NEWS

AI Startup SandboxAQ Raises $150M from Google, Nvidia & Other 🚀

AI and quantum computing startup SandboxAQ just secured a fresh $150 million in funding from major players including Google, Nvidia, and BNP Paribas. This brings its Series E round to $450 million and values the company at a hefty $5.75 billion. Total funding to date? A massive $950 million, with earlier backing from names like T. Rowe Price and Breyer Capital.

Originally spun out of Alphabet in 2022, SandboxAQ specializes in Large Quantitative Models (LQMs) — advanced AI tools designed to crunch complex data, assist in drug discovery, and power high-level financial modeling. These models are accessible through platforms like Google Cloud.

CEO Jack Hidary says the startup’s track record of delivering results has drawn strategic investment from tech giants looking to get ahead in the AI-quantum race. The new capital will accelerate R&D and expand SandboxAQ’s reach into sectors like biopharma, chemicals, and energy.

Google and Nvidia’s involvement highlights a broader trend: Big Tech is going all-in on quantum innovation. Nvidia’s recent pivot toward “physical AI” and Google’s breakthrough in next-gen quantum chips suggest both companies see real-world applications coming faster than expected.

MARKET
Flash Crash, Or Sustained Bear Market?

The market is currently in the midst of a global recession scare, with major trade wars escalating between the world’s largest economies. Nearly every sector and industry group in the U.S. equity market is breaking down, as institutional investors rush to cash. The stock market took another hit on Friday after China imposed new tariffs on U.S. goods, sparking fears that a trade war could push the global economy into a recession. China’s commerce ministry announced a 34% tariff on all U.S. products, matching the tariffs on Chinese goods that President Trump unveiled earlier in the week. This is a significant blow to some of the largest U.S. companies, like NVDA, AAPL, and TSLA, many of which generate over 30% of their revenue from China alone.

Looking beyond the U.S., the Chinese equity market, which had been a leader this year, has also plunged into a flash crash, proving this isn’t just a U.S. issue – it's a global event. While we can all speculate on the true implications of these tariffs—whether they'll spark inflation or lead to manufacturing returning to the U.S., potentially strengthening the economy and boosting the dollar—the ultimate outcome is beyond our control. For momentum swing traders, it's less about trying to predict these macroeconomic shifts and more about reacting to price action and opportunities as they arise.

Nasdaq

The Nasdaq, being the most growth-focused large-cap ETF, is of course being absolutely devastated. The QQQ is clearly making a significant relative volume move downward toward its Point of Control (POC) at the $438 level, which we discussed yesterday. This level became a likely test point for the QQQ due to the low volume cluster seen on the Visible Range Volume Profile (VRVP) extending down to that level. As of premarket, the QQQ is currently testing this zone, and we do expect some slowing down here. However, considering the intensity of the liquidation happening, we're not looking to "buy the dip" or play any type of bounce at this point.

The weekly chart further confirms that the $438 level is likely to cause some choppiness in the near term. This is because it aligns with the multi-month Point of Control (POC) level, which has acted as a significant area of volume distribution. Given this, we expect some back-and-forth price action as the market interacts with this key zone.

S&P Midcap 400

The midcaps (MDY), as seen on their weekly chart, are facing significant pressure as they approach their 200-week EMA at $484, an important long-term support level. What makes this selloff even more concerning is the relative underperformance of the midcap sector compared to large caps. Midcaps, being more sensitive to economic cycles, are particularly vulnerable in times of heightened market uncertainty and global recession fears, which explains why the MDY is struggling more than broader indices like the S&P 500.

The pressure on midcaps is amplified by their earnings sensitivity. Unlike large-cap stocks, which often benefit from global diversification and strong balance sheets, midcaps tend to have greater exposure to domestic economic conditions and weaker capital reserves. As inflation concerns rise and a potential recession looms, investors are shying away from these more vulnerable companies in favor of larger, more stable firms, which exacerbates the selloff in the midcap space.

Additionally, the MDY is now breaking below critical technical levels. If we don’t see a rebound at the 200-week EMA, the next logical support could be at the POC, approximately 5% lower, where a heavier concentration of volume has traded historically. Given the aggressive liquidation taking place across sectors, a breakdown through this support is likely to accelerate the downward move, leading to further technical weakness.

Russell 2000

The IWM (Russell 2000 ETF), which tracks small-cap stocks, is in a significantly worse position compared to larger indices right now. Small-cap stocks are inherently more speculative, with weaker balance sheets and greater exposure to economic turmoil. In times of uncertainty, such as the current global recession fears, investors will always liquidate their small cap exposure first.

Technically, the IWM is breaking down below all key weekly support levels. The weekly 200-EMA was ignored yesterday, and now the IWM is essentially in a freefall.

DAILY FOCUS
Don’t Try To Outsmart The Volatility

The number one goal of any trader is simply to exist. Surviving in the market is the true challenge. Making money in a trending market? That’s the easy part. The hard part? Keeping it. Preserving your capital, navigating through volatility, and ensuring you don’t get wiped out when the market takes an unexpected turn — that's where the real skill lies.

It's easy to get caught up in the excitement when the market is moving in one direction, but volatility can strike at any time. And when it does, if you don't have a strong grip on your risk management and your discipline, all that hard-earned profit can vanish in an instant.

We wish we could sit here and provide you with happier, more inspiring analysis, but the truth is, sitting in cash right now has been the smartest trade we’ve made year to date. Short positions have been working, and we will discuss a few potential shorts you can consider, but understand this: trading is not linear. You are not in a position where, to earn a greater percentage return in the year, you need to trade more. That’s simply not the game.

In fact, sitting through a -5% drawdown for 10 months of the year and then making 20% in the final two months is not only possible — it’s very much easier than you might think. Flash crashes create opportunities for even more aggressive recoveries. The key is waiting for the right moments and not getting caught in the noise in between.

WATCHLIST
Potential Short Trades

CYBR: CyberArk Software Ltd.

• A potential short trade is forming in the CIBR group, specifically with CYBR, which has previously shown relative strength by consistently forming higher lows on its rising 200-day EMA. However, the market is now intensifying selling pressure, and CYBR has gapped below this key level.

• As we discussed earlier, CYBR was trying to form a double bottom, but this setup is failing, signaling further weakness. With this breakdown, a short position could be in play, with the ideal trigger being a rejection at the 200-day EMA intraday. This level can act as a solid stop-loss point, and you could aim for a quick momentum-driven move lower.

• It's essential to note that short positions are inherently more challenging, and this is a key point of caution. Even some of the best traders avoid shorting. Dan Zanger and Kristjan Kullamaggie (who preferred parabolic shorts and avoided breakdowns) have both emphasized this. So, while there’s a setup here, remember that shorting is a nuanced strategy, and you need to remain highly disciplined with your risk & position management especially if holding overnight.

APP: Applovin Corporation

• APP, another technology name, has been significantly lagging and is now forming its own failure of a double bottom recovery. Much like CYBR, it has gapped below its 200-day EMA on the daily chart, signaling increasing selling pressure. This pattern suggests that the stock is struggling to gain traction and may continue to trend lower.

• Tech, in general, has been one of the lagging sectors lately, and any weakness in individual tech names could present opportunities for shorting. Given this sector-wide underperformance, shorting a tech stock like APP could turn profitable, especially when the stock is failing at key support levels.

• That being said, the risk-to-reward ratio here is critical to consider. While shorting a lagging tech stock has potential, the magnitude of the move and whether the trade justifies the risk is up to you to assess. We personally prefer to hold cash in uncertain environments, but if you're targeting this sector, a short setup on APP could be one to watch.