OVERVIEW
What You Need To Know

Macro Analysis

• Futures sharply lower across the board as the failed-breakout → distribution theme accelerates, with tech leading the downside.

• AI complex under pressure as institutions compare current behaviour to late-2021; Fed cut odds slide and missing macro data forces markets to trade blind.

Nasdaq (QQQ)

• Breakdown from the 3-day coil came on 127% relative volume, slicing through the $618–$612 air pocket and shifting control decisively to sellers.

• Now opening on the $600 POC where stabilization is possible, but trapped longs above $612–$618 create heavy overhead supply on any bounce.

S&P 400 Midcap (MDY)

• Failed breakout confirmed by 156% relative volume rejection, flushing price back into the lower half of the range.

• Now below the 20-week EMA, and a weekly close here typically marks transition into a Stage 4 markdown.

Russell 2000 (IWM)

• Immediate rejection at the declining 10-day EMA and POC triggered a high-volume breakdown toward the 20-week EMA.

• Pre-market sits below that level with very little demand until $225, making that the next logical magnet.

Focused Stock: MU

• Leadership deteriorating as the entire semiconductor group unwinds; MU is ~15% extended above its 10-week EMA.

• Losing the $230 shelf opens a low-volume pocket to $205–$210, creating a clean mean-reversion path before any longer-term rebase.

MARKET ANALYSIS
The Correction Is Here

• Futures deep in the red after the worst market session in over a month with the Nasdaq futures –1.7%, S&P futures –1.2%, Dow –0.8%.

• Tech is leading the selloff again as we see NVDA, AMD –3% premarket; Tesla and Palantir –5%. XLK set to finish the week red.

• This continues the failed-breakout → distribution structure we’ve been highlighting.

• The whole AI trade under pressure:

  • Oracle’s wipeout now functioning as a sector-wide sentiment break.

  • Rising concern about overstretched AI valuations, soaring debt-financed capex, and hyperscaler dependency.

  • Institutions explicitly comparing current behaviour to late-2021 (post-euphoria unwind).

• Fed expectations shifting:

  • Probability of a December rate cut drops to ~52%, down from 63% yesterday and 95% a month ago and markets are adjusting to the idea that the Fed may stay tighter for longer as uncertainty rises.

• Government shutdown ends, but the twist:

  • Key economic data (CPI, payrolls) may never be released, creating an information vacuum.

  • Investors are now forced to price macro risk through positioning flows, yields, and sentiment, not data.

Nasdaq

% over 20 EMA: 33.33% | % over 50 EMA: 43.13% | % over 200 EMA: 53.92%

• QQQ’s 3-day contraction has now resolved decisively lower, and the resolution came on 127% relative volume, confirming real distribution and a potential stage 4 markdown phase looming if we close below $599 today.

• The breakdown sliced cleanly through the low-volume node on the VRVP between $618 → $612, exactly where we expected the air pocket to accelerate any downside move.

• We are now gapping directly into the $600 POC, the highest-volume price of the entire multi-month range and a natural place for the market to attempt stabilization.

• Weekly structure remains intact for now, but the rejection from the upper range and the velocity of this breakdown shifts control toward sellers.

• Given the size of the gap, an intraday reflex push into the gap is likely, but:

  • There is a large pocket of trapped longs above $612–$618.

  • Any bounce into that zone will immediately run into supply from forced sellers unwinding failed breakouts.

• Swing traders should not attempt bottom-picking here as this is not comparable to the clean undercut reversal we saw Friday the 7th at the 50-day EMA / 10-week EMA combo.

• Day traders/scalpers can target short-duration retracements into the gap but even so this is still risky.

S&P 400 Midcap

% over 20 EMA: 44.00% | % over 50 EMA: 40.75% | % over 200 EMA: 53.25%

• MDY failed exactly as expected and the attempted breakout above the descending red resistance line never had real sponsorship as volume declined on the breakout, telegraphing weakness.

• Yesterday confirmed that weakness with a 156% relative volume breakdown, rejecting the trendline and flushing straight back into the lower half of the range.

• Price is now accelerating into $582, which is the top of the major summer demand zone that has kept midcaps alive for months.

• Yesterday’s candle was a full-body distribution bar, slicing through the 20-day and closing near lows, confirming sellers in control.

• The breakdown came from a position of vulnerability:

  • Lower highs for weeks

  • Failed trendline reclaim

  • Weak breadth internally within midcaps

• The VRVP shows a clear high-volume shelf at $596 that has now flipped into resistance and any bounce will struggle to reclaim that zone.

• MDY is now back below the 20-week EMA (~$586) and a weekly close below here almost always marks the transition into a Weinstein Stage 4 (Wyckoff mark down phase).

Russell 2000

% over 20 EMA: 41.84% | % over 50 EMA: 38.82% | % over 200 EMA: 53.48%

• On the open, IWM attempted a reflex bounce into the declining 10-day EMA, which sat perfectly at the Point of Control (POC) around $243.

• That level rejected immediately on very high intraday selling at 166% relative volume (highest in 1 month), showing sellers were waiting at the most important volume node on the chart.

• That rejection triggered a clean breakdown through all short-term supports and pushed IWM aggressively toward the 20-week EMA (~$234).

• Pre-market, we’re opening below that 20-week EMA, and the VRVP confirms there’s very little demand between $234 and $225.

• The next major support cluster sits at $225, which aligns with:

  • the 50-week EMA, and

  • the 200-day EMA.

  • This creates the next logical downside magnet if $234 fails to reclaim (-4.66% downside move).

FOCUSED STOCK
MU: An Extended Leader

ADR%: 4.73% | Off 52-week high: -3.8% | Above 52-week low: +285.6%

• MU has been the clear leader within semiconductors, but leadership is now deteriorating across the entire complex (XSD, SMH both breaking down).

• On the weekly, price has been rising since September on declining relative volume which is a classic price/volume divergence that often precedes exhaustion in strong trends.

• MU is now ~15% extended above its 10-week EMA (~$201) and this creates a clean mean-reversion setup, especially as sector momentum unwinds.

• The VRVP shows a low-volume pocket from $233 down toward $205–$210, meaning once MU loses the $230 shelf, downside can accelerate quickly into that air pocket.

• Yesterday’s candle showed a doji on an undercut to $230, meaning buyers reacted, but this doesn’t negate the structural weakness in a sector-wide unwind, isolated strength rarely holds.

• Note: This is just a momentum burst short into the 10-week EMA and once MU tags the 10-week EMA, we would not expect a continued bleed as leaders typically rebase rather than trend-break (see MY in July-August 2025).