OVERVIEW
Strength, Strength & Even More Strength

The market kicks off the week with strength, as all major indices continue to climb in the premarket session, building on one of the best weeks in history following Donald Trump’s victory over Kamala Harris.

After weeks of uncertainty, investors now have clarity. With the election behind us, the fear of a contested result is no longer a concern, allowing the market to refocus on what truly drives performance — economic and corporate fundamentals. This change in focus is crucial, as it enables investors to make more informed, confident decisions moving forward.

In addition, traders were closely monitoring Thursday’s Federal Reserve policy announcement, which included another interest rate cut. The subsequent press conference with Chairman Jerome Powell further fueled market optimism, enhancing the overall sense of confidence in the economy’s future.

Heading into this week, we are seeing a large number of strong set-ups in a broad and widespread rally. Bitcoin has surpassed $80,000, significantly boosting market sentiment. This surge is also lifting the prices of stocks related to the cryptocurrency sector, such as MicroStrategy, Coinbase, and various mining companies.

Meanwhile, the Cboe Volatility Index (VIX), Wall Street’s "fear gauge," tracking S&P 500 options, rose by 2.7% to 15.34. A VIX reading below 20 is considered a sign of low volatility.

Over the past week, the VIX has dropped by about 30%, likely due to the quick resolution of the U.S. election, which helped ease uncertainty. Additionally, the expectation that Trump will implement pro-market economic policies has further supported stock prices and helped calm any nerves.

So, what does all of this mean for today’s session?

There are no major economic reports today that are expected to cause any unexpected turbulence, and we’re continuing to see strength in the premarket, with strong breakout follow-through and broad expansion across various sectors.

It’s highly likely we’ll see a continuation higher today. However, whenever we open with a gap, there’s always the risk of a fade lower. To avoid getting caught, make sure to use the 5-minute opening range high in combination with relative volume to guide your entries and manage risk effectively.

This is an excellent opportunity to get on board with Swingly Pro, where we provide a daily report card that includes a list of all the leading industry groups, as well as a complete focus list of the stocks breaking out today that should be on your radar.

You can learn more about this here.

Nasdaq

The Nasdaq is showing significant strength, with four consecutive sessions of gains. Friday’s session even saw an intraday consolidation range, which is now being broken through in the premarket today. This pause in the uptrend on lower volume is a positive sign, as both buyers and sellers seem comfortable trading within this new range. The breakout from this intraday bull flag suggests the QQQ is not done reaching new highs.

Of course, there is the potential risk of becoming slightly extended in the short term if the QQQ continues to push higher, moving away from its daily exponential moving averages (EMA). This could create the possibility of a pullback at some point. However, given the strong optimism fueling this rally, this isn’t a major concern — the chart remains too strong to ignore.

S&P Midcap 400

The midcaps took a brief pause in their strong rally over the last two sessions after Wednesday's productive gap up, which was a healthy sign we were pleased to see. Now, we’re witnessing a breakout from the intraday range the MDY built just below $603, with the index gapping up to $608.

This gap up signals strength, but as always, there’s the risk of a fade at the open whenever we see such a pronounced move, which can leave us vulnerable to shakeouts if we're not careful. However, the midcap sector overall remains a highly attractive area to focus on for the foreseeable future. The lower market cap, more rate-sensitive, and generally more volatile names in midcaps (and small caps) tend to perform the best when investors are comfortable taking on risk. With the economy clearly prioritizing growth — driven by lower interest rates and the optimism surrounding a Trump presidency — this area looks ready to continue its strong performance.

Russell 2000

Small caps are likely to be the top performers in this high-growth, low-inflation environment we’re entering. Friday's session saw a late-day surge in the Russell 2000, breaking out of its short-term consolidation, and now that breakout is materializing in the premarket. The technicals are similar to the MDY, with the main concern being the potential for a fade at the open.

What’s clear, however, is the real strength in the IWM. Not only has the price action over the past four sessions shown impressive momentum, but the surge in buying pressure and volume is remarkable. The IWM is making new relative highs, with all-time highs potentially just around the corner.

The extension above its EMAs in the IWM is becoming more significant, but with emotions settling down, earnings reports coming in strong, and Bitcoin pushing high-risk asset optimism even further, it's hard to see any weakness today. The IWM looks likely to continue its rally, keeping the momentum intact for now.

DAILY FOCUS
This Is The Time To Get Aggressive

Our risk appetite is higher than it’s been in a long time, and now is the time to get aggressive with full-sized positions in the top-performing sectors and industry groups. The market is presenting numerous opportunities across various themes, and we want to take advantage of that.

However, there’s something we need to highlight—especially for newer traders—that can’t be overlooked. This is arguably the most dangerous time for traders. When euphoria is high, and it feels like every stock you buy just keeps going up, that’s when mistakes are most often made. Traders tend to chase stocks they’ve been tracking but missed the entry on simply due to FOMO, which is a recipe for disaster. This is not how professionals operate.

Now, more than ever, it’s crucial to stay vigilant. It’s easy to get overconfident and think you can throw your rules out the window for a position. But if you miss a trade, that’s okay—another one will come.

We’re moving fast, and the temptation to chase can be overwhelming, especially with so many stocks rallying simultaneously. The key here is to stay focused and avoid getting distracted by the noise. Tight, precise entries are what matter most right now.

If you miss a trade, don’t chase it—there are always more opportunities ahead. Stick to your process, trust your discipline, and prioritize quality over quantity. In this environment, patience and precision will be far more valuable than trying to catch every move.

WATCHLIST
Today’s Stocks To Watch

HIMS: Hims & Hers Health, Inc.

• HIMS is breaking out of a multi-month base, forming a cup and handle pattern since early summer 2024. On Friday, the stock pulled back intraday to test the 10-EMA and 20-EMA, where it was met with strong buying pressure, pushing it back up just below the $24 breakout level we are targeting.

• In the premarket, we’re seeing the breakout take shape. Assuming it holds, we’re looking to take a long position. However, if there’s a gap up, we’ll treat this like an EP (early position) trade, using the 5-minute opening range high (ORH) as our entry guide.

• HIMS is already a solid growth stock, with strong double-digit revenue and EPS growth both quarter-over-quarter and year-over-year. This makes it an attractive name to watch for a potential move higher.

PRCT: PROCEPT BioRobotics Corporation

• PRCT is another health technology growth stock we’re targeting today. It’s showing signs of a breakout following a strong earnings report and the formation of an earnings flag.

• The fundamentals for PRCT are exceptional, with nearly triple-digit revenue and EPS growth, as well as a high relative strength compared to the overall market. Additionally, the stock has a high average daily range (ADR), making it likely to experience explosive moves in a short period of time.

• We’ll be targeting a buy on the 5-minute opening range high (ORH), just like with HIMS, especially given the gap up. This setup looks promising for a strong move.