MARKET ANALYSIS
Here’s All You Need To Know

• U.S. equity futures are taking a pause this morning following yesterday’s strong move, with the Dow coming off a record-setting rally while the S&P 500 and Nasdaq consolidate just below flat.

• The dominant macro driver today remains the AI narrative, following major announcements from Nvidia and AMD at CES. Both companies laid out next-generation AI platforms, which helped reignite optimism across the technology complex, even as price action at the index level remains restrained.

• Importantly, markets appear to be treating recent geopolitical developments, particularly around Venezuela, as a secondary consideration rather than a destabilizing shock. The prevailing interpretation is that these events may translate into longer-term corporate opportunity rather than immediate systemic risk.

• That said, price action beneath the surface remains erratic. While futures are green or flat, we continue to see a lack of aggressive marginal buying pressure at highs. Rallies are occurring, but follow-through has been inconsistent, and many recent upside moves have required consolidation rather than extension.

• Copper continues to surge to record highs, reinforcing the idea that structural demand tied to AI infrastructure and electrification remains very real- this is a very under-appreciated asset that we don’t see too many people tracking (see COPX for Copper Mining stocks).

• Overseas, Chinese equities are off to a strong start in 2026, driven by improving sentiment around domestic AI development and early signs of economic stabilization. While this adds to the global risk-on narrative, technical conditions in China are already becoming stretched, which is worth keeping in mind.

Nasdaq

46.07%: over 20 EMA | 50.00%: over 50 EMA | 55.88%: over 200 EMA

• The NASDAQ remains in a very strong contraction structure, and the way it behaved over the last two sessions is constructive. Yesterday’s gap higher of roughly 0.84% was significant, and importantly, price managed to hold that gap and consolidate above both the 10-day and 20-day EMAs.

• While the session closed as a red candle, the candle color itself is largely irrelevant in this context. What matters is structure, and structurally the NASDAQ is holding above short-term trend support rather than immediately fading the gap.

• We did see rejection at the point of control around 621.32, but that rejection is happening just below the broader breakout level. The index is now contracting less than 0.5% below the supply zone that has capped price since October 27th, which puts us very close to a decision point.

• This is one of those moments where the market is coiling tightly ahead of resolution. On the weekly chart, the contraction has become extremely compressed, which historically precedes expansion rather than prolonged drift.

• That said, risk levels are very well defined. If the NASDAQ fails to hold above the 20-day EMA at 617, we would expect a relatively swift move lower toward the next major demand zone around 612. That level aligns with both the rising 10-week EMA and the 50-day EMA, which price successfully tested and reversed from on Friday, January 2nd.

S&P 400 Midcap

63.15%: over 20 EMA | 68.92%: over 50 EMA | 62.02%: over 200 EMA

• The mid-caps are currently the strongest segment in the entire market. Yesterday’s breakout came on approximately 154% relative volume, decisively resolving the multi-week contraction that had formed at highs.

• From a relative strength standpoint, mid-caps are outperforming the NASDAQ, the S&P 500, and small caps. This is not subtle leadership; it is clear and persistent.

• What makes this move even more compelling is context. Just days ago, the mid-caps tested their rising 10-week EMA and immediately found demand. That test occurred at the exact level where price had previously been capped for months, meaning former supply has now cleanly flipped into demand.

• This is the literal definition of perfect early stage-two rally. Price is expanding out of a base, volume is confirming the move, and the broader trend is still young rather than extended and the breakout point has been tested to confirm a change of character (prior resistance → now support).

• At this stage, the correct mindset is not whether mid-caps are “too late,” but rather which individual mid-cap stocks are leading within the move.

• Pullbacks in the strongest names inside this segment are likely to offer some of the best risk-reward opportunities in the market right now.

Russell 2000

44.60%: over 20 EMA | 59.60%: over 50 EMA | 62.02%: over 200 EMA

• Small caps are behaving constructively and appear poised to follow the strength we are seeing in mid-caps. While they lag slightly on a relative basis, the structure continues to improve.

• Yesterday, small caps pushed through the demand zone around 250.12 and reclaimed the point of control at 250.82. While prior supply near 250.36 did cause some hesitation, the broader takeaway is that price is now attempting to build acceptance above former resistance.

• Over the last two weeks, we have seen repeated tests of the rising 10-week EMA, each time met with buying pressure. The last three sessions in particular are notable, as relative volume has expanded following a successful bounce off the 50-day EMA, which aligns with the 10-week EMA.

• From a structural standpoint, this sets the stage for a potential stage-two continuation move. There is still a descending resistance line to contend with, currently defined by the first touch near 257.37 and the more recent touch around 253.55, but the pressure is clearly building.

• With borrowing costs easing and mid-caps rallying aggressively, it would be unusual to see small caps break down meaningfully in this environment. Historically, mid-cap leadership often precedes broader participation from small caps rather than divergence.

• Taken together, this is one of the more constructive cross-cap setups we have seen in months, and for the first time in a while, the weight of the evidence is shifting toward a more bullish posture.

FOCUSED STOCK
HOOD: SOFI Yesterday, HOOD Today

ADR%: 4.39% | Off 52-week high: -19.9% | Above 52-week low: +315.5%

• Robinhood had an exceptionally strong session yesterday, and it is flying under the radar relative to the quality of the move we are seeing. After last week’s sharp failure that pushed price down to the lowest levels since the week of November 24th, we saw a meaningful shift in character.

• Friday marked the first key signal. Price flushed lower and printed a clear hammer-style reversal candle on extremely high relative volume, with that session registering roughly 100% of the 20-day relative volume. That type of volume response at lows is exactly what you want to see when downside momentum is exhausting.

• Since that reversal, Robinhood has followed through constructively. Yesterday’s session brought another expansion in relative volume as price moved back into the prior contraction range, signaling that demand is now stepping back in with intent rather than price simply drifting higher.

• Relative strength has surged back to 98, placing Robinhood firmly among the strongest stocks in the market from a momentum standpoint. That is particularly important given that financials are currently one of the strongest segments overall.

• Price is now sitting directly at a key inflection point. A clean break and hold above the 50-day EMA at 123.50 would likely open the door for a broader recovery move back toward prior highs. This is the level that matters.

• Robinhood has already reclaimed both its 10-day and 20-day EMAs, and on the weekly chart it has formed a Morning Star reversal pattern, which is one of the strongest multi-candle reversal formations you can see after a decline.

• Yesterday we highlighted SoFi as a financials leader, and that breakout did trigger. Robinhood now looks like the next high-quality setup within the same strong group.

• From a risk management perspective, as long as price continues to hold above 117.62, which is the rising support level established since November 21st, the structure remains constructive. If it does not break out today, continued tight consolidation above that level would still be a positive outcome.

FOCUSED GROUP
QTUM: A Breakout is Around The Corner

• Quantum computing remains one of the most interesting and most aggressive segments in the market right now. These stocks are highly volatile, carry elevated ADRs, and sit squarely within the broader AI theme, which makes them ideal vehicles when momentum conditions align.

• As a group, quantum computing has spent the last five weeks trading sideways in a well-defined contraction that began on October 27th. That prolonged consolidation followed a sharp push higher in early December and has done a good job of working off excess momentum.

• Yesterday we saw a strong gap higher across the group on elevated relative volume. From a technical standpoint, this qualifies as a runaway gap, which does introduce the possibility of a short-term pullback of roughly 1.3%. That risk is worth acknowledging upfront.

• That said, the bigger picture matters more here. On the intermediary trend, this is a clear breakout attempt following a multi-week base. The group tested the rising 10-week EMA in early December, tested it again last week, and both tests were firmly defended by buyers.

• What we are seeing now is acceleration coming out of that base, which is exactly how strong momentum groups behave when they resolve higher.

• The key with quantum computing is selectivity. Not every stock in the group will move in unison, and not every gap will follow through. The real edge comes from identifying which individual names are leading and which are merely reacting.

• When you compare quantum computing to other AI-related segments, such as semiconductors, the relative trend structure in quantum is currently cleaner and less extended. That gives it an edge from a risk-reward perspective, despite the higher volatility.

• This is a group to actively track rather than blindly chase. Focus on the leaders, watch how they behave on any pullbacks, and look for continuation patterns that actually hold rather than fade.