OVERVIEW
The Time For Patience Is Here

After an intense rally over the past week, the market is beginning to show signs of strain. Many leading stocks are now either highly extended beyond their key moving averages or starting to falter. This was evident in yesterday's session, where cryptocurrency stocks, which had been the most overextended segment of the market, saw sharp declines.

Notably, the Grayscale Bitcoin ETF (GBTC) formed a weak candle pattern known as a blow-off top or shooting star, accompanied by high-volume intraday pullbacks. At the same time, leading names in the sector, such as MicroStrategy (MSTR) and Coinbase (COIN), also experienced significant pullbacks, signaling potential exhaustion in these high-flying stocks.

These recent market movements come on the heels of the October Consumer Price Index (CPI) report, which met expectations but reinforced the reality that the Federal Reserve’s battle against inflation is ongoing. Core CPI rose by 0.3% for the third consecutive month, raising the annual rate to 3.3%. This report served as a reminder that inflation pressures remain persistent.

Amid this backdrop, investors are questioning the sustainability of the post-election rally sparked by Donald Trump’s decisive victory, which propelled major indexes to new highs. Navigating this environment requires a focus on strategic risk management as volatility becomes more pronounced.

It's not unusual to see this kind of market digestion after such a rapid and exaggerated push higher in a short period. Further signs of weakness are likely on the horizon.

So, what should we expect in today’s session?

The release of the Producer Price Index (PPI) data during premarket hours and Fed Chair Powell’s afternoon speech are on the agenda. While these events may trigger volatility—potentially to the upside as seen with yesterday's strong CPI reaction—the technical indicators continue to point to an overextended market that may face additional pressure.

Nasdaq

The Nasdaq has shown significant consolidation around the $513 level over the past four sessions, as highlighted by the visible range volume profile (VRVP). This steady trading range suggests that the market is pausing after recent momentum.

While we anticipate an eventual break higher, it’s difficult to pinpoint whether this will occur in the coming days. Given how extended many major submarket groups are, the more likely scenario is continued consolidation and a potential test of the rising 10-day EMA before any new breakout occurs. This cooling-off period will help reset conditions and build a stronger base for a sustainable move higher.

S&P Midcap 400

The midcaps (MDY) are exhibiting a similar pattern of market consolidation, though with a more pronounced pullback. MDY has now retreated for three consecutive sessions from recent highs. Despite this, we expect support to emerge soon, as the VRVP indicates a high volume of trades at the $597 level. Ideally, reclaiming and maintaining the psychological support level of $600 would be a positive signal; however, holding steady within this range is still a sign of market resilience.

What’s most important is seeing the test of the rising 10-day EMA met with strong buying pressure. This would demonstrate underlying strength and resilience, signaling that buyers are prepared to defend key levels and potentially drive the market higher in the near term.

Russell 2000

The small-cap sector is also experiencing consolidation and a pullback, with potential support increasingly aligning with the rising 10-day EMA. The past week’s lows have been breached, and the strong gap-up seen on November 6th seems to coincide with the current trajectory of the rising 10-day EMA, positioning this level as a likely point for the IWM to test.

It’s important to note that all major indices remain in clear uptrends. While these pullbacks may appear concerning, they are a natural part of market cycles and do not signal a shift in the overall positive outlook. Medium- to long-term sentiment continues to be bullish, and short-term retracements are a healthy component of sustainable market growth.

DAILY FOCUS
Don’t Try To Outsmart The Market

Success in the market isn’t about predicting the next move, it’s about finding and following momentum. To succeed, focus on actionable setups and make the most of market trends. Here's your approach for today:

1. Find High-Momentum Stocks:

   • Scan for stocks that have moved 50%+ in the past 6 months. Look for consistent price action that shows strength, not just a short-term spike.

   • Filter through sectors with strong momentum—financials, consumer Cyclicals, or energy, for example.

2. Look for Consistent Growth:

   • Focus on stocks with 25%+ revenue growth YoY. This shows strong fundamentals and signals that the business is expanding rapidly, giving you more confidence in their future potential.

   • Filter for companies with improving earnings reports and rising estimates from analysts. This can be turn around points in their profitability or a new development in their business (e.g. NuScale Power:SMR and its development of modular nuclear reactors for the AI theme).

3. Narrow Down to the Best Sectors:

   • Target the strongest sectors—like those outperforming the broader market over the last 3-6 months.

   • Filter by sector strength and concentrate on the stocks that are gaining the most traction in those sectors.

   • You always want to focus on the stocks in the leading sectors. Always.

4. Create Your Market Leaders List:

   • Curate a short, high-quality list of stocks from your scans. These should meet all your criteria: 50%+ move in the past 6 months, 25%+ revenue growth, and sector strength.

   • These are just examples of some criteria, we have a total of 15 daily scans which are significantly more detailed.

   • Don’t overwhelm yourself with too many names. Focus on the best especially when you add them to your daily focus list.

5. Track Them Daily for Setups:

   • Check your list daily—monitor price action, key technical indicators, and volume spikes. Look for clear setups like breakouts above resistance or pullbacks to key support levels.

   • Watch for price consolidations, which often precede large moves. Act when you see a confirmed signal.

6. Execute on the Best Opportunities:

   • When you spot a setup, pull the trigger quickly when you see the momentum start turning. Don’t wait for the perfect moment—execution is key. The market moves fast, and opportunities can slip away in an instant.

   • The market leaders often are the names that take us out of pullbacks and corrections which is exactly why we track them.

   • Stick to your plan. Cut losses early, and let winners run. Keep track of your trades and learn from each one. Make sure you are not risking too much (e.g. max. 1% of NAV per trade).

Consistency in tracking, identifying, and acting on the best opportunities is what separates the successful from the rest.

If you're looking for an edge, Swingly Pro helps you cut through the noise—providing real-time data and actionable insights that pinpoint the best stocks and setups for your next move. Stay ahead, execute with confidence, and take advantage of the best opportunities every day.

WATCHLIST
Watch These Like A Hawk

CVNA: Carvana Co.

• CVNA (Carvana) is currently the top performer in the retail sector, outperforming its peers with remarkable strength. Over the past few months, the stock has been on a consistent uptrend, holding above its daily 10-EMA without a single close below this level. This demonstrates incredible relative strength and bullish momentum.

• Right now, we’re seeing a volatility contraction pattern (VCP) forming on CVNA. The stock is consolidating after its strong run, but it’s important to note that the stock is currently extended and not an ideal entry point. However, we are actively monitoring it for a potential breakout.

• We are waiting for a high relative volume breakout from this consolidation phase, which would confirm that the stock is ready to continue its move upward. The retail sector remains strong, and as long as it continues to outperform, CVNA is likely to lead the charge. For now, patience is key, and we’ll continue tracking CVNA closely for when it presents a viable entry.

RUSHA: Rush Enterprises, Inc.

• RUSHA is another leading stock in the retail sector, showing similar strength to CVNA after a strong move higher. The stock is currently in a sideways consolidation, and although it’s extended right now, we want to see the 50-EMA catch up before considering an entry. It’s likely that the stock will test the daily 10-EMA before any further breakout higher.

• Both RUSHA and CVNA are prime candidates to add to your watchlist. Keep an eye on these stocks as they show the kind of strength and sector leadership that could fuel further upside once the setup is right.