MARKET ANALYSIS
This Is What Character Change Looks Like

• The ADP report delivered a clear surprise with private payrolls dropping by 32,000 in November. The weakness was concentrated in small businesses and immediately reinforced expectations for a rate cut next week.

• Traders are treating it as confirmation that labour demand is cooling just enough to give the Fed room to move.

• Weekly jobless claims told a very different story. Claims fell to the lowest levels since late 2022 at 191,000. The combination is unusual but important. Hiring is slowing, yet layoffs remain muted. That mix keeps the economy in a controlled deceleration rather than flashing recession signals.

• Services activity remains firm with readings above 52. Growth is slowing but still positive, and this is exactly the type of backdrop the Fed prefers as it considers easing. The economy is not rolling over whatsoever so don’t be alarmed by this, it is simply moving into a gentler gear.

• The AI complex remains under pressure though we are seeing a lot of improvements in the daily scans. Microsoft’s slide after reports of reduced AI sales targets weighed heavily on the entire group and added to the rotation already underway.

• For the first time since the spring rebound, investors are showing a willingness to trim overweight tech exposure and shift toward areas that have lagged.

• Bank of America broke from the rest of the Street with a far more restrained 2026 equity outlook. Their case points to slower buybacks, heavy AI related capital spending and a market operating with far less liquidity support.

• They are not challenging the longer term bull cycle, but they are calling out the likelihood that returns compress from the extraordinary run of the past three years.

• Corporate layoff announcements continue to build and have now exceeded 1.1 million this year. That is the highest since 2020 and reflects companies adjusting to higher input costs, automation trends and trade related uncertainty. It is a sign that the labour market is undergoing a deeper structural shift.

• Nvidia’s CEO met with President Trump to discuss pending restrictions on advanced chip exports. The direction of these policies matters for the entire AI supply chain and remains one of the key policy variables that markets need to monitor into year end.

• We all now will shift attention to the delayed PCE inflation report on Friday and to the University of Michigan sentiment survey. Both feed directly into expectations for next week’s Fed decision, which is now the dominant catalyst on the calendar.

Nasdaq

72.27%: over 20 EMA | 54.45%: over 50 EMA | 58.41%: over 200 EMA

• Yesterday delivered a strong relative volume advance straight into the supply zone, and the response from buyers was clear.

• QQQ retested 617 for a second session and immediately pushed back through it, finishing near 624 and continuing to firm in pre market. The fact that price is pressing against the upper boundary of supply rather than rejecting from it tells us buyers remain in control.

• Nothing in this structure suggests the index is at risk of an abrupt reversal. Even if we do see a pause, the support below is well defined. The rising 10 and 20 day EMAs sit directly at 614, which also lines up with the first major node of the volume profile.

• That zone extends toward 612 and should act as a natural catch point if the market digests the recent move.

• Relative strength versus the SPX has also begun to turn higher and now sits at 84. This matters because leadership had been drifting for several weeks. The improvement supports the idea that this advance has real sponsorship behind it rather than short covering alone.

• The final hurdle to clear is 626. That level marked the failure point from early November, when two tight candles produced the rollover that eventually carried QQQ to 581.

• A clean move through 626 and a close above it would validate a full shift in character. It would also open the path toward an all time high attempt in the near term.

S&P 400 Midcap

76.30%: over 20 EMA | 57.85%: over 50 EMA | 60.59%: over 200 EMA

• Mid caps continue to show one of the cleanest consolidations across all indices.

• Price is trending sideways and building a tight bull flag directly above the 600 level where demand has appeared repeatedly.

• Buyers defended 600 on Monday, Tuesday, and again on Wednesday. Each retest was immediately bought and pushed back into the supply band up to 607.

• We remain capped under 607 for now, but the important development is that the entire contraction is taking place above the former supply at 598. This level acted as resistance from late October through late November and has now turned into support.

• Relative volume has been declining steadily since the twenty sixth of November as the range tightens. This is classic behaviour during a constructive volatility contraction where sellers are stepping aside.

• The weekly chart reinforces the strength of this structure. The supply around 598 was dense and has now been fully reclaimed.

• The morning star reversal pattern that formed across the weeks of the 10th, 17th, and 24th of November continues to validate itself, confirming a major shift in trend.

• The ideal outcome from here would be continued tightening, but the overall setup strongly favours continuation rather than distribution.

Russell 2000

76.30%: over 20 EMA | 57.85%: over 50 EMA | 60.59%: over 200 EMA

• Small caps attempted a breakout yesterday with a strong push through the short term declining resistance near 247 on elevated relative volume.

• The candle measured one point seven four, almost a full average daily range of one point nine four, showing genuine demand stepping in.

• Price is now pressing into the supply band toward 250. This is an important zone and there is still a reasonable chance we see hesitation or rejection on first contact.

• The more important development is the strength of support at 245 to 244. The point of control has now shifted to this region and the rising daily ten EMA is sitting directly on top of it.

• This establishes 244 as the clear line that must hold to keep the structure constructive. As long as price remains above that level, any consolidation should be viewed as healthy.

• The weekly chart reinforces this strength. We are now pushing through the top of the Morning Star reversal structure from the prior four weeks, with this week making progress above the key pivot of 248.

• Broad market scans show a rising number of small cap names setting up. This supports the idea that IWM is preparing for a breakout rather than exhaustion.

• A controlled pause below 250 followed by a reclaim would be the highest quality outcome. Losing 244 would be the only meaningful sign of weakness.

FOCUSED STOCK
RGTI: Quantum Heating Up Again

ADR%: 9.32% | Off 52-week high: -55.2% | Above 52-week low: +843.5%

• For the first time in months, the quantum group is starting to show coordinated strength and that matters because quantum sits at the extreme end of the growth spectrum.

• When speculative groups start turning, it usually signals broad-market risk appetite is expanding.

• RGTI has now held above its rising 200 day EMA for three straight weeks
  which is the first structural improvement we've seen since the September breakdown.

• Price has been building higher lows every week with volume compressing —
  exactly what you want to see in a base that is preparing to move.

• The entire October to December pullback happened on declining volume,
  showing sellers are losing interest rather than gaining control.

• A very clear low-volume pocket extends up to the POC on the visible range profile. That POC aligns with:

  • the declining 50 day EMA

  • the 10 and 20 week EMAs

The group confirmation: QBTS

• QBTS gave us the first real tell yesterday as it broke above its declining 20 week EMA for the first time since the entire sector topped.

• The breakout came on high relative volume,
  making it the first quantum name to flash a genuine character shift.

• QBTS has been leading the group recently and is often the early signal
  that the rest of the complex is about to unwind higher.

• Every major quantum name is forming a similar multi-week bottoming structure, which adds weight to the idea that RGTI is next in line.

• Quantum is one of the most speculative corners of the market.
  When this complex starts to rotate higher, it almost always reflects
  broad expansion in liquidity, risk appetite, and growth participation.

• In other words, if RGTI and QBTS start trending together, the odds of a broad market breakout rise meaningfully.

FOCUSED GROUP
XLF: A New Stage 2 Rally Is Coming

• Financials continue to mirror the broader market’s behaviour with a clean bounce off the rising 50 week EMA, which also aligns with the daily 200 day EMA. That was the clear line where buyers stepped in.

• Since that bounce, XLF has been drifting higher in a steady, controlled manner. Yesterday’s session pushed directly into the dense supply band on the volume profile that sits around 53.60.

• What makes this move more interesting is the weekly view. XLF undercut the rising 10 week EMA earlier this week, then reclaimed it and closed firmly back above it. That reclaim happened right on the rising 50 day EMA at 52.70, which confirms that buyers are defending this area with intent.

• Yesterday registered a breakout. Relative volume was strong at seventy seven percent of the twenty day average. Not explosive, but very respectable.

• XLF is now sitting inside a tightening range just below its supply band. A follow through above 53.60 would confirm that institutions are pressing their exposure in the sector.

Key Leader: Robinhood (HOOD)

• HOOD broke out yesterday in a very clean move. This is one of the names we highlighted previously for its constructive structure and tightness.

• The breakout confirms the same pattern that is beginning to show up across many stocks inside financials. They form a deep reversal, tighten for several weeks, exhaust the sellers, and then rotate into strength.

• HOOD’s breakout is happening right as XLF is pressing into major supply, which strengthens the signal that the sector is preparing to expand higher.