MARKET ANALYSIS
What You Need To Know

• US equities are continuing to lag the rest of the world in a way we have not seen in decades. Year to date, the S&P 500 is slightly negative while global ex-US indices are materially positive. That relative weakness matters because capital does not sit still. When performance leadership shifts, allocations follow.

• The valuation gap between US equities and the rest of the world remains stretched. Even stripping out the mega caps, the S&P still trades at a premium that assumes superior earnings growth. That premium only works in a rising momentum environment. In a consolidation or distribution phase, it becomes a headwind.

• Concentration risk remains elevated. The top 10 names still account for an outsized portion of index weight. When breadth narrows and leadership falters, the index can appear stable while underlying participation deteriorates. We are already seeing that divergence in parts of the market.

• The AI narrative is transitioning from “infinite upside” to “prove the returns.” Capital expenditure plans remain enormous, but expectations are being repriced. That does not mean the theme is over — it means the easy multiple expansion phase is behind us, at least temporarily.

• From a policy perspective, the market is in a holding pattern. Fed minutes are due, and the next meaningful data point is the PCE inflation print. Rate-cut expectations are still embedded in forward pricing. If inflation proves sticky, that repricing could tighten financial conditions quickly.

• The dollar has stabilised after a period of softness. A firmer dollar, widening credit spreads, and a rising volatility floor all point to the same thing: risk appetite is no longer expanding. It is becoming selective.

Nasdaq

44.55%: over 20 EMA | 47.52%: over 50 EMA | 50.49%: over 200 EMA

• The Nasdaq continues to trade inside the descending broadening wedge that we have been tracking closely for over a week. Price is currently stabilising around the $595 level, which is precisely where the lower boundary of the wedge provided support on the 5th of February before we bounced back into the declining 10-, 20-, and 50-day EMA cluster.

• That prior bounce into $615 was rejected aggressively. It is important to remember that the $615 rejection coincided with the declining 10-week EMA and the full daily moving average cluster, which ultimately led to the large February 12th sell-off on expanding volume. That rejection confirmed supply is still active at that level.

• We are now watching to see whether this current test of support can form a potential double bottom. For that to materialise, we need to see immediate strength.

• Specifically, we would need a push back into $608, which is where the declining 10-day EMA and the 20-week EMA are now converging. A failure to reclaim that zone quickly keeps the broader structure vulnerable.

• From a statistical perspective, descending broadening wedges are not inherently bearish patterns. According to the Bukowski’s database, based on 757 modelled trades, the breakout direction is upward roughly 72% of the time.

• The percentage meeting price target on upside breakouts is 83%, compared to just 32% on downside breaks. The average rise following an upside resolution is 39%, while downside breaks average a 13% decline.

• Identification-wise, this pattern requires at least five total trendline touches for statistical validity. We now have that requirement met. Both trendlines slope downward, creating the classic “tilted megaphone” structure.

• One important nuance from the data: downward breakouts tend to perform better when volume trends upward during the pattern, while upside breakouts perform better when volume trends downward.

• At present, volume has not been expanding aggressively into this support test, which slightly favours the bullish resolution scenario.

• The measure rule is also worth noting. For a downside break, you measure the height from the highest peak of the wedge to the lowest valley and project it lower from the breakdown point.

• For an upside resolution, the highest peak within the formation becomes the primary target. Given current structure, a decisive breakdown below this $595 support would open the door to a move toward the 200-day EMA near $582.

• That is roughly a 2–3% downside move, which the QQQ can complete in one to two sessions given its 1.6% average daily range.

• Tactically, this remains a range-trader’s structure until it resolves. The lower boundary continues to act as demand, while the declining upper trendline near $615 remains supply.

• Intra-formation trades—selling near resistance and covering near support—have been working very well. However, once resolution comes, volatility expansion should follow.

• The key takeaway is this: although the pattern statistically resolves higher more often than not, the market must prove it. Without an immediate reclaim of the declining short-term EMAs around $608, the risk of another flush toward the 200-day EMA remains the base case.

S&P 400 Midcap

62.06%: over 20 EMA | 65.07%: over 50 EMA | 67.08%: over 200 EMA

• The mid-caps continue to behave impressively on a structural basis, even after the sharp mean reversion we saw three sessions ago.

• That pullback came with very dense supply built at $660, where the visible range volume profile shows roughly 62,000 shares traded red versus only 1,500 shares traded green. That imbalance confirms clear distribution at highs and explains why price struggled to extend further.

• Despite that supply at the top of the range, the rising 10- and 20-day EMAs continue to be respected, with the 20-day EMA acting as primary dynamic support.

• We have now seen three distinct bounces off the $642 area. That level is technically important because it was also the price that rejected the mid-caps back on January 15th before the breakout higher.

• Former resistance is now acting as support inside the current contraction that began on February 6th.

• Structurally, this remains a strong stage-two trend on the intermediate timeframe. However, the character of the daily action is shifting. Over the last five sessions, relative volume has been rising while price is consolidating.

• That is not what you ideally want to see inside a healthy pause. Rising volume during sideways action is typically indicative of increasing selling pressure and early distribution rather than simple digestion.

• Breadth inside the mid-cap complex remains the strongest of the major equity segments, which is a positive longer-term characteristic.

• But from a tactical standpoint, the risk/reward has deteriorated. We would be very cautious initiating fresh long exposure here unless it is strictly short-duration, intraday trading.

• At the same time, shorting aggressively is also not high probability while the rising 20-day EMA and the $642 support continue to hold.

• The most logical approach in this environment is waiting until we see either a decisive breakdown below $642 with expanding volume or a clean expansion back above $660 supply, this remains a contraction phase best suited for short-term scalps rather than swing positioning.

Russell 2000

50.62%: over 20 EMA | 54.72%: over 50 EMA | 62.82%: over 200 EMA

• Small caps are still trading inside a clear Adam & Eve double top structure, with the defining “Adam” spike printed on January 22nd and the second, wider “Eve” peak forming afterward.

• From a pure pattern-statistics standpoint, this is not a formation to ignore: performance rank is 10 out of 36, the average decline is ~16%, the percentage meeting the price target is ~54%, and the break-even failure rate is ~21%, based on 651 historically sampled “perfect trades.”

• That said, it is critical to separate “pattern present” from “pattern confirmed.” This double top is not validated yet because confirmation only occurs once price closes below the valley floor between the two peaks.

• Until that happens, it remains a risk factor, not a completed reversal. This matters because Bukowski’s work also highlights the practical reality here: if you don’t wait for confirmation, there is a high chance price simply continues higher instead of resolving lower.

• The weekly structure is the main reason we are not treating this as a clean short thesis right now. The IWM is forming a tight weekly contraction and it has now produced three consecutive weeks of rising support off the rising 10-week EMA, with each defence pushing price back up. That kind of repeated support response is exactly what you want to see in a healthy stage-two environment.

• On top of that, the IWM has been base-building for roughly six weeks within a continued stage-two rally.

• Whatever the daily noise looks like, the intermediate trend is still behaving constructively, and we do not want to understate how important that is in an environment where many other areas of the market are failing their intermediate supports.

• The line in the sand remains very clear. For the double top to become “real,” we would need to see a decisive breakdown below the rising 10-week moving average, which also aligns with the rising 50-day EMA around ~$258, and we would want to see that break occur on expanding volume.

• Practically, that leaves us in a “respect the pattern, respect the support” regime. If you are trading the IWM, the highest quality decisions will come from how price behaves around $258.

• While it holds, the weekly contraction remains constructive and the double top stays unconfirmed. If it breaks with volume, the pattern transitions from a warning into a valid reversal structure.

FOCUSED STOCK
BE: A Perfect Defense of Rising Support

ADR%: 11.73% | Off 52-week high: -17.7% | Above 52-week low: +859.2%

• Bloom Energy is currently one of the strongest stocks in the entire market, carrying a relative strength rating of 99 versus the SPX, which places it firmly in leadership territory.

• In an environment where broad indices are chopping and many former leaders are breaking down, that type of relative strength immediately narrows our focus.

• On the daily and weekly structures, we are seeing textbook defence of the rising 10-week EMA and the rising 50-day EMA over the last two sessions.

• Price has tested both moving averages on back-to-back days and held cleanly, with buyers stepping in precisely where they should in a healthy stage-two structure. That type of tight support reaction is exactly what you want to see from a true leader.

• The broader context is a six-week consolidation following a powerful advance. During this consolidation, we have seen rising highs and slightly declining lows on the weekly structure.

• Strictly speaking, that is not the ideal volatility contraction profile — in a perfect VCP-style setup you would prefer to see narrowing price ranges with higher lows compressing into resistance. So yes, structurally that is a mild cautionary signal.

• However, the more important detail is that we are still consolidating above the rising 10-week EMA, and relative volume has been declining throughout this consolidation phase.

• That contraction in volume is constructive. It signals that supply is drying up rather than expanding, which materially reduces the probability of distribution and increases the odds that this resolves higher once the broader tape stabilizes.

• It is also worth emphasizing the historical context of the current price zone. The level we are holding right now acted as clear resistance back in October–November 2025.

• That resistance has now flipped to support, and we are consolidating directly above it. From a classical technical standpoint, that is exactly how you want to see prior supply zones behave after a breakout.