MARKET ANALYSIS
Here’s All You Need To Know

• The market is pushing higher again this morning, with futures bid after a stronger than expected April jobs report and continued hopes that the U.S. and Iran can still move toward a deal.

• Nonfarm payrolls came in at 115,000, well above the expected 55,000, while unemployment held steady at 4.3%.

• That is a very important macro data point because it shows the labour market is healthy and this is still the type of jobs number the market can digest well because it is strong enough to reduce recession risk, but not so strong that it immediately forces a more aggressive Fed reaction.

• The market has been worried about two things: oil inflation from the Iran conflict and the possibility that the economy weakens at the same time.

• Today’s jobs report helps remove some of that second concern and the U.S. economy is clearly not collapsing, and that gives the market more room to keep rewarding strong earnings, AI growth, and the broad risk on rally we have been seeing.

• The Middle East backdrop is still messy, but the market is not reacting with panic.

• The U.S. and Iran exchanged fire in the Strait of Hormuz overnight, with both sides claiming the other struck first.

• Trump said there was no damage to the U.S. destroyers and described the strikes against Iranian targets as “just a love tap,” while also saying the ceasefire remains in effect.

• That language matters because the market is treating the exchange as contained rather than the start of a fresh escalation.

• Oil did initially move higher after the clash, but crude has already moderated, with WTI roughly flat to slightly higher around the mid $90s.

• Brent is still hovering around the $100 area, so oil remains the key macro variable.

• The important point is that we are not seeing a major oil spike this morning despite another military exchange in the Strait.

• That is exactly why futures are higher and the VIX is not showing any panic type reaction.

• The market is essentially saying that as long as the ceasefire framework remains alive and oil does not reaccelerate aggressively, equities can continue to look through the noise.

• This is also why growth is still holding up so well.

• Strong tech earnings and AI infrastructure demand remain the dominant equity story, and the Nasdaq is still on pace to materially outperform this week.

• The Nasdaq is currently set for a weekly gain of roughly 2.8%, while the S&P 500 is on track to rise around 1.5%.

• The Dow is lagging, which again tells us this remains a growth led market, not a defensive value led market.

• That being said, yesterday’s sector action did show some short term cooling under the surface.

• Only communication services and technology finished higher, while materials, energy and industrials lagged.

• That is not enough to call the tape weak, but it does show that the market is becoming more selective after a strong rally.

• The key takeaway is that the macro backdrop is still supportive, but not clean.

• Jobs are better than expected, earnings momentum remains strong, oil is not spiking, and the market still believes a U.S. and Iran deal is possible.

• At the same time, the Strait of Hormuz remains fragile, oil is still elevated near $100 Brent, and any failed peace response from Iran could quickly bring volatility back.

• That means we still want long exposure, but the quality of entry matters.

• The best opportunities remain in pullbacks, tight bases, and fresh rotations where the setup is not already deeply extended (we love the look of the precious metals right now as per our last 2 reports, Bitcoin & Ethereum).

• Today’s focus should be to watch whether the market holds the jobs report strength, watch whether oil stays contained after the Hormuz clash, and watch whether growth leadership continues without the VIX starting to react.

Nasdaq

61.38%: over 20 EMA | 59.40%: over 50 EMA | 57.42%: over 200 EMA

• The Nasdaq is now up roughly 26% during this current rally period, which is an extremely powerful move.

• Yesterday’s relative volume was 75% of the 20 day average, which is still below the level we would ideally want to see, but it was a better showing than some of the prior sessions.

• QQQ is now sitting around 8.58 ATR multiples above its 50 day moving average, which is very extended.

• That level of extension does not mean the trend is weak. It means the trend is mature and the entry tactic needs to be more disciplined.

• Ideally, you would already have exposure from the explosive moves we have seen in semiconductors, quantum computing and software.

• Software is especially important because we have been discussing that group for a while, particularly since the breakout on May 1st.

• We also saw follow through yesterday from the Magnificent Seven after their breakout on Wednesday, which is very healthy for the broader tape.

• The real question is where can we still get viable long entries without being late into an already powerful trend.

• From our perspective, traders who missed the leading growth moves should be looking more closely at gold, silver, commodities and cryptocurrency.

• Gold and silver are still holding up very well and remain far less extended than many of the leading growth groups.

• Bitcoin and Ethereum have pulled back, but they are also still holding their recent breakouts.

• Around 61% of Nasdaq stocks are above their 20 day moving average, which is pushing back higher but still not near the overheated 80% zone.

• The more important point is what happened during the recent sideways period.

• While the percentage of stocks above the 20 day moving average dipped, the percentage of stocks above the 50 day and 200 day moving averages held around 55%.

• Stocks were cooling short term, but they were not breaking intermediate or longer term trend.

• Buyers then stepped back in and pushed QQQ higher and the visible range volume profile also supports this as at yesterday’s highs, we saw roughly 2M shares traded green versus only around 1.4M shares traded red.

• At yesterday’s lows, we saw around 4M shares traded green versus roughly 2M shares traded red.

• That is still a very strong imbalance in favour of buyers and the Nasdaq remains extremely strong, but the extension means we still prefer pullback long entries rather than chasing fresh highs.

S&P 400 Midcap

52.00%: over 20 EMA | 61.50%: over 50 EMA | 58.25%: over 200 EMA

• MDY had a sharp mean reversion yesterday from a price action standpoint.

• The session had around 2.2% average daily range, which is roughly 1.8 times greater than the expected daily range.

• A lot of that move looks like a potential gap fill toward roughly 667, which would be the gap left between May 5th and May 6th.

• That would imply a further downside move of around 0.61% toward the rising 10 day moving average.

• Relative volume yesterday was very low at only 53%, so we did not see the type of volume spike that would validate a major shift in character.

• For now, the likely scenario is simply a pullback toward the 667 area.

• We would not remove mid caps from the watchlist as a broader long exposure area.

• MDY itself does not need to be traded directly, but it is useful as a proxy for the health of mid cap stocks inside the U.S. equity market.

• Yesterday’s move does not look like a viable short setup.

• Breadth is still solid, with roughly 52% of MDY stocks above their 20 day EMA and around 58% to 61% above their 50 day and 200 day moving averages.

• That said, MDY is currently the weakest of the major capitalization ETFs.

• That matters because we always want to focus our attention where strength is clearest.

• Mid caps are still healthy, but they are not currently leading.

Russell 2000

60.43%: over 20 EMA | 71.32%: over 50 EMA | 61.53%: over 200 EMA

• IWM also pulled back yesterday, but the structure remains constructive.

• Relative volume came in around 69%, while the session had a large 2.3% range, which is roughly 1.6 times greater than the expected daily range.

• There are now some trapped longs above 286, extending up toward the recent highs.

• In that area, we saw roughly 830,000 shares traded green versus around 700,000 shares traded red.

• That matters because trapped longs above current price can act as supply when price returns to that zone.

• Those buyers may look to exit at breakeven, which can temporarily cap price.

• The more important signal came at the lows.

• At yesterday’s lows around 281.15, we saw very strong buyer aggression, with roughly 2.1M shares traded green versus only around 750,000 shares traded red.

• That is a major imbalance in favour of buyers and this pullback has also helped IWM cool off as the IWM is now around 4.7 ATR multiples above its 50 day moving average, which is much less extended than before.

• We would not be surprised to see a further drift toward 279.90, which would be around another 1.14% lower.

• That level lines up with the rising 10 day moving average and a denser area on the visible range volume profile.

• A move into that zone would invalidate roughly four days of price action, but it would not be bearish in the bigger picture.

• Trading above the 10 day moving average remains the key short term reference point.

• A pullback into that area could actually create a much better long opportunity for traders who missed the earlier breakout.

FOCUSED STOCK
DAVE: A Very Strong Pullback Long Entry

ADR%: 6.74% | Off 52-week high: -13.4% | Above 52-week low: +144.1%

• Our focus stock today is DAVE, and there are several reasons it deserves attention.

• DAVE broke out roughly four weeks ago after testing the 285 level and completing a double bottom structure.

• That breakout came after a 287 day intermediary trend base, which is very significant.

• The double bottom formed between early February and early April, and price expanded higher on rising relative volume at the beginning of April.

• Yesterday’s earnings reaction created volatility, with DAVE gapping down and pushing all the way into the 50 day moving average.

• That 50 day EMA around 227 saw very aggressive buyer support.

• At that level, we saw a roughly two to one imbalance in favour of buyers.

• We also saw the same type of imbalance around 245, with roughly 55,000 shares traded green versus only around 12,000 shares traded red.

• That is a very strong showing of buyer aggression after an earnings related pullback.

• On the weekly structure, this is a textbook pullback long setup.

• Price came down into the rising 10 week moving average, immediately formed a red hammer candle, and started expanding higher.

• DAVE already has a 90 relative strength rating versus the SPX, making it a clear market leader and it also has a very high momentum profile, with an average daily range near 7%.

• That is exactly the type of volatility profile we want in a leading stock because it can produce meaningful percentage moves when the setup works.

• Importantly, DAVE is not extended as it is only around 1.94 ATR multiples above its 50 day moving average, which gives it much cleaner asymmetry than many of the already extended leaders.

• From our perspective, DAVE is likely to continue higher as long as it holds this moving average complex.

• The ideal entry was Wednesday’s pullback, but we would still be watching for entries as close as possible to the 50 day EMA and rising 10 week moving average.

• A logical stop area would be below the 20 week moving average, around 217.

• DAVE is a market leader, it has broken out on a higher timeframe, and the weekly structure gives a stronger read on the broader trend than the daily chart alone.