OVERVIEW
The Fed Cuts Rates: Blue Skies For Equities

Yesterday was an eventful day for the market, with China-related stocks making strong moves in anticipation of today’s big policy announcement. China revealed a 5-year, 10 trillion yuan ($1.4 trillion) package aimed at tackling government debt. While there are hints of further support next year, many investors were left wanting more decisive fiscal action beyond the current debt swap plan.

In the U.S., the Federal Reserve met expectations by cutting interest rates by a quarter point. During the press conference, Fed Chair Jerome Powell expressed optimism, saying he’s “feeling good” about the economy. This provided some reassurance to the markets, though it highlighted the delicate balance the Fed must maintain between encouraging growth and controlling inflation.

Market sentiment also suggests optimism around a Trump administration, viewed as favorable for growth and risk assets. However, Powell pointed out that while growth might accelerate, new tariffs could fuel inflation. The Fed currently sees risks as balanced between stable prices and maximum employment, but this could shift quickly if inflation picks up.

The post-election rally has driven all three major indexes toward substantial weekly gains. The S&P 500 is up approximately 4.3%, setting it up for its best week since November 2023. The Nasdaq has outperformed the others, with a 5.6% increase as of Thursday's close.

Nasdaq

The Nasdaq is continuing its impressive surge, pushing to new all-time highs with a remarkable three-day rally. Yesterday’s session was particularly strong, marked by high volume and a full green candle that showed no signs of fear or selling pressure (which would typically be indicated by a long upper wick).

While the index has now climbed for three consecutive days, which is healthy, it's unusual for any ETF to sustain such a strong upward move without a brief pause or sideways action. In the short term, we wouldn’t be surprised to see momentum slow slightly, either today or early next week, allowing for some consolidation on the intraday chart before resuming its upward trajectory. Importantly, we don't detect any signs of weakness that would suggest a deeper pullback invalidating yesterday’s lows—there's simply too much excitement and strength in the market right now.

S&P Midcap 400

The midcaps experienced the brief intraday pullback we expected yesterday as the initial post-election excitement from the big gap-up started to fade. Currently, MDY is trading within a tight range, forming an intraday consolidation pattern. This type of movement is healthy and sets the stage for a potential push higher.

The key now is for buyers to step in and defend these new highs, providing solid support when the next breakout comes. While we don’t foresee a retracement beyond yesterday’s lows, if it does happen, we expect the gap-up lows to hold strong and keep the bullish momentum intact.

Volume was noticeably lighter compared to the prior day, and we saw a doji candle on the daily chart, signaling indecision between buyers and sellers. After such a big gap up, this isn’t a sign of weakness but rather a natural pause before another potential move higher.

Russell 2000

The small caps are in a similar position, with heavy volume trading around the $236 level where the Russell 2000 is currently sitting (check the visible range volume profile). We've also seen a doji candle, indicating consolidation on the intraday charts. This is healthy digestion and consolidation following the big move.

Both MDY and IWM have unfilled gaps, which are significant. While this indicates strength, it’s crucial that the lows from Wednesday, if tested, attract strong buying support. If not, we could see sharp retracements. However, we don't expect this to happen, given the market breadth is improving and the macroeconomic climate—with lower interest rates and a Trump presidency—should support overall equity market growth.

DAILY FOCUS
Earnings Based Episodic Pivots Are Working

Earnings-based episodic pivot trades are hitting well right now. These setups focus on stocks that react sharply to earnings reports—either gapping up or down—and then offer solid entry points once the price settles after the initial move. APP and Z were perfect examples of this yesterday, making strong moves post-earnings and providing clear entries when the volatility settled.

With earnings season in full swing, there are a lot of earnings beats to consider. These moves can offer some great opportunities, but beyond earnings reactions, actionable setups are scarce. Right now, the best approach is to stay patient and avoid rushing into anything.

Don’t chase stocks. Setups always come. The last thing you want to do is chase a stock now, hoping for another big move, and end up cutting into your account. Many of the best entries in names like Palantir, NVIDIA, and MicroStrategy are already behind us, so now we wait for the next strong setup. Stay vigilant, stay patient, and let the market come to you. The right entries will show up—just don’t force them.

WATCHLIST
Today’s Earnings Watch

UPST: Upstart Holdings, Inc.

• UPST reported a Q3 loss of $0.07 per share, beating the expected $0.15 loss. Revenue came in at $162.14M, above the $150.22M estimate and up from $134.55M last year.

• The stock is now gapping up +17% pre-market after an impressive few months and a breakout leading into today’s earnings results.

• We’ll be watching the 5-minute opening range for an entry, looking to take a half-sized position on a break higher.

DOCS: Doximity, Inc.

• DOCS reported a 20% YoY revenue increase, reaching $136.8M in Q2 FY2025, beating the $127.1M estimate. Adjusted earnings came in at $0.30 per share, topping the expected $0.26.

• The stock is seeing its best session ever, with a +40% gap up on very high volume. We’ll be looking for an entry on a 5-minute ORH break, entering with half-sized risk.