MARKET ANALYSIS
What You Need To Know

• U.S. futures are trading lower this morning after President Trump announced an immediate increase in global tariffs to 15%, up from the previously stated 10%, following the Supreme Court’s decision to strike down a large portion of the earlier reciprocal tariff framework.

• Dow futures are down approximately 0.5%, with S&P 500 and Nasdaq futures lower by roughly 0.4% to 0.6%, reflecting renewed uncertainty around trade policy direction.

• The key issue for markets is not the headline tariff increase itself, but the unpredictability surrounding implementation, duration, and potential escalation over the coming months.

• European officials have already requested formal clarification from Washington, signaling that transatlantic trade negotiations may face renewed friction, which adds another layer of policy uncertainty.

• Gold has responded immediately to this uncertainty, rising roughly 2% and trading near 5,185, reinforcing its position as the primary defensive hedge in the current environment.

• Bitcoin briefly sold off below 65,000 overnight before stabilizing near 66,000, reflecting ongoing volatility within high-beta risk assets.

• Treasury yields have eased modestly, with the 10-year yield hovering near 4.08%, suggesting that bond markets are not pricing in a sustained inflation shock at this stage.

• Federal Reserve Governor Christopher Waller indicated that upcoming labor market data will heavily influence the March policy decision, emphasizing that January’s employment data may prove to be more noise than signal.

• Importantly, Waller reiterated that tariff-related inflation effects are likely to be temporary, which reduces the probability that trade policy alone materially shifts rate policy expectations in the near term.

• The broader macro environment remains defined by policy uncertainty rather than economic deterioration, which is a meaningful distinction.

• Markets are adjusting to fluctuating trade rhetoric, but there is no confirmed breakdown in employment, credit conditions, or corporate earnings at this time.

• Volatility surrounding tariffs may remain a recurring theme throughout the year, but the magnitude of reaction has been smaller than the initial shock seen last April.

• In this context, price action suggests that markets are reacting to uncertainty rather than repricing a confirmed macro downturn.

• Until economic data materially deteriorates or volatility expands decisively, the current environment appears to favor selective pullback opportunities rather than broad defensive positioning.

Nasdaq

51.48%: over 20 EMA | 49.50%: over 50 EMA | 50.49%: over 200 EMA

• The QQQ remains inside a descending broadening wedge that has been in place since January 20, and price has now spent 23 trading sessions compressing within this structure.

• The upper boundary of the wedge continues to reject price precisely at 611, which also aligns with the declining 20-day EMA on the daily chart and the declining 10-week moving average on the weekly chart.

• Despite these repeated rejections, QQQ is sitting on a demand zone that has consistently held price since September 15.

• That level has been defended multiple times, including February 5, February 6, February 12, between February 13 and February 17, and again on Friday with 131% relative volume.

• The repeated defense of this level while higher lows continue to form suggests pressure building beneath resistance rather than distribution.

• Historically, descending broadening wedges resolve to the upside 83% of the time across 757 examples in Bulkowski’s database, which supports a constructive bias.

• A decisive break above wedge resistance would likely trigger upside expansion, while a loss of Friday’s low at 599 would likely open a move toward the rising 200-day EMA at 583, representing approximately 2.7% downside.

• The structure provides clearly defined risk on both sides, which is why the NASDAQ remains the primary index to monitor for directional resolution.

• The QQQE is forming the same descending broadening wedge structure as QQQ, although with slightly wider volatility swings.

• Higher lows have been forming since February 5, which shows constructive internal pressure despite repeated rejections at resistance.

• The 104 level has acted as supply on February 12, February 18, and again on Friday, and price is currently consolidating directly beneath that zone.

• The ideal outcome is continued sideways tightening under 104 while maintaining higher lows, which would build the conditions necessary for upside expansion.

• A decisive break above wedge resistance would confirm strength, while a failure of the higher-low structure would invalidate the pattern.

S&P 400 Midcap

61.55%: over 20 EMA | 67.33%: over 50 EMA | 68.09%: over 200 EMA

• Mid-caps currently have less upside breadth runway than the NASDAQ, with nearly 70% of stocks trading above both their 50-day and 200-day moving averages.

• Price has rejected the 661 region three separate times on February 11, February 12, and again on Friday, indicating supply remains active at highs.

• Relative volume has declined during these rejection attempts, which suggests a lack of strong participation at resistance.

• While a breakdown is not expected, mid-caps appear to be in a choppy base-building phase rather than positioned for immediate expansion.

• Given the limited breadth room and overhead supply, capital appears better allocated toward growth segments at this stage.

Russell 2000

53.50%: over 20 EMA | 55.89%: over 50 EMA | 63.11%: over 200 EMA

• IWM remains in a Stage 2 continuation base on the weekly timeframe and has been consolidating for 36 trading days, which is approximately five weeks.

• Relative volume has declined for three consecutive weeks as price tested the rising 10-week EMA, reflecting controlled selling rather than distribution.

• The 10-week EMA sits at 259.20, and a test of that level would represent approximately 1.54% downside from current price.

• That level is expected to act as support, although short-term volatility is likely ahead of Nvidia earnings on Wednesday.

• Given that small caps are growth-sensitive, positioning should be managed carefully into that catalyst.

FOCUSED STOCK
MSFT: A 14 Year Long Support Test

ADR%: 2.66% | Off 52-week high: -28.1% | Above 52-week low: +16.1%

• Microsoft is currently testing its 200-week EMA at 386, which is a level that has not been broken in fourteen years.

• Every prior test of this moving average since 2012 has resolved higher, which makes this one of the most significant primary trend boundaries in the market.

• The 2025 Adam and Adam double top formation has already met its measured downside target, meaning the corrective objective has been fulfilled.

• Relative volume has declined during the pullback into the 200-week EMA, and approximately 9 million shares traded green versus 6.5 million red near 397 as price stabilized.

• The stock is trading at -4.47% from its 50-day EMA, which reflects near-term downside extension.

• Daily price action is tightening at primary support, and unless there is a decisive weekly close below 386 on expanding volume, this remains a viable pullback long location.