OVERVIEW
This Google Earnings Is Bigger Than You Think

Big Tech has faced its fair share of doubters recently, with soaring valuations and massive bets on AI raising some eyebrows. But yesterday, Alphabet, Google’s parent company, kicked off a critical earnings season for mega-cap tech with a performance that exceeded even the most cautious expectations. Beating Wall Street estimates across the board, Alphabet reported solid revenue gains driven by its surging cloud business.

The company’s cloud revenue came in at an impressive $11.35 billion, up nearly 35% from last year’s $8.41 billion, underscoring strong demand and expansion. Total revenue also saw a healthy 15% year-over-year growth, an improvement over last year’s same quarter, which highlights Alphabet’s resilience even in a market clouded with uncertainty.

This performance has more significance than it may seem at first glance. Alphabet’s strength, especially as a leader in AI, demonstrates that these enormous investments are not only paying off but are now translating directly to the bottom line. Large institutions are watching Big Tech’s earnings closely to ensure that investments in AI and other productivity-enhancing technologies continue to drive robust future growth, potentially setting the stage for a sustained rally in tech.

Alphabet’s stellar earnings set the stage for a potential surge in demand from both retail and institutional investors, creating a ripple effect that could extend across the entire market. A post-earnings boost in a heavyweight like Google often fuels broader tech strength, lifting the Nasdaq and boosting the S&P 500 (SPY), with momentum trickling down into other sectors and lifting sentiment market-wide. This rally has the potential to set a bullish tone, energizing both high-growth and stable stocks alike.

And it’s only the beginning. With Meta, Microsoft, and Amazon all set to report this week—and Apple soon to follow—the excitement is building. Tesla’s strong earnings last week already sent its stock soaring, fueled by robust growth. Together, these results point to a bullish case not just for AI, but for the entire tech sector, one of the largest and most influential in U.S. equities. If these companies keep delivering, tech could drive a market-wide upswing, pushing strength well beyond AI and into every corner of the market.

Today’s Economic Data

Today brings the preliminary reading for third-quarter economic growth, with initial projections pointing to a solid annualized growth rate of 3.0%. This aligns with last quarter’s expansion and signals a strong domestic economy. However, there’s always room for surprises, and data releases like these can spark market volatility.

That said, our main focus remains on key episodic pivot trades in major tech names, including Google, Snap, and Reddit. These tech-driven opportunities present compelling setups, largely unaffected by economic headlines.

For a deeper look at how we’re trading these moves and an in-depth dive into our strategy, check it out here.

Nasdaq

The Nasdaq continues to demonstrate impressive strength, with yesterday’s session confirming strong sponsorship interest in driving the QQQ toward all-time highs. Demand has been particularly robust around the rising 10- and 20-day EMAs, especially at the 10-day EMA near $495, which held steady with three solid tests since Friday.

Right now, the QQQ appears primed for further upside, especially as mega-cap tech stocks prepare to report earnings and are likely to exceed expectations. This setup presents an ideal environment to go long on big tech, with the Nasdaq’s resilience adding support to this bullish outlook.

S&P Midcap 400

Midcaps are also showing significant strength, highlighted by one of the highest-volume green days we’ve seen in months. Initially, the MDY retraced through the 10- and 20-day EMAs we hoped would provide support, but it ultimately found strong backing at the point of control (POC) level of $568, attracting substantial demand.

The MDY appears very strong right now, and we’re closely monitoring whether it can break through the upper range at $573 as early as today. If it does, we could see the MDY surge through a low-volume range, targeting the $584 level. This would signify a powerful bullish move in the midcaps, aligning with the overall market momentum.

Russell 2000

Small caps are showing just as much strength as midcaps, poised for a significant push higher if demand steps back in and drives the Russell 2000 above the overhead supply at $222 and into the high $220s.

We’ve seen the IWM reclaim and consolidate along the 10- and 20-day EMAs after finding support at the point of control (POC) level and the rising 50-day EMA. This is a promising sign, suggesting that the Russell 2000 is likely to follow suit with its larger counterparts.

DAILY FOCUS
Stay Laser Focused On The Price Action

Right now, we’re seeing an absolutely incredible number of setups presenting themselves, creating major opportunities to accumulate great long exposure in some stellar stocks. We've been emphasizing this a lot lately, especially regarding big tech names, which typically offer a handful of earnings EP (episodic pivot) trades each year. These earnings reports often mark the beginnings of these giants’ next Stage 2 rallies and upward legs, making this the best time to gain low-risk exposure to high-probability trades.

This week, we’re taking an aggressive approach and firmly prioritizing these stocks in our strategy. Our entry sizes are being bumped up to fill size—risking 1% of net asset value—especially on GOOG. This decision is driven by the high probability of follow-through on the stock, coupled with its low volatility (as indicated by its Average Daily Range percentage). A lower volatility typically requires a larger absolute dollar amount to see strong returns, so we’re positioning ourselves accordingly.

As per usual, we’ll be using the 5-minute opening range high (ORH) for our entry strategy. Don’t hesitate to get aggressive today; the potential rewards in these stocks are well worth the risk. Now is the time to capitalize on the momentum and make the most of these exceptional opportunities. Trust your trading skill, trust your strategy and your risk management. This is why you do all of the work that you do.

WATCHLIST
Massive Opportunity On These Two Gappers

GOOG: Alphabet Inc

• GOOG has been trending sideways and has formed what looks like an inverse head and shoulders pattern since it undercut the daily 200-day EMA back in September.

• The stock is clearly in a Stage 1 base, and this represents its first significant attempt to break above and transition into the beginnings of the next Stage 2 uptrend. For those familiar with Stan Weinstein’s work, this is an exceptional time to get aggressive, as it often represents the point of maximum reward relative to risk.

• As we watch for this critical breakout, remember to not get too cocky as failure is still a possibility. We will be using the 5-min opening range high (ORH) as usual with a 1% NAV max risk on the stock.

SNAP: Snap Inc.

• SNAP is another notable tech name, although it’s slightly less exciting than GOOG, as it has been trending sideways since its significant sell-off back in the summer. However, we’ve seen SNAP holding its ground, and today it’s making a notable attempt in premarket to break above its declining 200-day EMA for the first time in months.

• A strong break and hold above this 200-day EMA would signal a significant change in character for SNAP, which is why we’ll be focusing on an entry here if we can see the necessary strength to push SNAP higher.

• One key factor to consider is that SNAP has a higher Average Daily Range percentage (ADR%) compared to GOOG. This means you won’t need as large a position size to achieve substantial returns, making SNAP potentially more attractive for traders with smaller accounts.

• However, it’s important to note that GOOG presents a significantly higher-probability trade for follow-through.