OVERVIEW
Fear Is In The Air

The post-election rally in U.S. stocks, initially sparked by optimism surrounding Donald Trump’s victory, is showing signs of weakness. The market is now grappling with renewed concerns about inflation and the uncertainty of how the president-elect’s policies might play out. Over the past week, the S&P 500 has declined by -2%, erasing more than half of the gains from the initial surge driven by hopes for pro-growth economic measures.

On top of this, rising bond yields are becoming a significant worry for the stock market, especially for us swing traders focused on short- to medium-term moves. Higher yields make bonds more attractive compared to stocks, offering steady returns with less risk. They also raise borrowing costs for businesses and consumers, which can slow economic growth and pressure profits.

The 10-year Treasury yield—a key benchmark—has risen about 90 basis points since mid-September as strong economic growth has tempered expectations for rate cuts by the Federal Reserve. Initially, stocks managed to hold up despite rising yields due to solid economic data. However, Trump’s proposed policies, such as tax cuts and tariffs, are seen as inflationary, which could push yields past the 4.5% level that many investors view as a tipping point for market stability. Yields recently hit this level before easing back.

Fed Chair Jerome Powell recently stated there’s no rush to cut rates, citing robust economic performance and inflation above the 2% target. This pushed bond yields higher and weighed on stocks. As yields climb, equities become less appealing compared to U.S. government bonds, which are considered risk-free if held to maturity. For us, this is likely to mean increased volatility and the need for sharper strategies to navigate the shifting market.

Nasdaq

The Nasdaq experienced a sharp and significant sell-off on Friday, marked by high relative trading volume. The session began with the index gapping down below its daily 10-day EMA (Exponential Moving Average), breaking through the rising 20-day EMA, which failed to attract any meaningful buying interest. As a result, the Nasdaq is now positioned about halfway between the rising 50-day EMA and the breached 20-day EMA level of $498.

The high volume during this sell-off is notable and concerning. Unlike the typical low-volume pullbacks that often follow strong upward moves, this sell-off displayed intense selling pressure. This reaction can be attributed in part to a cooling of sentiment after the euphoric post-election rally fueled by Trump’s victory. Additionally, from a technical standpoint, the unfilled gap left from Wednesday, November 6th, has been in the process of being filled, which adds to the current selling momentum on the QQQ.

Looking ahead, the 50-day EMA is expected to act as a support level, as it did during the last test in late October and early November. Traders are also anticipating Nvidia’s earnings release this Wednesday, which could play a pivotal role in determining whether the QQQ sees a recovery. Given Nvidia's significant weighting in the ETF and its influence on the broader market, the results will likely either boost sentiment and drive a rebound or add to the current downward pressure.

We will be discussing this earnings report in further detail over the coming days.

S&P Midcap 400

The midcap sector has been in a steady decline over the past four days, retracing from recent highs. Currently, these stocks are hovering just above their rising 20-EMA, a crucial support level. Notably, the volume during this pullback has been relatively low, suggesting that the downward pressure may not be strong or widespread. This kind of low-volume retracement typically signals a temporary pause or consolidation rather than a full-scale reversal.

We're now in a similar situation to that of the QQQ, where the decline has become stretched and a bounce could be imminent. After an exaggerated sell-off, it's common to see a counter-move, as sustained downward momentum is rare. However, caution is essential at this stage—it's crucial not to rush in and try to catch a "falling knife," as the market could still see more volatility before any bounce materializes. Patience will be key in identifying the right entry point and it is still too early to tell where this may be.

Russell 2000

The small-cap sector is facing a sharp pullback, down 6% from recent highs in just the past week. This shows a clear shift in market sentiment. Such a quick drop could either signal a larger change in outlook or just be a correction after an overextended rally. The rise in 10-year Treasury yields is also putting additional pressure on small-cap stocks, as higher yields mean higher borrowing costs, which can hurt these companies more, especially those with a lot of debt.

We're closely watching how the IWM behaves at its current 20-EMA level, as this will be a key indicator of its short-term direction. There's still an unfilled gap below, down to around $225, where the visible range volume profile (VRVP) shows the densest levels of demand. This suggests that there could be additional downside potential before the market finds support. If the IWM continues to decline, the $225 level may act as a strong demand zone, potentially leading to a bounce or stabilization.

DAILY FOCUS
Discipline Over Effort: It Only Takes One Trade

Trading is so incredibly fast paced and t’s easy to get caught up in the idea that success comes from working harder and for longer, analyzing every detail, and making constant moves. However, the market doesn’t reward effort for effort’s sake—it rewards discipline. The truth is, no matter how much time or energy you put into researching setups, the real differentiator is your ability to stay disciplined and stick to your plan.

• Can you resist the temptation to act impulsively when the market is moving sideways or seems quiet?

• Are you able to wait patiently for the right trade setup, even if that means sitting on the sidelines for extended periods?

• Can you allow your trades to develop without micromanaging, trusting that you’ve made the right decisions?

The idea of being patient can often feel unproductive. It can seem like you're not doing enough, especially when you see others actively trading or reacting to every price movement and when you are yet to be “consistently profitable”. But in reality, patience is one of the most powerful tools in a trader’s arsenal. It’s the quiet force that separates those who succeed in the long run from those who burn out from chasing every short-term move.

The key is learning how to wait for your edge. A well-timed move, based on careful analysis and a clear strategy, often yields more than a dozen rushed decisions. This doesn’t mean you should sit idly by; it means you should recognize when the market is offering an opportunity and when it’s better to stay out. By practicing discipline and letting the market come to you, you avoid overtrading, which is often the downfall of many traders.

How To Refine Your Edge

It is absolutely essential to define a "specialty"—a set of filtering parameters that allow you to narrow down the universe of stocks to those that meet specific, consistent criteria. This process helps you avoid getting overwhelmed by the endless stimulus the market provides and ensures you stay focused on the opportunities that align with your strategy. By having a clear niche, you can filter out the noise and zero in on high-quality stocks.

For example, we focus on leading growth stocks using the following key parameters:

1. 25% Revenue Growth YoY
   Revenue growth is a powerful indicator of a company’s ability to expand its market share. By requiring at least 25% growth on both a yearly and quarterly basis, we ensure that we are only considering companies that are showing consistent and significant growth. This helps us identify companies that are scaling rapidly and have strong momentum, but also are likely to see fund accumulation/support which is huge for ensuring the stock has a bias to push higher.

2. 25% EPS Growth YoY
   Earnings per share (EPS) growth is just as important as revenue growth because it reflects a company’s profitability. A 25% growth in EPS, on both an annual and quarterly basis, indicates that the company is not only growing its sales but also efficiently converting that revenue into profit. This ensures we focus on companies that are not just expanding, but doing so profitably and actually generating value for their shareholders (us).

3. ADR% > 3%
   The Average Daily Range (ADR) measures a stock's volatility, helping us identify those with price movement that offers trading opportunities. A stock with an ADR over 3% shows a higher level of volatility, which can be beneficial for us traders looking to capitalize on price swings and don’t want to be trapped in a slow moving stock that may take an entire year to make any meaningful move- we want to be trading the fastest names so the greater the ADR%, the better.

4. Average Volume (60-Day) > 1 Million
   Liquidity is key to executing trades effectively. By filtering stocks with an average volume above 1 million shares over the last 60 days, we ensure we are targeting liquid stocks that are easier to trade without significant slippage. Higher volume also often suggests stronger institutional interest, which can support more stable trends.

The Power of Specialization

You must be diligent in your process of focusing on these specific parameters, we create a narrow, high-quality universe of stocks—leading growth stocks that meet strict standards of growth, profitability, volatility, and liquidity. This focused approach not only helps us avoid distractions from stocks that don’t fit our strategy but also accelerates our learning process. By concentrating on a specific type of stock, we become experts much faster, gaining a deeper understanding of the factors that drive performance in growth stocks.

That said, you absolutely don’t need to follow our exact parameters. We encourage you to conduct your own analysis and develop your own set of filters that work for your trading style. Every trader’s edge is different, and discovering what resonates with your approach is key to building a successful strategy.

If you'd like to learn more about how we scan the market, get access to our exact market scans and indicators, and dive deeper into how we trade these high-growth stocks, consider exploring Swingly Pro where you’ll get hands-on tools and the exact strategies we use to identify and trade the best opportunities in the market.

WATCHLIST
Leading Stocks In The Leading Sectors

HOOD: Robinhood Markets, Inc.

• HOOD is showing strong potential as one of the top names in the financials sector (XLF). Recently, it has been forming a high-tight flag (HTF) pattern while trading above its rising 10-EMA, a key technical level. On Friday, we saw a surge in demand that helped push HOOD higher during an intraday test of this level, indicating strong buying interest and support.

• This morning, HOOD is breaking out of a small consolidation in premarket trading. Given the relative strength in the XLF sector as a whole, which has been showing solid performance, the conditions are ripe for HOOD to continue its upward movement. The sector’s strength could act as a catalyst for a potential breakout in HOOD.

• We’ll be closely watching the price action for any signs of sustained strength and a breakout above current levels. If we see a breakout accompanied by high relative volume, we may consider initiating a small position, around 0.25%, as the stock gains momentum. Patience and discipline will be key as we monitor for the right entry point as we are in no rush for naked exposure.

SOFI: SoFi Technologies, Inc.

• SOFI, like HOOD, is demonstrating strong potential within the financials sector (XLF), with a high-tight flag (HTF) pattern and a textbook consolidation on its rising 10-EMA. This level has shown solid support, and the contraction in both volume and price range suggests the stock is gearing up for a move higher. These characteristics typically indicate that the stock is preparing to break out.

• From a fundamental perspective, SOFI shares similarities with HOOD, as both are leading names in a high-performing sector. This adds to the conviction that SOFI could be on the verge of making a significant move.

• We will be watching for a breakout above the $14 level, especially if it occurs with high relative volume. However, given that the confidence level is currently lower given the general market climate, any position taken would be on the smaller side, around 0.25%, to manage risk accordingly.