OVERVIEW
A Very Impressive Bounce On Friday

The market has been nothing short of volatile over the past week, with everything from Bitcoin selling off to multi-month lows, to the U.S. equities market breaking down from major support levels, to the investor-favorite Magnificent Seven stocks all experiencing markdown phases.

However, over the weekend, we did see some positive developments. These built on Friday’s impressive close, where, for the first time in weeks, buyers showed some real aggression. This has raised an important question: Are we at the beginning of a meaningful bounce that leads to a recovery, or is this merely a low-volume rally—a classic bull trap that will ultimately lead to further markdowns?

Before diving into the technical analysis, it's important to take a step back and consider the bigger picture of market structure. Right now, we are at a critical crossroads, and understanding the market’s cyclical nature can help us determine what’s ahead.

Understanding Market Cycles (Wyckoff Logic Model)

Markets tend to move through distinct phases, as outlined in the Wyckoff Logic Model. These phases are driven by institutional behavior and ultimately dictate whether a market is in a sustainable uptrend or headed for further downside.

1. Accumulation Phase – This is where large institutional players quietly accumulate shares at lower prices. Demand builds up, but the market remains range-bound as strong hands absorb supply.

2. Markup Phase – Once accumulation is complete, demand overwhelms supply, and the market breaks out into a strong uptrend. This is when we see extended rallies and new highs being set.

3. Distribution Phase – At the peak of a trend, the same institutions that accumulated earlier begin offloading their positions to overconfident retail buyers. This leads to failed rallies, increased volatility, and ultimately, a market top.

4. Markdown Phase – With institutional support gone, supply starts to overwhelm demand. Prices decline, failed bounces turn into bull traps, and the market enters a more sustained downtrend. Eventually, this cycle repeats as a new accumulation phase begins.

Right now, we are potentially at the tail end of the distribution phase, entering what could either be a deeper markdown or the beginning of a new accumulation phase. The coming weeks will be critical in determining whether buyers can take control and establish a sustainable uptrend—or if this recent bounce is just a temporary reprieve before further downside.

With this framework in mind, let’s now dive into the technical developments shaping the market’s next move.

Nasdaq

The QQQE, which is the equal-weighted variant of the QQQ (tracking large and mega-cap tech stocks), appears to be forming a double-top reversal pattern on the weekly chart. We’ve now seen two clear peaks—one in December 2024 and another in February 2025—both of which triggered aggressive selling, preventing the Nasdaq from continuing higher.

This potential double-top formation is something we have been closely tracking for the past two weeks, paying particular attention to how QQQE behaves around its 10-week and 20-week EMAs.

Friday’s price action was notable and deserves further attention. QQQE found strong demand at a key $91 level, which aligns with a high-volume support zone visible on the Volume Profile (VRVP). This demand helped prevent the 20-week EMA from breaking down, and instead, QQQE closed firmly above this level.

The most interesting takeaway here is the long lower wick on last week’s candle, combined with relatively high volume. This suggests that sellers may have overextended themselves, and we could be seeing the early signs of a shift in behavior—potentially indicating that buyers are stepping in with conviction.

S&P Midcap 400

The midcap index (MDY) has formed a Head & Shoulders reversal pattern on the weekly chart, one of the most reliable trend reversal formations in technical analysis. However, an important detail to note is that the neckline has yet to be broken, meaning the pattern remains unconfirmed.

Last Friday’s close was significant—we saw a red doji candle form after several weeks of a multi-week downtrend. This is the first high-probability reversal candle we’ve seen in weeks. Some might argue that the red hammer in early February was a reversal attempt, but that candle formed on declining volume, making it a weaker signal. In contrast, last week’s doji was accompanied by an increase in volume, which, as we know, is essential for confirming price action.

Another key factor is that MDY found strong demand at its Point of Control (POC) and, more specifically, at its rising 50-week EMA—both of which are critical areas of support. This suggests that institutional buyers may be stepping in at these levels, preventing further downside—at least for now.

That being said, the neckline break is the key confirmation level to watch. Until that happens, this remains a developing rather than a validated reversal pattern. The coming week will be crucial in determining whether this was just a temporary bounce or the start of a larger trend shift.

Russell 2000

The IWM (Russell 2000 ETF) has also formed a Head & Shoulders pattern, much like the MDY, as these two indices often move in tandem. Rather than repeating the same analysis, the key takeaway here is that IWM saw an equally impressive bounce, recovering its 50-week EMA on higher relative volume—in fact, the highest volume of 2025 so far.

This is a strong indication that buyers stepped in aggressively at this key technical level. Now, the focus shifts to how this week unfolds—whether the index can build on this strength and continue higher or if we see a failure and potential confirmation of the Head & Shoulders pattern with a breakdown below the neckline.

DAILY FOCUS
We Are Seeing Positive Developments

While we’re seeing signs of strength, it’s still too early to confidently say the market is turning. The real work begins now—observing whether this bounce has true staying power or if it’s just another short-lived relief move. There’s absolutely no need to force being first. The saying goes, the most expensive parts of any trend are the first third and the last third, meaning trying to catch the bottom or top often leads to unnecessary risk. The real money is made in the middle of the trend, once confirmation is there.

Instead of guessing, we focus on scanning for relative strength—which stocks and sectors are showing resilience, breaking out on volume, and forming clean setups? The best trades come when the market proves itself, not when we try to predict its next move.

We need to see:
✅ More stocks forming viable setups
✅ Stronger follow-through from leading names
✅ Improving breadth confirming a trend shift

Until then, patience remains key. We are monitoring these developments closely and will adjust accordingly.

WATCHLIST
A Few Relative Strength Leaders To Track

BE: Bloom Energy Corporation

• BE saw an impressive bounce to erase last week’s breakdown, finding support at its rising 20-week EMA and closing the week essentially flat despite reporting strong earnings.

• This is a great example of relative strength—that kind of sharp undercut and recovery tells us one thing: there’s real demand supporting this stock, preventing it from trending lower.

• This stock is also in an early Stage 2 uptrend as it only recently broke above its 200 week EMA, making it one of our top watchlist names. Strong demand at key support levels, combined with its early-stage breakout potential, puts it in a prime position for continued momentum—if market conditions allow.

REAX: The Real Brokerage, Inc.

• REAX has been building a sideways base since July 2024, showing strong resilience by refusing to break down. With earnings coming up this week, the stock is at a key inflection point.

• If we see a market-wide bounce, coupled with continued relative strength in the real estate sector (XLRE), REAX could finally see meaningful follow-through. This is a name we’ll be watching closely for potential opportunity.