OVERVIEW
Bulls Remain In Control

🟩 Risk-On (but selective): Large caps, small caps, and midcaps all held key EMAs last week and are starting to coil again beneath major resistance. Despite the noise in the headlines, the market continues to absorb pressure — not break.

📈 Structural Strength Everywhere: IWM, MDY, and QQQ all defended key levels (10-EMA, 20-EMA, 50-EMA) with strong relative volume bounces. The fact that demand is stepping in across all market tiers speaks to underlying strength.

📊 Sector Rotation in Play: We’re seeing classic handoffs between leadership — from tech to industrials and even utilities (on the back of META’s nuclear push). XLI looks ready to break out of a tight high-tight flag; TLN is ripping on strong news and volume.

MARKET ANALYSIS
The Pullback Is Over?

There isn’t much new to report on the macro front. We’re still navigating the same geopolitical noise:

• U.S.–China tensions remain unresolved after the Geneva tariff pause.

• The EU is threatening countermeasures following Trump’s renewed steel tariff threats.

• Everyone’s talking, but no real outcomes — yet.

The takeaway? It’s still just noise. Traders must remember: volatility comes from headlines, but conviction comes from charts.

Here’s what’s more important right now: the calendar.

• May closed with a +6% gain for the S&P 500 — the strongest monthly return since November 2023.

• Historically, whenever May returns exceed +5%, the next 12 months have been bullish for equities 100% of the time (based on historical studies going back decades).

• And statistically, the next six weeks are among the best six-week periods of the entire year — rivaled only by Q4 seasonality.

📌 Key Point: This isn’t the time to lighten up — it’s the time to stay focused. The headlines haven’t changed, but neither has the trend. The charts still lead, and so far they’re pointing higher.

Nasdaq

QQQ continues to hold its handle structure cleanly after a strong bounce off the rising 10-day EMA yesterday — a key technical level that has acted as dynamic support throughout this consolidation.

Price has now pushed back into the Point of Control (POC) zone, and while it’s only marginally above, the action remains constructive.

🔄 VCP Still Intact

We’re seeing a textbook volatility contraction pattern (VCP) forming in the handle portion of this setup — defined by tighter price action and declining volume. This is classic bullish behavior as weak hands get shaken out before a potential breakout.

So far, every undercut of the rising 10-EMA has been absorbed and defended, with buyers consistently stepping in. That’s a powerful tell.

The QQQ Equal-Weight ETF (QQQE) — which gives the same weight to each component, unlike cap-weighted QQQ — is also forming a near-identical shallow cup and handle pattern with a similar VCP forming under its POC.

That confirms broad participation across the entire large-cap tech landscape — not just driven by mega-cap heavies.

S&P 400 Midcap

While MDY continues to underperform relative to large- and mega-cap tech — which is expected in a growth-led tape — it’s quietly building a constructive structure.

📈 Higher Lows Forming

Price bounced cleanly yesterday off the rising 50-day EMA on elevated relative volume, right at a dense demand zone outlined in the visible range volume profile. This area has repeatedly acted as key support — and failure to hold it would open the door to further downside, as there’s very little structure below.

🔍 Key Technicals

• A series of higher lows is now forming off the 50-day EMA.

• Yesterday’s bounce produced a long lower wick on high relative volume — a classic sign of aggressive dip buying.

📌 Today’s Job: Hold the Line

We need to see MDY hold above the 50-day EMA and ideally push higher toward its declining trendline and breakout level.

Above current levels, there’s a low relative volume zone — meaning that if buyers step in, price could move quickly through that area toward the $566 resistance region.

Russell 2000

🧱 Structurally Bullish: IWM quietly looks like the strongest index into June (in terms of its potential future return). While it’s often the laggard, this time it’s leading the recovery — and technically, it’s far cleaner than the midcaps.

💥 Strong Bounce at Key Level: Friday’s high relative volume bounce directly off the rising 50-day EMA confirms that demand is still very present. Unlike MDY, IWM isn’t weighed down by as much overhead supply, and it’s already pressing into its breakout zone.

🧩 Inverse Head & Shoulders: The structure couldn’t be clearer — we’ve been flagging under $209 (which lines up with the declining 200-day EMA), and the pattern now resembles a near-perfect inverse head and shoulders. That’s a high-probability setup for a structural trend reversal.

📌 Why It Matters:

• This zone (~$209) marks both major technical resistance and the POC on the visible range.

• A confirmed breakout from here would mark a new bull phase in small caps — potentially sparking a broad equity expansion.

📉 What Could Go Wrong: While we’ve seen shakeouts, all have been met with aggressive bids. The only real red flag would be a breakdown below the 50-day EMA — but so far, that level has held like a fortress.

🔑 Key Takeaway: IWM is showing relative strength and tightening just below a multi-month breakout level. It’s the kind of tension that often precedes explosive resolution. Combine that with healthy setups in QQQ and constructive action in MDY, and it’s clear: the market is coiling. Stay ready.

FOCUSED STOCK
TLN: Talen Energy Corporation

📈 All-Time Highs in Play: TLN is gapping higher in premarket after news that Meta is aggressively pursuing nuclear power for its data centers — a narrative that’s lit a fire under utility names. TLN is one of the cleanest technical beneficiaries.

📊 Breakout Confirmation: After basing since January 2025, TLN is finally breaking above its multi-month range. The double bottom structure from earlier in the year is now fully resolved, and price has worked through the dense overhead supply visible on the VRVP.

🛡️ Execution Tip: Use an Opening Range High (ORH) trigger to confirm strength out of the gate. That helps protect against early fades or failed breakouts — especially on gap-up moves like this.

FOCUSED SECTOR
XLI: Industrials

📦 High-Tight Flag: The Industrials sector (XLI) has entered a textbook volatility contraction right under all-time highs — the kind of tight range compression that often precedes explosive continuation.

📈 Rising Volume = Fuel: Relative volume has steadily increased during the rally leg leading into this coil, which is a crucial signal. Rising prices on rising volume indicate strong participation — and the presence of real demand, not just drift.

🔍 What to Watch: The flag is now extremely tight, and any breakout above the current range could trigger a sector-wide momentum surge. We’re right at the edge of resolution.

🎯🛡️ Execution Tip Don’t wait for XLI itself to break. Instead, start scanning the top-performing individual names inside the group now. The leaders will break out before the ETF does — and those are the names you want to be focused on.

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