OVERVIEW
Our Edge Is Showing Up Right Now

🟢 Risk-On: From small caps breaking their 6-month downtrend to semiconductors ignoring political noise entirely, price continues to lead sentiment. Most major indices are confirming strength via clean patterns, rising EMAs, and expanding relative volume.

🔄 Leadership Rotation & Breadth: IWM has validated a textbook inverse head and shoulders and is driving a fresh Stage 2 rally. MDY reclaimed former resistance and turned it into support with aggressive buyer defense. QQQ continues its tight handle formation under all-time highs — the pullback never even tested the rising 10-EMA. Equal-weight tech (RSPT) is holding firm. Sector breadth is expanding, with semis (XSD), select financials, and software names showing relative strength.

📌 What to Do Now: Cut through the macro noise — the Elon vs. Trump feud, tariffs, and economic headlines are distractions. The tape is telling us where to focus: strong groups, tight bases, and confirmed breakouts. Use pullbacks to rising EMAs and contraction patterns at key levels to position for continuation. Stay patient, but be ready. The path of least resistance remains up.

MARKET ANALYSIS
No Panic, No Problem — This Is Accumulation

Markets caught a bid Friday after the May nonfarm payrolls report came in above expectations — 139,000 jobs added vs. 125,000 forecast — a sign that the labor market remains sturdy despite some recent cracks. The unemployment rate held steady at 4.2%.

📉 But It’s Not All Smooth Sailing:

• Earlier in the week, several data points raised caution flags:

  • ADP private payrolls missed badly (37K vs. 110K expected)

  • Jobless claims ticked higher

  • The U.S. services sector showed unexpected softness

This mix of data complicates the Fed’s path into the June 17–18 FOMC meeting, where rate expectations remain a wildcard.

🌍 Geopolitical Theater Continues

High-level U.S.–China trade talks resume Monday in London, aiming to revive the Geneva framework that temporarily de-escalated tensions. But don’t be fooled — this is still a charged backdrop, with tariff threats and export controls now part of the narrative.

🧠 But Remember This (and we said it Friday):

We are not geopolitical analysts. We are not macro economists.
We are momentum traders.

Unless the chart — price and volume — tells us to panic, we don’t panic.

And right now? The market continues to bid up weakness. Weakness is not lasting. Last week alone, we had every excuse to sell off — but we didn’t. That’s the signal.

🧭 Focus on the tape. The rest is just noise.

Nasdaq

The Nasdaq 100 (QQQ), which tracks large and megacap tech stocks on a cap-weighted basis, continues to build its handle formation after a textbook cup base.

Despite Thursday’s broad market panic, QQQ didn’t even touch its rising 10-EMA or the Point of Control (POC) just below it. That’s notable relative strength.

📊 Friday Recap:

• Price drifted higher on low volume — a classic sign of digestion, not distribution.

• We’re now sitting within a tight resistance cluster, but the VRVP shows no major overhead supply.

• Most importantly, our daily scans continue to show notable strength across the large and megacap tech space.

S&P 400 Midcap

Friday’s session in the MDY may have looked like a quiet red candle to the untrained eye — but beneath the surface, it was a textbook bullish retest.

After gapping over the multi-month descending trendline, MDY pulled back intraday right into that prior resistance zone… and buyers stepped in aggressively. What was once resistance is now support. That’s a key character change — and a bullish one.

📊 Key Takeaways:

• Breakout → retest → strong defense of the new support zone.

• Relative volume is steadily rising — a signal of increasing demand.

• As long as we hold over the former trendline (around $556), momentum remains firmly intact.

This is exactly the type of behavior we want to see during early-stage breakouts. Quiet strength + strong structure = confirmation. Eyes on continuation this week.

Russell 2000

The IWM has now decisively broken out of its December 2024 descending trendline, with Friday delivering a powerful gap up through resistance and into a low relative volume pocket on the Visible Range Volume Profile (VRVP) — with a clear runway all the way to $222.

This is not just another bounce. This is the official confirmation of a Stage 2 rally, marked by a textbook inverse head and shoulders bottom — one of the highest probability bear market reversal patterns.

• A multi-month base just resolved higher.

• The breakout occurred on strong volume and through prior supply.

• There’s now very little overhead resistance until much higher levels.

Small caps have been the laggard class for around a year. With this breakout, that narrative is shifting. Participation is broadening — and this move signals a new phase of market health

FOCUSED STOCK
ACMR: ACM Research, Inc.

ACMR has been our top semiconductor watch for over a year — and for good reason.

What makes ACMR so special is its monstrous Stage 1 IPO base forming on the monthly chart. This is not a short-term pattern — it’s a textbook primary trend consolidation. The stock is now trading above its monthly Point of Control (POC) around $19.50, with rising relative volume and a series of higher lows building quietly beneath major resistance.

Breakouts on monthly trend structures are among the highest-probability setups for multi-month to multi-quarter trends — especially when tied to a leading group like semiconductors.

Friday’s action gave us something actionable: a clean breakout from a tight volatility contraction pattern inside its recent range — on strong relative volume. While ACMR still needs to clear the $25.90–$26.00 level to complete the full monthly breakout, Friday offered an excellent early-stage entry within the range for those looking to scale into a position.

We’re not trying to predict a breakout — we’re positioning as the character changes. The combination of rising group strength (XSD), monthly structural power, and short-term accumulation makes ACMR one of the highest-quality names on our board right now.

FOCUSED GROUP
XSD: Semiconductor ETF

The semiconductor group continues to be the strongest technology-related sector in the market — and one we’re heavily exposed to and structurally very bullish on.

The XSD ETF (equal-weight semiconductors) barely flinched during Thursday’s headline-driven volatility (Trump–Elon noise). That relative strength matters.

🔎 Tight Contraction Under Supply

We’re now contracting directly beneath a well-defined overhanging supply level around $240. Friday’s inside day helped tighten this structure further, all while price holds comfortably above both the Point of Control (POC) and the rising 10EMA — a classic base-building setup beneath resistance.

This is the exact type of pre-breakout behavior we look for in leadership groups.

💡 Watch the Leaders Within the Group

Names like NVDA and MU — both of which we currently own — are acting extremely well. NVDA remains the flow magnet and MU has quietly broken out of a multi-year base.

Now is the time to be running scans within this group.

Remember: You don’t have to trade the sector ETF (unless you want to eliminate single stock risk). You use it to find the leading stocks within the leading group and trade those.

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

Q: “Why Do You Prioritize ADR So Much? Can’t I Just Add More Size to Lower ADR Stocks?”

Great question — and one of the most common misunderstandings we see, especially from newer traders.

📊 What is ADR, and Why Does It Matter?

ADR stands for Average Daily Range — it measures how much a stock moves (in percentage terms) on average each day. If a stock has a 5% ADR, it moves about 5% from high to low each day on average. If another has a 1% ADR, it barely moves at all.

This matters because trading is about capturing asymmetric opportunities — you want to put your capital in a vehicle that moves. Would you rather ride a bicycle (1% ADR) or a Ferrari (5% ADR) when you only get one lap to score?

💥 “Just Add Size” Is Where Most Blow Ups Start

The logic of adding size to lower-ADR stocks seems fine at first — until you realize what it actually means:

• You end up violating your position sizing rules.

• You’re locking up huge amounts of capital in stocks that don’t move.

• You increase your risk of being trapped in dead trades that never follow through.

Remember: this system (ours) is designed around a low win-rate, high R/R (risk-reward) philosophy. We expect to be wrong often — which means protecting capital and maximizing exposure only when the odds are in our favor.

If you’re holding a 1% ADR stock and it doesn’t follow through, you’ve now tied up 30–50% of your account in something that goes nowhere. Meanwhile, the high-ADR name you skipped might’ve moved 10%+ in two days.

🔋 You’re Not Just Risking Capital — You’re Risking Opportunity

There’s also the opportunity cost. Time in dead trades is time you’re not in strong trades. Capital efficiency is everything when your edge depends on compounding asymmetric moves.

🧠 Smart Risk Management Beats Raw Exposure

Sizing up on low-ADR names often requires using margin to reach meaningful return potential. That’s a recipe for overexposure, stress, and premature exits — especially for developing traders.

Instead, focus on tracking and trading names with high ADR, clean technical structures, and leading sector alignment. That’s where your probability-adjusted edge lies.

The stock is just a vehicle — your job is to board the fastest, cleanest one heading in the right direction.

Want help finding them? That’s what we scan and identify for you every day in Swingly PRO.