NEWS
Palantir Surges After Securing NATO AI Defense Contract🚀

Palantir (PLTR) stock rose 4.6% on Monday after NATO finalized a deal to use the company’s AI-powered military system, known as the Maven Smart System NATO (MSS NATO). While the exact details weren’t shared, NATO said it plans to start using the tech within 30 days to help with battlefield awareness, planning, and identifying military targets.

A version of this system is already used by the U.S. Army, Air Force, and Space Force. In September, Palantir landed a $100 million contract to expand access to the software in the U.S. military. In 2024, the company brought in $1.57 billion from U.S. government contracts alone.

Palantir’s stock has been on a wild ride this year - soaring nearly 50% early on, then falling in February after reports of possible U.S. defense budget cuts. Insider stock sales also weighed on shares. Still, Palantir is up 22% for the year, while the S&P 500 is down over 8%.

Analysts see the NATO deal as a big win. Louie DiPalma from William Blair said it shows Europe isn’t turning away from U.S. defense companies, and that rising military budgets across Europe could keep demand strong. Wedbush analyst Dan Ives called the deal another boost for Palantir, saying the company is well-positioned to benefit from growing government spending on AI in both North America and Europe.

MARKET
Something Is Brewing Under The Surface

Markets opened the week with a bit of a bounce, mostly led by strength in tech. But beneath the surface, it wasn’t exactly smooth sailing — it was a choppy session with low conviction.

The rally was sparked by an unexpected shift in U.S. trade policy: a last-minute exemption on key tech products — including smartphones, computers, and semiconductors — from the latest round of “reciprocal” tariffs. That update, quietly released late Friday by U.S. Customs and Border Protection, was enough to get buyers to step in — especially in large-cap tech where these components are critical.

In simple terms, the market saw this as a sign that the administration might be backing off from its most aggressive stance on trade — at least for now. And while that’s certainly a short-term positive, it’s far from a done deal.

Both President Trump and Commerce Secretary Howard Lutnick made it clear over the weekend that these exemptions aren’t permanent — which brings the usual dose of uncertainty right back into the picture. That’s the environment we’re in: fragile, reactive, and highly sensitive to headlines.

As always, our job isn’t to guess what happens next — it’s to stay adaptive. We’re not trying to forecast every political twist. We’re trying to position ourselves on the right side of the probability curve — and right now, that means being nimble and letting the price action speak louder than the headlines.

Let’s get into the charts and see what really matters.

Nasdaq

The QQQ’s advance into overhead supply just below $465 is textbook behavior within a maturing uptrend — but the nuance here lies in what didn’t happen.

Despite price pushing into a high-confluence zone (defined by the POC, previous resistance, and supply from earlier this month), there was no volume expansion to validate the move. When price advances on contracting volume — especially into known resistance — that tells us the move is likely being driven by short-covering or mechanical flows, not real institutional demand. No footprints from the big players = no conviction.

Now combine that with the formation of a red hammer candle off the rising 10EMA, and you have a mixed picture. Structurally, it’s still bullish: higher lows, rising EMAs, and failed breakdowns are all supportive of continuation. But the absence of volume means this is a market that’s drifting, not charging.

So what does that mean for us?

1. You're not chasing here. If this breakout is going to be real, it’ll need follow-through with volume. Until then, this is where traders get chopped up trying to anticipate a move that hasn’t materialized yet.

2. Watch for failure at resistance. A second rejection at this level on rising relative volume would be our first signal that supply is overwhelming demand — that’s when we shift defensive. Otherwise, we stay neutral-to-constructive and wait.

3. This is where we wait for the second entry. The breakout or breakdown will either fail or confirm — but until then, capital preservation > hero trading. We want to see volume validate direction.

In this environment, where headlines (Fed, tariffs, geopolitics) can disrupt flow at any moment, we remind ourselves: trading is not about predicting what’s next — it’s about responding when the odds are finally in your favor.

Let’s continue to watch the $465 zone on QQQ closely. Above it, with volume? That's our signal. Below it, and rejected on size? That's your caution light. Either way, price will tell the truth.

S&P Midcap 400

Midcaps Showing the Same Structure, but with a Sharper Volume Profile. The technical setup across the midcaps (MDY) continues to mirror what we’re seeing in large-cap indices like the QQQ — but with even clearer signals.

As MDY has drifted higher over the past few sessions, we’ve seen a noticeable and accelerating decline in relative volume. That divergence — rising price with falling volume — is something we always take seriously, because it points to waning participation and often precedes a slowdown or potential reversal.

But the context matters. The right-side volume profile reveals a very light-volume pocket extending up to the Point of Control (POC), which creates a vacuum effect — a zone where prices can move rapidly due to the lack of meaningful supply overhead. This low-volume area suggests that if demand does re-enter even modestly, price can float higher with minimal resistance.

Yesterday’s session gave us a clean red hammer candle — a bullish structure — that held the rising 10-day EMA and saw virtually zero aggressive selling. When buyers are passive but sellers are also absent, it typically indicates either:

• A temporary pause before resumption higher, or

• The market is coiling, waiting on a catalyst to spark a directional move.

So while the price/volume divergence is a yellow flag, the structural dynamics (light-volume overhead, hammer candle, EMA support) still skew slightly bullish for now. We remain data-dependent, but as of now, the tape suggests there's no real urgency from sellers. Until that changes, we’re more inclined to expect stability or modest continuation rather than breakdown.

Russell 2000

It’s becoming increasingly clear that large- and mega-cap tech names are doing all the heavy lifting right now. When we zoom out and compare the major sub-markets — from large-cap (QQQ) to mid-cap (MDY) to small-cap (IWM) — the price structures are practically identical.

The IWM, in particular, is tracking almost tick-for-tick with the QQQ and MDY. After an initial rejection off the declining 10-day EMA, small-caps found strong demand at the $183 zone — a prior demand shelf — which launched a bounce back toward that moving average. This behavior reinforces the idea that buyers are still lurking beneath, stepping in at key levels, even if passively.

What's especially interesting is the current low-volume overhead zone sitting just above current price. That low supply pocket creates the potential for a "slipstream" effect — where any burst of demand can cause prices to glide higher with minimal resistance. We're on the edge of our seats here because if we see even a hint of follow-through in these next couple sessions, it could easily evolve into a broader breakout attempt.

But we stay anchored in price action — not political narratives, not noise, and not opinions. Whether it’s tariff speculation, election cycle headlines, or Fed chatter, the only thing that matters is how the market responds. If price is moving with volume and leadership is aligned, we participate. If not, we sit in cash.

DAILY FOCUS
Your Job as a Trader: Adapt, Don’t Predict

One of the most misunderstood — and underappreciated — concepts in trading is that you do not need to be right most of the time to be profitable. In fact, our win rate is below 40%, and we’re still able to generate solid returns. How? Because we’re laser-focused on risk-to-reward (R/R) and positioning ourselves only when the odds are meaningfully in our favor.

Here’s what most traders miss:
Trading is not about being active — it’s about being precise.

The Real Edge: Risk-to-Reward & Strategic Exposure

The core principle that makes low win rate strategies viable is high R/R. If your average win is 3x, 4x, even 5x your average loss, then you only need to win occasionally to come out ahead over time.

But to execute that, you need to understand:

• You don’t need constant exposure.
  Just because the market is open doesn’t mean it’s offering favorable conditions. A big part of success is being comfortable sitting in cash — waiting until the conditions are right.

• Patience is profitability.
  Most people lose money not because they lack skill, but because they force trades. We’re not hedge funds — we don’t have capital mandates forcing us to be in the market. That is our superpower as retail traders. We can wait for clarity, for simplicity, and then act with full conviction.

Know Your Numbers — Or Get Played by Them

Every trader must have an intimate understanding of their system’s data. This includes:

• Win rate – Knowing what percentage of trades you expect to win helps you frame your mindset and expectations.

• Average win vs. average loss – Your edge lies in this spread. A 30% win rate can still be wildly profitable with 4:1+ R/R.

• Maximum string of losses – If you have a 40% win rate, long losing streaks are mathematically inevitable. Are you emotionally and financially prepared for that?

• Drawdown behavior – What’s your expected drawdown? What does a "normal" rough patch look like? Can you mentally and financially survive it?

If you don’t understand these numbers, you’ll make irrational decisions when volatility hits — either by panicking too early or getting overconfident too soon.

Probabilities, Not Predictions

Every single trade we take is based on probabilities, not predictions. Our job isn’t to guess what’s going to happen — our job is to recognize when the math is tilted in our favor, and then take that shot with size and confidence.

We’re not trying to outsmart the market. We’re simply trying to get behind setups where we can say:

That’s the entire game.

WATCHLIST
Our Top Priority List For Today

HNRG: Hallador Energy Company

• HNRG has started to show strong premarket movement, building on an impressive session yesterday where it broke through the key $14 level. This level, established back in October 2023 on the weekly chart, signals a potential major technical breakout. If this level holds, it could indicate a significant long-term trend change.

• In related news, Last Tuesday, President Trump signed an executive order aimed at boosting the US coal industry, calling coal “abundant and cost-effective.” The order looks to increase coal exports, remove federal restrictions on mining, and ensure that coal isn't discriminated against in federal policies, aligning with the potential positive momentum for coal stocks like HNRG.

MSTR: MicroStrategy Incorporated

• It’s tough to ignore MSTR when building a list of relative strength leaders. This chart is one of the most compelling in the market right now. With all these technicals lining up, MSTR looks like it’s ready to break out and could be one of the strongest plays in the market. The stock has been forming a major multi-month base, meeting nearly every technical criterion we look for in a solid base:

  • Leading Theme: Bitcoin (BTCUSD) has shown significant relative strength, fueling interest.

  • Higher Lows: A clear series of higher lows, showing consistent bullish momentum.

  • Linear Progression: The price action aligns well across key moving averages, indicating strength and demand on critical levels.

  • Tight Range & Volume Contraction: The range has been narrow, and volume has contracted — classic signs of volatility shrinking and potential for a big move.