MARKET ANALYSIS
Here’s All You Need To Know

• The last two sessions were built on one major repricing:

  • The U.S.-Iran conflict appeared to be moving toward a deal.

  • The Strait of Hormuz risk premium came out of oil.

  • Equities were allowed to recover from last week’s energy spike and semiconductor unwind.

  • The Dow pushed above 52,000 for the first time.

  • Broader risk appetite stabilized.

• This morning’s setup is more complicated. Trump has now made clear that the Iran agreement is not final, saying the U.S. could return to military action if the final terms are not acceptable.

• That does not fully reverse the peace narrative, especially with a signing ceremony still expected in Switzerland this week, but it does remove the cleanest version of the relief trade.

• The market can no longer treat the oil shock as fully resolved. It now has to price a deal that is progressing, but still politically fragile.

• Oil is reflecting that nuance:

  • WTI is back near $76.

  • Brent is around $79.

  • Both are ticking higher after Trump’s comments.

• That is still a much better backdrop than last week, but it is enough to remind traders that the inflation risk has not disappeared.

• Earlier this week, the sharp drop in crude allowed the market to behave as if the energy problem had been solved. Today’s message is more cautious: not yet.

• That matters because today is also Fed day and the rate decision itself is unlikely to be the surprise. The market expects the Fed to stay on hold in the 3.5% to 3.75% range, with virtually no serious pricing for a move at this meeting.

• The real event is Kevin Warsh’s first press conference as Fed Chair. Warsh inherits a difficult setup:

  • Oil has fallen enough to ease immediate inflation pressure.

  • The prior energy spike has already shown up in recent pricing data.

  • Financial conditions have eased after the equity rebound.

  • SpaceX’s successful IPO has revived speculative appetite.

  • Risk assets are no longer trading like they are under stress.

• That gives him little reason to sound dovish, even if the Fed does nothing today and the key question is whether Warsh validates the market’s relief rally or leans against it.

• A balanced tone would likely allow equities to keep repairing, especially if he frames lower oil as a reason to remain patient.

• A more hawkish tone — focused on sticky inflation, stronger activity, or the risk that easier financial conditions could reignite price pressure — would make the last few sessions look more like a relief rally than the start of a clean risk-on leg.

• There is also an important communication issue: Warsh may decide not to submit his own “dot” in the Fed’s quarterly projections.

• That sounds technical, but the dot plot has become one of Wall Street’s favorite tools for forcing the Fed into a forecast path.

• Warsh has been critical of forward guidance, so stepping back from the dot would be an early signal that he wants a less predictable, less market-managed Fed.

• In other words, today is not just about rates. It is about the Fed’s new reaction function.

• Underneath the macro noise, the equity tape is still constructive and Nasdaq futures are firmer, helped by a rebound in semiconductors.

• Intel is higher after starting production of its advanced 18A-P node, ASML is up, and the semiconductor ETF is pushing higher in premarket trading.

• Micron is also back in focus after Deutsche Bank raised its price target, citing a memory shortage linked to AI demand.

• This matters because chips remain the market’s swing group and last week’s semiconductor weakness was the clearest sign that the AI trade was no longer moving effortlessly higher.

• If chips can hold today’s bid through the Fed, the Nasdaq repair has a much better chance of continuing.

• If the group fades again after a strong premarket, it would tell us supply is still sitting above the market.

• SpaceX remains the other major sentiment gauge and the stock is higher again premarket and is now up around 50% from its $135 IPO price, pushing its valuation above Amazon’s.

• That is extraordinary demand for a newly listed, long-duration growth story, and it confirms that speculative appetite is still alive.

• But SpaceX is also becoming a liquidity magnet as a stock this large, this volatile, and this heavily followed can support the innovation trade if it keeps working. It can also drain attention and capital from other crowded winners if momentum starts to crack.

• For now, the market is treating SpaceX as proof that risk appetite is healthy.

• The danger is that SpaceX becomes the new pressure point if post-IPO demand starts to fade.

• The global backdrop is supportive, but not flawless, we note Japan’s Nikkei closed at another record high, helped by strong export data and Japanese exports rose 17% year over year, while semiconductor exports surged more than 61%.

• South Korea’s Kospi also advanced, reinforcing the idea that AI-linked manufacturing demand remains powerful across Asia.

• Europe is more uneven. BMW’s profit warning hit the autos sector, with weaker China demand and the lingering impact of the Middle East conflict weighing on the outlook.

• That is an important reminder: the macro backdrop is improving, but not every cyclical pocket is confirming a clean global acceleration.

• U.S. sector rotation is also worth watching too as financials led yesterday, while information technology lagged.

• That is not bearish by itself. In fact, it may be healthier than another narrow mega-cap tech chase.

• But it does tell us this market is rotating beneath the surface and leadership is no longer exclusively about the largest AI names. Banks, industrials, financials and parts of the cyclical complex are now part of the discussion.

• The setup into today is clear:

  • Oil relief is still intact, but the Iran deal is not fully de-risked.

  • The Fed is expected to hold, but Warsh’s tone matters more than the decision.

  • Semiconductors are trying to repair, and that remains the key signal for the Nasdaq.

  • SpaceX is still confirming speculative demand, but it is now a major liquidity test.

  • Leadership is broadening beneath the surface, which is constructive if it continues.

• The market has a real chance to keep repairing, but it needs confirmation from three places:

  • Oil staying contained despite Trump’s comments.

  • Semiconductors holding their rebound through the Fed.

  • Warsh avoiding a hawkish communication shock in his first press conference.

• If those pieces line up, the relief rally can broaden into a more durable risk-on phase.

• If oil reverses, chips fade, or Warsh pushes back against easier financial conditions, the market will likely treat the last few days as a fast repricing of geopolitical relief rather than a full reset of the trend.

Nasdaq

53.46%: over 20 EMA | 44.55%: over 50 EMA | 51.48%: over 200 EMA

• QQQ and QQQE both delivered the expected downside gap-fill we discussed in yesterday’s report. That is important because the pullback was not random weakness; it was a normal technical response after the sharp rebound.

• We still suspect the Nasdaq may need more choppy action before it can cleanly expand higher. The index bounced hard from the 10-week EMA / 50-day EMA area, but the move now needs time to digest.

• The most constructive part of yesterday’s pullback was the volume profile:

  • QQQ pulled back on 103% relative volume.

  • That is not extremely low, but it is still low compared to several of the prior 10 trading sessions.

  • A high-volume pullback would have been far more concerning.

• Relative volume continues to decline as price pulls back, which is a healthier form of digestion. It suggests the selloff is not being driven by aggressive institutional distribution.

• The main concern remains the actual MAG7 / MAGS components inside QQQ. Many of those names remain very choppy, and that is where the caution comes from.

• The index-level structure is still holding up, but the leadership underneath is not yet clean enough to justify aggressive fresh exposure.

• QQQ and QQQE are weakening short term, but relative strength versus the broad market remains very high:

  • QQQ relative strength versus SPX: 84

  • That is still a strong reading and confirms the Nasdaq has not lost broader leadership.

• Pullback-long setups still make sense here, but selectivity matters. This is not a clean environment for blindly adding fresh long exposure unless traders are already managing existing positions from lower-risk entries.

• The better entries were on the pullback into the rising 50-day EMA / 10-week EMA area. At current levels, this is more of a management zone than an aggressive new-buy zone.

S&P 400 Midcap

68.92%: over 20 EMA | 62.40%: over 50 EMA | 62.40%: over 200 EMA

• MDY also pulled back, but the move came on higher relative volume at 120% of the 20-day average.

• That is worth noting, but it does not materially damage the structure yet. The group had rallied sharply and was due for digestion after its breakout move.

• We still see a likely move down toward the rising 10-day EMA, which is near $685.

• That would represent roughly another 1% downside from current levels and would be a logical short-term reset area.

• MDY has repeatedly respected the 10-day EMA during strong trend phases, so a move into that zone would not be bearish by itself.

• From an extension standpoint, MDY is not heavily stretched versus the 50-day EMA:

  • Current ATR extension from the 50-day EMA: 2.64x

  • That is not excessive for a strong trending group.

• The more important extension is versus the 10-week EMA:

  • The 10-week EMA is currently around 3.40% below price.

  • That is close to one full average weekly range, with MDY’s average weekly range around 3.74%.

• That tells us MDY is still strong, but not in an ideal fresh-entry zone. The group may need to pull back or move sideways before the risk/reward becomes attractive again.

Russell 2000

62.54%: over 20 EMA | 60.59%: over 50 EMA | 60.80%: over 200 EMA

• IWM is behaving very similarly to MDY, so the analysis does not need to be overcomplicated.

• The Russell 2000 pulled back as expected, but the pullback came on only 85% relative volume versus the 20-day average.

• That is constructive. It tells us the downside move was not being driven by aggressive selling pressure.

• Like MDY, we suspect a move toward the rising 10-day EMA is likely.

• The important demand zone is around $288, where the visible range volume profile shows significant buyer support:

  • 7.85M shares traded green

  • 6.47M shares traded red

• That imbalance matters because it shows strong demand sitting around that level. If IWM pulls into that area and buyers defend it again, it would confirm that small-cap demand is still intact.

• IWM remains a broadening signal for the market. The group is not as clean as MDY structurally, but it continues to show that buyers are willing to move beyond mega-cap technology.

FOCUSED GROUP
XBI: Biotechs & Healthcare Still Strong

• Healthcare continues to lead, and the group remains one of the cleaner areas of the market from a trend and rotation perspective.

• The important point is that healthcare is not just holding up defensively. It is actively building leadership through higher-timeframe Stage 2 structures.

  

  XPH VRVP Daily & Weekly Chart

• XPH, the pharma ETF, had a strong pullback yesterday but closed with a red hammer candle as price tested the rising 10-day EMA and bounced.

• That is constructive demand behavior. Sellers pushed the group lower intraday, but buyers defended short-term trend support.

• XBI is also showing strength. The biotech ETF continues to hold its daily point of control, which tells us demand remains present around the highest-volume area of the structure.

• Holding the POC during a pullback is important because it shows buyers are defending the core accumulation zone rather than letting price lose acceptance below it.

  

  XLV VRVP Daily & Weekly Chart

• XLV, the broader healthcare ETF, entered a brand-new Stage 2 rally roughly three weeks ago.

• The most recent pullback has come on low volume into the daily 10-day EMA, with two back-to-back hammer candles showing demand.

• That is exactly the type of behavior we want to see from a leading group:

  • New Stage 2 breakout

  • Controlled pullback

  • Low-volume digestion

  • Buyers defending the 10-day EMA

  • Hammer candles showing demand at support