OVERVIEW
Something Is Brewing Under The Surface

Yesterday’s session was marked by anxious anticipation, with most stocks trending sideways as investors awaited the earnings report from Nvidia, the world’s largest publicly traded company by market cap — worth more than the value of the United Kingdom, Germany, France, and Italy. Nvidia reported earnings per share (EPS) of $0.81, surpassing analysts’ expectations of $0.74, and revenue of $35.1 billion, well ahead of the forecasted $33.2 billion.

Looking ahead, Nvidia provided a revenue forecast of $37.5 billion for the fourth quarter, with a potential variation of plus or minus 2%. This is slightly above Wall Street’s expectations of $37 billion, further fueling optimism around the stock and its growth prospects.

Despite Nvidia's strong earnings report, the stock sold off by about 3% immediately afterward. This reaction highlights that Nvidia may have reached a point in its growth cycle where it no longer delivers the same "wow" factor with each earnings report. After an incredible 2,000% rise in the past two years, expectations for the company are now so high that it's nearly impossible for the stock to surprise the market in the same way it once did. The extraordinary growth has set a new bar, and even strong results may no longer be enough to drive the same level of excitement

There’s also growing concern about Nvidia’s future due to potential global tariffs. Donald Trump has threatened to impose blanket tariffs on products from around the world, including a specific focus on Taiwan-made chips. This could be a potential alternative to the CHIPS Act, which aims to bring semiconductor manufacturing back to the U.S.

Since most of Nvidia’s chips are produced by TSMC in Taiwan, any tariffs on these chips could lead to higher production costs for Nvidia. The company may either raise prices on its AI chips, which could hurt its margins, or pass the additional costs onto customers, potentially affecting demand and profitability. This uncertainty adds another layer of risk for the company moving forward which likely impacted the negative reaction to yesterday’s earnings.

So, what about today’s session?

Putting Nvidia aside, the market itself looks relatively strong. The major indices have found support at key levels, which helps maintain the bullish thesis of an imminent recovery. In fact, we've even seen some selective breakouts working, with follow-through momentum coming into the market.

There are no major economic reports today that are likely to cause any significant volatility. Instead, it seems the major "concerning" or potentially volatility-inducing events are now behind us, including Nvidia’s earnings report. With that uncertainty cleared, the market has room to continue its recovery trend.

Nasdaq

The Nasdaq continues to build a series of higher lows, now sandwiched between key daily moving averages, particularly the 20-EMA and 10-EMA. We've seen strong support come in over the last four sessions, especially now that the gap left on the day Trump was elected has been filled. The QQQ is on the verge of a major breakout, with $505 as a key level to watch. If we see it break through on high relative volume, it could signal a breakout above the descending daily 10-EMA, which has been acting as resistance for the past week.

The Visible Range Volume Profile (VRVP) also shows a low-volume pocket up to $510, which should be filled quickly if buyers get aggressive. This could lead to a sharp move higher in the Nasdaq if the momentum continues and buyers push the index further.

S&P Midcap 400

The midcaps are also finding support, with the session unfolding just as we outlined in yesterday’s report. The MDY pushed above its daily 20-EMA on high volume and is now poised to break above $592 and its 10-EMA, setting the stage for a recovery run toward $600.

However, the $591-$593 zone may present some resistance, so a strong showing from buyers is needed to push through. The volume from yesterday’s session was bullish, with a high relative volume green day and a hammer candlestick, indicating that buyers were committed to defending the 20-EMA and were aggressive in driving the price higher. If this momentum continues, we could see the midcaps make a solid recovery as early as today.

Russell 2000

The small caps had a similar session, finding support at the 20-EMA and the $230 demand zone, as seen in the Visible Range Volume Profile. If they break higher, their next potential resistance point is all the way up at $236. This could be the most volatile of the three capitalization groups if the move plays out.

Note: It's important to remember that, on all the indices, we could see either a continuation of sideways movement or a breakdown (though the latter seems unlikely). Instead of trying to predict the exact move, the focus should be on riding any upward momentum as it unfolds. This approach allows you to stay flexible and take advantage of the market's natural flow without putting yourself in the firing line.

DAILY FOCUS
How We Scan The Market Everyday

Finding high-probability trade setups is all about consistency and process. At Swingly, we rely on two primary methods to uncover the best opportunities: the top-down approach and the bottom-up approach. These strategies help us find stocks with strong momentum, solid fundamentals, and tradability, giving us a steady pipeline of actionable ideas.

This is how we run our daily scans with a quick breakdown to help get you started:

The Top-Down Approach: Starting with the Market Leaders

The top-down approach begins by analyzing the broader market to identify leading sectors and industries. From there, we dive deeper into individual stocks within these groups.

Step 1: Identify Leading Sectors

• Why this step matters: Strong stocks often come from strong sectors. By focusing on the top-performing sectors, we align our trades with market leadership.

• How we do it: We track sector performance over 1-month, 3-month, and 6-month periods to identify consistent leaders.

For example, if the energy sector has outperformed during these periods, we zero in on energy stocks to find potential trade opportunities.

Step 2: Screen for Strong Stocks Within Leading Sectors

After identifying leading sectors, we look for standout stocks by applying two key criteria:

1. Momentum Leaders: Stocks that have gained +50% or more over the last 6 months.

2. Growth Leaders: Companies with +25% year-over-year (YoY) revenue and EPS growth, signaling strong fundamentals.

Step 3: Filter for Liquidity and Tradability

We refine our list to focus on stocks that are liquid and tradable:

• Market Cap: At least $100 million to avoid micro-cap stocks with higher risk.

• Volume Traded: At least 1 million shares traded in the last 2 months to ensure enough liquidity.

• Average Daily Range (ADR): Greater than +3%, so the stock has sufficient daily price movement to generate swing trading opportunities.

Step 4: Evaluate Technical Setups

Once we’ve identified stocks that meet our criteria, we analyze their charts for actionable setups. These include:

• Consolidation patterns: Such as volatility contraction patterns (VCP).

• Breakouts: Stocks breaking through key resistance levels.

• Pullbacks: Stocks retracing to strong support zones or moving averages.

This step ensures we’re only trading stocks with technical setups that align with our momentum swing trading strategy.

The Bottom-Up Approach: Let the Stocks Lead the Way

The bottom-up approach flips the script. Instead of starting with sectors, we begin by scanning for individual stocks with standout performance, regardless of their sector or industry group.

Step 1: Scan for Momentum Leaders

We screen for stocks that have shown the strongest price performance across multiple timeframes:

• 1 week, 1 month, 3 months, and 6 months.

• Momentum leaders are stocks that are outperforming their peers consistently over these periods.

Step 2: Focus on Fundamentals

Momentum alone isn’t enough. We filter for companies with strong growth metrics:

• Revenue Growth: At least +25% YoY.

• EPS Growth: At least +25% YoY.

This ensures that the stocks we’re considering have both technical and fundamental strength.

Step 3: Refine with Liquidity Filters

We use the same liquidity and tradability criteria as in the top-down approach:

• Market Cap: Above $100 million.

• Volume Traded: At least 1 million shares traded in the last 2 months.

• ADR > 3%, to ensure sufficient daily volatility for swing trading.

Step 4: Monitor Daily Momentum

By reviewing the results of our scans daily, we uncover stocks with sudden bursts of momentum or breakout potential—even if they aren’t part of a leading sector. This method helps us catch hidden opportunities before they become widely noticed.

Why We Use Both Methods

Each approach has its strengths:

• The top-down approach ensures we’re aligned with the broader market and sector leadership.

• The bottom-up approach allows us to spot individual stocks with strong momentum and growth, even in less obvious areas.

By combining the two, we create a robust system that captures opportunities across different market conditions.

This Is Just the Beginning

Finding the best trades takes time, discipline, and the right tools. The reality is that 99% of trading is more about research and positioning yourself in the right areas of the market, irrespective of the set-up you see as a potential breakout in a lagging industry group is very unlikely to work out. We make this process easier for the traders at Swingly Pro:

1. Daily Published Scans: Get the results of our top-down and bottom-up scans delivered to you every day. Instantly identify the market’s momentum leaders and growth stocks, saving you hours of research.

2. Complete Daily Focus List: Stay ahead of the curve with a curated watchlist of actionable setups for the day and week ahead. This ensures you’re always aware of where the best opportunities lie.

3. Entry & Exit Strategies: For every stock on our list, we provide a detailed trade plan, including entry points, take-profit targets, stop-loss levels, and our precise risk management approach. Know exactly how we’re managing the trade before you take action.

4. Custom TradingView Screeners: Gain access to our exclusive TradingView screeners, designed to help you replicate our process. Customize the scans to fit your needs and uncover winning trades in minutes.

Whether you’re looking for actionable trade ideas or tools to simplify your research, Swingly Pro gives you everything you need to stay ahead of the market.

We dive deep into the details every day to streamline your research process, allowing you to focus your time and energy on executing trades with confidence.

WATCHLIST
Today’s Breakout Opportunities

STEP: StepStone Group Inc.

• STEP is a leading name in the financials sector that has been trending sideways, forming a volatility contraction pattern (VCP) along its daily 10-EMA. With the strength we've seen in other financial stocks like HOOD and ROOT, STEP presents an exciting opportunity that we're keeping a close eye on.

• For an entry to be triggered, we would need to see high relative volume on a breakout above $66.45. This level would signify a shift in momentum, and if we see that volume backing the move, it could lead to a solid breakout in STEP.

NVDA: NVDA Corporation

• NVDA is looking quite exciting right now, with pre-market action showing it has already reclaimed almost all of its lost ground from yesterday's after-hours dip and is getting closer to the key breakout level of $148 that we’ve been watching.

• The fact that buyers stepped in not only during after-hours trading but also throughout yesterday's session—particularly on the intraday test of the daily 10-EMA and 20-EMA—is a strong sign of strength. This suggests that buyers are committed to defending key support levels and pushing the stock higher.

• Additionally, a breakout in NVDA would likely coincide with a breakout in the Nasdaq (QQQ), which is also nearing its own breakout level. This could set the stage for some solid momentum in both NVDA and the broader market if the breakout occurs.