OVERVIEW
Track The Rotation: Don’t Fight It

🟢 Risk-On: SPY, IWM, and MDY all holding key moving averages. QQQ continues to consolidate while MAGS carry the weight. Breadth remains healthy.

📊 Broad Market Structure: No signs of distribution. Pullbacks are low volume and orderly. Internals confirm strength beneath the surface.

🧠 Strength Is Rotating, Not Fading: High-beta tech is cooling, but capital is flowing elsewhere. Stay with the trend. Don’t chase breakouts, instead buy pullbacks in strong names.

MARKET ANALYSIS
Tariffs, Earnings, and Powell

Markets opened the week shrugging off fresh trade threats. Over the weekend, President Trump announced steep new tariffs aimed at the EU and Mexico, set to begin August 1. Despite the aggressive posture, both regions signaled willingness to keep negotiating. For now, markets are treating this more as posturing than policy.

What matters more this week is earnings. The second quarter season ramps up, with major banks e.g. JPMorgan kicking things off. The question is simple: will corporate results be strong enough to offset lingering macro uncertainty? So far, markets seem to believe they will.

Also in the backdrop is growing tension between the Trump administration and the Fed. Headlines emerged around Powell’s job security, and the administration is now scrutinizing Fed expenses, a sign of deepening political friction. While not an immediate market mover, this kind of narrative risk matters at the margin when policy clarity is key.

For traders, none of this changes the fact that price continues to lead. Internals remain strong. Participation is broad. The leadership is rotating, not breaking. That’s the signal.

Nasdaq

The QQQ continues to hold its consolidation structure, spending last week grinding higher with controlled pullbacks that consistently bounced near the rising 10-day EMA.

While price action remains stable, we have yet to see any real momentum expansion or broad demand that would trigger a breakout acceleration.

Most of the strength in the QQQ is still being driven by the mega caps, the MAGS (MSFT, AAPL, GOOGL, etc.), which continue to lead and drag the cap-weighted index higher.

We remain bullish on this segment overall and retain exposure here, but it is important to recognize that much of the move is index distortion, not broad tech strength.

For us traders, that means staying selective. The easy beta in this group is already behind us. From here, focus should shift to individual relative strength names rather than chasing the index itself.

S&P 400 Midcap

Midcaps pulled back Friday in line with broader market softness, but structurally, MDY is doing exactly what it should, consolidating and digesting the strong upside move from late June.

After the breakout, we are now seeing resistance from overhead supply, which makes last week’s retracement unsurprising. There is heavy demand congestion above from prior failed rallies, so a period of chop is likely as the index works through that.

For us traders, this means lower odds on fresh breakout attempts in the near term. The trend remains constructive, but patience is key.

Let this consolidation play out and focus on pullback entries or base formations, rather than trying to force continuation trades before the structure resets.

Russell 2000

Small caps pulled back alongside the broader market on Friday, but the move came on declining relative volume, a signal that this is likely just a short-term mean reversion, not a breakdown.

Price is now pulling into the rising 10-day moving average, which has acted as consistent support during this trend. Unless that level decisively fails on expanding volume, the path of least resistance remains higher.

The uptrend here is still intact with a clean structure, rising EMAs, and no signs of broad distribution. Do not expect every candle to go up. This is a normal pause within a strong move.

As always, remember you are a trend follower, whether you like it or not. Stay aligned with the general structure.

FOCUSED STOCK
DFDV: DeFi Looking To Breakout

We are personally risk-off today with no planned executions, but DFDV is firmly on our radar due to its high ADR% and explosive potential when it moves.

• The stock has been forming a clean series of higher lows since May, showing clear accumulation and structural improvement.

• Last week, price bounced sharply off the Point of Control (POC) and surged with relative volume expansion, attempting to break above a descending trendline.

• Notably, the visible range volume profile (VRVP) shows a low-volume pocket above $27.50, which could open the door for a fast move if price can reclaim that zone with strength.

At this point, DFDV is not yet a 5-star setup. We want to see more tightness and contraction in the days ahead. The past three sessions have been strong, but we are looking for better risk definition before initiating any position.

This stays on the shortlist for potential entry on a clean breakout or pullback into support with volume confirmation.

FOCUSED STOCK
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FOCUSED GROUP
GXC: Chinese Equities Pushing

Chinese equities are starting to look increasingly compelling, with GXC leading the charge.

GXC recently bounced cleanly off the Point of Control (POC) on the visible range volume profile (VRVP) around $85.

Since then, price has pushed higher and is now forming a tight range just above the densest volume shelf, showing signs of accumulation and early-stage strength.

This type of tight action, holding above supply, is exactly what precedes momentum expansion when capital starts rotating in size.

We are now seeing individual components begin to break out cleanly. For instance, VNET is rallying hard and has now entered a fresh Stage 2 uptrend, breaking out of its base on expanding volume and showing clean RS behavior.

This is not an isolated case, several other names in the group are starting to show similar price structure improvements, suggesting leadership is quietly building.

Actionable Insight: Start building a watchlist of relative strength leaders in the Chinese equities group. Focus on names showing Stage 1 to Stage 2 transitions, base breakouts, and strong volume patterns.

These names are often less entangled in U.S. macro noise, and if this rotation sticks, they can offer clean asymmetric setups before broader participation arrives.

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

Q: “You mentioned there's a market rotation taking place.. is that good or bad?”

A: Rotation isn’t good or bad, it’s just signal.

What matters is what type of rotation it is and how you choose to respond to it.

There are two broad categories of rotation:

1. Internal Rotation (Constructive)

This is where capital remains within the equities market, but rotates between sectors or styles.

Example:

• High-beta growth (e.g. QTUM, XLK) starts to cool off after a big run.

• Meanwhile, money flows into value or cyclicals (e.g. XLE, XLF) or defensive themes like GDX.

In this scenario, the market is not breaking down, it’s just changing leadership. Smart money reallocates risk rather than exiting, and your job as a trader is to rotate with it.

This is when we exit fading sectors and press into emerging strength. Think of it as surfing: you always want to be riding the wave with the most momentum.

2. External Rotation (Risk-Off / Distribution)

This is more serious. It’s when money leaves the equity market entirely, not just rotating between groups, but pulling out of risk altogether.

We saw this in December 2024 to April 2025, when:

• Breadth collapsed.

• Growth and value both sold off.

• Capital rotated into bonds, gold, and cash equivalents.

This kind of rotation requires defensive positioning, tight risk controls, and a shift in strategy from offense to capital preservation.

Rotation is just context, not a conclusion.

See every setup, every sector rotation, and the trades behind the P&L, updated daily in real time.

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