MARKET ANALYSIS
Here’s What You Need To Know

• The Federal Reserve kept interest rates unchanged, which was fully expected, but Powell’s tone was broadly rather positive.

• He described the U.S. economy as being on “firm footing” and suggested policy is not meaningfully restrictive, which the market interpreted as modestly dovish.

• Political noise around Powell continues, with an ongoing criminal investigation tied to testimony about Fed building renovations, but Powell avoided engaging with the issue and reiterated the importance of central bank independence. Markets largely ignored the political backdrop and focused on policy continuity.

• Big Tech earnings are driving the macro narrative as we saw Meta rallied sharply after strong revenue guidance and continued AI investment plans, while Microsoft sold off on softer cloud growth and margin guidance.

• The key takeaway is that investors are now differentiating between AI spend that shows a clear path to monetization and spend that does not.

• Tesla beat expectations but reported its first full-year sales decline, while announcing the phase-out of the Model S and X and a pivot toward robotics and AI investments.

• This reinforces the broader theme that capital expenditure, not just revenue growth, is becoming the main driver of equity dispersion in mega-cap tech.

• The U.S. dollar remains volatile after falling to multi-year lows earlier this week. Treasury officials pushed back on intervention rumors, but the broader trend is still a weaker dollar over the last year, which continues to support commodities and real assets.

• Markets are increasingly focused on whether AI capex can translate into real earnings growth. The current environment is no longer rewarding spend alone; investors want visibility on returns, which is creating sharp winners and losers within the Magnificent Seven.

• Equity futures are modestly higher, but the tape is fragile. With Apple earnings still ahead and key macro data (including jobless claims and inflation releases) coming, near-term volatility remains elevated and reactions are likely to be stock-specific rather than index-wide.

Nasdaq

52.47%: over 20 EMA | 56.43%: over 50 EMA | 59.40%: over 200 EMA

• The NASDAQ pushed to an all-time high yesterday, reaching 636.84 before pulling back into the close.

• The pullback occurred on a modest expansion in relative volume at roughly 94% of the 20-day average, which was the highest volume seen since the rally began on January 21st.

• We have now had five consecutive sessions of declining relative volume on the advance, followed by a relative volume spike on a pullback, which is a classic early warning sign of supply starting to assert itself.

• The gap from earlier in the week was filled, which we flagged as a high-probability outcome, and gap-ups in the current low-participation environment remain structurally unreliable.

• We expect near-term weakness in the NASDAQ over the next few sessions, although mega-cap earnings introduce unpriceable tail risk in both directions.

• Initiating fresh naked long exposure after a sharp multi-day extension, with participation fading and earnings risk unresolved, presents poor asymmetry unless the setup is highly selective at the single-stock level.

• The NASDAQ has rotated back into relative leadership versus the S&P 500, mid-caps, and small caps, and liquidity is clearly concentrating in mega-cap tech.

• The rally has been aggressive, with roughly a 4–5% move in a compressed window, which represents a momentum regime shift.

• Intraday price action showed rejection at 636.84 with rising relative volume on the pullback, coinciding with a failed push above 639 earlier in the session.

• QQQ has now printed four consecutive sessions of lower intraday highs while holding the point of control near 634.

• Our base case remains a test of the 20-day EMA near 629.87, representing roughly a 0.7% downside move, which would be a normal mean-reversion within a leading trend.

• Breadth deterioration in mid-caps and small caps alongside improving NASDAQ breadth reinforces the ongoing rotation into mega-cap tech leadership.

S&P 400 Midcap

46.23%: over 20 EMA | 65.32%: over 50 EMA | 61.80%: over 200 EMA

• Mid-caps rejected the attempted breakout above 639 with relative volume expanding to roughly 103% of the 20-day average, which signals supply stepping in at highs.

• The index has now printed four consecutive sessions of lower lows while holding the point of control around 634.

• Our base case remains a test of the 20-day EMA near 629.87, representing a ~0.7% pullback, consistent with capital rotating out of previously crowded mid-cap longs.

• This move would not invalidate the broader stage-2 trend and should be viewed rather normal digestion after a very impressive 2-3 months of action.

Russell 2000

47.08%: over 20 EMA | 58.81%: over 50 EMA | 63.30%: over 200 EMA

• Small caps failed to hold the breakout above 267 and rejected with a relative volume spike around 92% of the 20-day average, confirming supply overhead.

• Price has traded down to the lowest level since January 20th, with clear evidence of short-term distribution at highs.

• Our base case remains a move toward the 20-day EMA around 260–261, representing roughly a 1.2% pullback.

• The weekly trend remains stage-2, but the short-term long asymmetry has compressed after a nine-week vertical advance.

FOCUSED STOCK
EOSE: A Perfect Bullish Engulfing Candle

ADR%: 9.14% | Off 52-week high: -16% | Above 52-week low: +443.3%

• EOSC printed a textbook bullish engulfing candle after pulling back to 14.94, which aligned with both the weekly point of control and the rising 10-week EMA.

• The engulfing candle reclaimed prior highs with confirming relative volume, signaling demand stepping in at key structural levels.

• Relative strength is now at 98, and the stock trades with a high ADR (~9%), making it suitable for momentum-driven swing structures.

• The industrial sector (XLI) remains one of the stronger groups, providing a macro tailwind for the setup.

• The optimal entry was the pullback into the 10-week EMA and POC, but further intraday weakness into that zone would still represent a constructive re-entry opportunity if volume confirms support.

• The weekly structure shows a multi-month base with repeated bounces at the 20-week EMA and expanding relative volume during the December–January advance, confirming institutional participation.

• Structurally, EOSC is a volatility expansion candidate emerging from a base with demand clearly defending the key weekly levels.