reports will provide valuable insights into the health of the economy and could have a significant impact on the markets.. Here’s a breakdown of each one, why they matter, and what they could mean for us swing traders:

1. Jobless Claims (215,000 expected)
This report shows how many people are filing for unemployment benefits. If the number is higher than expected, it could signal that fewer people are finding jobs or that layoffs are increasing, which might make investors nervous about the economy. A lower number suggests that the job market is strong, which is a good sign for the economy and could boost confidence in the stock market.

Why it matters: A higher jobless claims number could create concerns that the economy is slowing down, while lower claims indicate economic stability and strength.

2. Durable Goods Orders (0.5% expected)
Durable goods are items that last for a long time, like cars, appliances, and machinery. This report shows how much businesses are investing in these products. A rise in durable goods orders indicates that businesses are confident in the future and are willing to invest, which generally means a healthy economy. If orders fall, it could suggest that businesses are tightening up, which might signal a slowdown.

Why it matters: More investment by businesses is a sign of economic growth, so a higher durable goods number is a positive indicator for the economy and the market.

3. GDP Growth Revision (2.8% expected)
This is an updated figure for how much the economy grew during the third quarter. If the number comes in strong, it suggests the economy is growing at a healthy pace. If the growth rate is lower than expected, it could signal that the economy is slowing, which could lead to uncertainty in the markets.

Why it matters: Strong GDP growth is a sign that the economy is moving in the right direction, which can encourage investment and drive market growth.

4. Personal Income & Spending

• Personal Income (0.3% expected)

• Personal Spending (0.4% expected)

These figures show how much consumers are earning and how much they are spending. With the holiday season upon us and Black Friday sales in full swing, consumer spending tends to rise during this time of year as people spend more on gifts and holiday-related purchases. Retailers and cyclical stocks, like those in the consumer discretionary sector (XLY), often see a boost in sales and stock performance during this period. If personal spending is up, it suggests that consumers are feeling confident and are willing to open their wallets, which is a positive for the economy and could support market gains.

Why it matters: The Christmas season is a key driver of consumer spending, and with retail and cyclical stocks already rallying, strong spending figures could signal a continuation of this trend. On the flip side, if spending is lower than expected, it could indicate that consumers are more cautious, which may signal a slowdown in economic momentum.

Inflation Watch:

5. PCE Index (0.2% expected)
The Personal Consumption Expenditures (PCE) Index measures the change in prices for goods and services. It’s a key inflation gauge used by the Federal Reserve. If inflation is rising too quickly, the Fed may raise interest rates to slow it down. A higher PCE number means prices are going up, and the economy might be “heating up,” potentially leading to higher interest rates.

Why it matters: If inflation is high, it could lead to higher interest rates, which can slow down spending and borrowing, and could negatively impact stock prices.

6. Core PCE (Excluding Food & Energy) (0.3% expected)
This is a more focused version of the PCE index that excludes food and energy costs, which are more volatile. It gives a better picture of underlying inflation. A higher core PCE could signal that inflation pressures are still strong and could influence the Fed's decisions on interest rates.

Why it matters: Core PCE gives a clearer look at inflation trends, which impacts the Fed’s policies. Persistent inflation could lead to tighter monetary policy (higher interest rates), which could affect market performance.

Understanding the Impact of Today's Reports
These reports provide crucial insights into the overall health of the economy. Strong numbers typically indicate economic strength, which can push stock prices higher. On the flip side, weaker-than-expected results might signal an economic slowdown, leading to increased market volatility.

However, it's important to note that many of these reports are often priced in beforehand. While the macro picture is essential—since it can influence whether institutional investors adjust their positions, causing ripple effects across the market—the most important factor to watch is the market's "reaction" to the data. How the market responds will ultimately dictate short-term price movements.

We’ll dive deeper into this shortly. But first, let’s take a look at the major capitalization groups and see how they are currently performing.

Nasdaq

The Nasdaq continues to grind along it’s rising daily 10-EMA which is a positive sign with yesterday seeing the QQQ hold the prior day’s range and trend sideways. We are continquing to see the large technology ETF hold steady and not succumb to the downard pressute inflicted on it by the likes of Nvidia or Google who have both been underperofrming rather poorly in the last week with both trending below their daily 10 & 20-EMA and in mdium term downtrends.

The Visible Range Volume Profile (VRVP) on the QQQ shows significant overhead supply just above the $512 level, which has already led to some rejection. This resistance is likely to persist, especially with a shorter trading week ahead, as tomorrow’s session is closed and Friday is only a half-day. With lower trading volume, these levels may remain hard to break.

Looking at the equal-weighted Nasdaq ETF (RSP), it’s clear that many of the large tech names are quite extended. A pullback seems likely in the next few sessions to allow the rising daily 10-EMA and 20-EMA to catch up. This could provide a healthy consolidation period before the next leg higher.

S&P Midcap 400

The midcaps are also quite extended, but it’s worth noting the significant demand that stepped in during yesterday’s session. This is evident from the high relative volume and the red hammer candle, which is actually a bullish signal. It suggests that buyers stepped in during the intraday pullback, showing resilience.

From a technical perspective, the MDY is likely to experience some sideways consolidation here, allowing the EMAs to catch up. There’s also an unfilled gap below yesterday’s lows, which could present a potential issue. We suspect this gap will likely get filled, potentially pulling the MDY down to its next dense demand level, coinciding with its rising 10-EMA around $604.

Russell 2000

The small caps, represented by the Russell 2000 (IWM), are showing signs of a potential retracement in their strong uptrend. Yesterday’s session saw a slight pullback towards the point of control (POC) and the rising 10-EMA at $237.

Despite the pullback, we saw some strength, but there’s also a dense level of supply between $240-$242. This will be a key level to watch for the IWM—how it behaves here will determine whether we see sideways consolidation or a small retracement lower. Either way, a pause in a sustained uptrend is healthy market action and not necessarily a negative sign. It allows the market to catch its breath and reset before continuing higher. This is also how we are able to actually find good entries.

DAILY FOCUS
We Are Waiting For A Trend To Develop

We’re currently in a phase where the market has made a strong move higher, with many of the main leadership stocks pushing aggressively. However, we’re starting to see these leaders become extended, trading more than 7x their average true range (ATR) from the 50-EMA. This is a classic sign of extension, and it’s a signal that we need to step back and wait.

For newer traders, this may seem counterintuitive. When stocks are moving quickly, it can feel like action is the key to success. But the reality is, as a swing trader, the majority of your time is spent waiting. Waiting for the market to consolidate, pull back, and for money to rotate from one sector to another. These periods of pause are not negative—they are part of the natural market rhythm and offer critical insights.

What’s important now is to track the flow of money between sectors. The leaders that led the charge may now take a step back, and fresh opportunities will emerge as capital rotates into new areas. It’s during these rotations that we identify the next wave of market leaders. For now, we need to be patient, stay disciplined, and wait for the market to give us those clearer entry signals.

WATCHLIST
The Most Probable Breakouts To Watch

PODD: Insulet Corporation

• PODD has been steadily building a series of higher lows along its rising 10-EMA, showcasing a clear sign of accumulation. The stock has been in a strong contraction phase, with both the trading range narrowing and volume drying up—classic indicators of consolidation before a potential breakout.

• We're closely watching PODD, as it continues to move sideways. Ideally, we would like to see this consolidation extend for a few more days, allowing the stock to fully digest its recent gains.

SMMT: Summit Therapeutics Inc.

• SMMT is showing promise as it breaks above its descending resistance level in pre-market. While it has the potential to break out, we need to see the stock gain traction, especially given the current sideways trend in small caps.

• As always, evaluate the stock’s performance on a case-by-case basis. Watch for behavior around resistance and key EMAs. If we see a gap-up open, consider using the 5-minute opening range high as confirmation to enter. This could provide a clearer signal that the trend is shifting.