OVERVIEW
Volume Divergence, Sector Rotation, & a Big CPI Print Ahead

🟨 Cautious Risk-On: QQQ continues to grind higher inside its shallow handle, but declining volume across large caps is flashing a short-term red flag. In contrast, IWM and MDY have both confirmed their inverse head & shoulders breakouts — and they’re entering low-volume pockets with room to run. Technically, the path of least resistance is still up, but the participation is shifting down the cap scale.

🔄 Rotation Watch: Small caps (IWM) are leading after clearing a major 7-month downtrend with conviction. Midcaps (MDY) reclaimed their breakout zone and are forming a potential launching flag. QQQ is still structurally bullish — but showing signs of stalling as capital rotates. XSD (semis), financials, and industrials are still the strongest groups. RSPT (equal-weight tech) is holding, which keeps broader tech constructive.

📌 What to Do Now: CPI data hits 1 hour before the open and will likely set the tone for the rest of the week. Don’t chase. Use this window to manage open positions and prepare for second-entry opportunities if we see clean retests. Focus on strength, keep risk tight, and don’t get distracted by macro headlines — the setups will speak for themselves.

MARKET ANALYSIS
Equities Still Pushing: Watch For A Rotation

After months of noise, we finally got a material step forward on U.S.–China trade policy.

Officials from both countries wrapped up their London talks with a broad agreement in place: the U.S. will ease restrictions on exports of advanced technology goods to China, while China will approve more rare earth mineral exports — a key bargaining chip. While it’s not a finalized deal yet, the framework appears to have buy-in from both sides and now just awaits formal approval from the White House.

🧭 Why It Matters:

Markets had been in “wait-and-see” mode on this front — and this is a clear de-escalation. It removes a near-term overhang and signals both sides are willing to step back from tariff escalation for now. That’s supportive for global risk appetite and especially bullish for semiconductors, tech, and industrials — the sectors most sensitive to cross-border restrictions.

📈 But — Don’t Ignore CPI Today

Before the market opens, we’ll get a fresh read on inflation. This is the key economic data point of the day and will likely drive early volatility. If CPI prints hotter than expected, it may cool the momentum in growth names. If it comes in softer, it could add more fuel to the rally.

Bottom line: Trade tension just eased, but inflation will dictate how we open. Let the market react, don’t try to front-run it. Stay reactive, not predictive.

Nasdaq

The QQQ has continued to grind higher over the past few weeks, inching toward all-time highs. But there’s a structural issue developing under the surface — and it’s worth paying close attention to.

📉 Volume Divergence: A Wyckoff Red Flag

Price is rising — but volume has been steadily declining during this advance. From a Wyckoff perspective, that’s a classic early-warning signal: when price pushes higher on weakening volume, it often precedes a short-term trend change or consolidation. It doesn’t mean a collapse is imminent — but it does mean fuel is drying up.

This isn’t a bearish call. It’s about awareness. The market isn’t failing — but it is flashing some early signals of exhaustion in this cap-weighted leadership.

🔁 Rotation Starting to Take Shape

We’re also seeing signs of capital rotation. While QQQ (large/mega-cap tech) has been the dominant force, midcaps (MDY) and small caps (IWM) are beginning to show stronger relative strength.

• QQQ: grinding on low volume, extended above the 10-EMA.

• MDY/IWM: just breaking out of multi-month ranges with stronger volume confirmation.

This is often what a healthy market transition looks like — leadership begins to broaden. But it’s also when risk disperses and setups start appearing outside the usual suspects.

🧭 What to Watch:

• Price above the rising 10-EMA is still a sign of strength — but any break below with expanding volume could confirm this divergence.

• Watch for continued rotation into higher-beta names and smaller market cap tiers — this could shift short-term trade focus away from mega-cap tech.

This is a moment for nuance: don’t get bearish, get observant. The Nasdaq has led, but leadership may be preparing to pass the baton — and your edge is in spotting that transition before it’s obvious.

S&P 400 Midcap

MDY has officially broken above its bear market downtrend — clearing the key $557 declining resistance level. While the move hasn’t been explosive, it has been constructive: we’re inching higher with relative volume steadily climbing, signaling real participation.

📊 What’s Important:

• Price action has been choppy, but that’s expected — VRVP shows dense overhead supply in this zone. The market is doing the work of digesting it.

• Despite the stall, MDY continues to build above the breakout zone, holding both the rising 10-EMA and prior resistance (now support).

📐 Structural Bullish Shift:

The inverse head and shoulders pattern — a major bear market bottoming formation — has been validated. This is a legitimate regime change.

🧭 What to Watch:

A short-term pause or inside day would be welcome — not a warning sign. Keep scanning midcap leaders to find the top stocks in this group (and this is where you prioritise entries).

Russell 2000

The move in small caps (IWM) continues to impress. Friday gave us clean follow-through above $209 — the descending 7-month trendline that had rejected every advance since December 2024. That level is no longer resistance. It’s now support.

🚀 What’s Changed:

• IWM has now registered three strong, impulsive legs higher.

• It’s entered a low relative volume pocket from $216 to $224 (per VRVP), where overhead supply is thin. Translation: the path of least resistance is higher.

• We’re extended above the rising 10-EMA — a short pause or flag would be healthy — but the bigger picture trend shift is undeniable.

📈 Zoom Out:

Weekly/monthly charts show this is one of the most asymmetric windows in small caps we’ve had in months. You don’t get many early-stage uptrends like this — don’t waste them.

🔍 What to Watch:

A flag near $216 would be classic post-breakout digestion. Leading names within the group will break out first — follow them for early cues.

Don’t overthink it. The trend has flipped. The market is rewarding momentum again.

FOCUSED STOCK
GCT: GigaCloud Technology Inc.

GCT continues to shape up as one of the most compelling charts in the software space. After a sharp selloff in February, the stock has spent the last few months building a clean cup-and-handle formation — and it’s now coiling tightly just below the 200-day (and 50-week) EMA.

The structure is constructive:

• 📈 Price is riding the rising 10- and 20-day EMAs.

• 🔒 Volatility has compressed over the past 2–3 weeks — tight price action, low relative volume.

• 🚀 The handle is shallow, and GCT is showing signs of strong institutional support.

Combine that with some of the most impressive exponential revenue growth in the group, and it’s clear this name is setting up for a potential stage 2 breakout.

📌 Trigger to Watch: A high relative volume move through $19.40 would confirm the breakout and likely start a new uptrend. As always, wait for confirmation — but this is one to keep on your radar.

FOCUSED SECTOR
XLRE: Real Estate

Real estate hasn’t been on many radar screens over the past two years — but that might be changing. The XLRE ETF just broke out this week over its Point of Control (POC) after spending several months consolidating in a tight range.

What’s notable here is the structure: After a classic capitulation move in early April (a flush where sellers likely got exhausted), we’ve seen a constructive 7-week flag build right above rising 10- and 20-week EMAs.

This week, demand stepped in precisely at those key MAs — and XLRE launched above the POC, signaling a clear breakout on the weekly chart.

This kind of action — capitulation, base, then breakout — is textbook reversal behavior. It doesn’t mean the sector is suddenly a top leader, but it does mean we need to start paying attention as rotation occurs.

📌 What to Watch: Keep scanning the group. Names like PLD, CCI, EQIX, and DLR are all building bases or starting to emerge. If breadth improves and volume starts to step in, we may be seeing a trend change in a sector no one’s been watching.

Q&A
Got a trading question? Hit reply and ask!

Q: “How do you know where to set your stop-loss?”

A: Our approach is simple but not arbitrary: your stop-loss should be placed where your trade thesis is no longer valid. It’s not about a magical number — it’s about protecting against the scenario where the setup you’re betting on breaks down.

For example, say you take a trade on a strong earnings gap-up using the 5-minute opening range high (ORH) as your trigger. Your stop might be set at the low of the day — if that low gets taken out, the initial thrust you were betting on didn’t materialize. But does that mean the stock is “dead”? Not necessarily. It might build a new base or form a volatility contraction (VCP) later in the day that gives you a second chance to re-enter with a tighter structure. Your original idea was fine — the timing just wasn’t.

In most cases, we use the low of the day as the default stop. It’s clean, visible to everyone, and it respects the price structure. But this isn’t a rule set in stone. If you’re entering on an intraday flag breakout or a later setup, you can often use the low of the base or the nearest logical support as your invalidation point.

Remember this: there’s a parabolic relationship between how tight your stop is and the return multiple you can achieve. The tighter the stop (within reason), the better the reward-to-risk potential. But if your stop is so tight that normal price noise takes you out — you’re not managing risk, you’re self-sabotaging.

🔑 Final takeaway: Don’t get clever with stops. Early on, just use the low of the day. Build consistency first — nuance can come later.