OVERVIEW
A Strong Uptick In Market Breadth

After weeks of waiting, the US stock market finally delivered the strength and breakout we’ve all been anticipating. The markets are starting to find their footing for two key reasons. First, there’s the recovery from the post-election hangover that followed the initial volatility. Second, we’re seeing a positive reaction to Nvidia’s earnings, which provided a strong catalyst for the broader market.

Yesterday’s session saw the major indices open higher, and although we experienced some intraday volatility, the day ended with a solid, broad-based rally. This breakout was backed by strong participation across multiple sectors, with utilities, energy, and communication services all pushing higher. It’s clear the market is regaining momentum, and investors are starting to feel more confident.

Nasdaq

The capitalization-weighted Nasdaq (QQQ) experienced notable underperformance compared to the equal-weighted QQQE, primarily due to the drag caused by Nvidia. The AI giant initially saw a -4% drop pre-market, but it quickly recovered, almost attempting a breakout to the upside. This dynamic is important because it highlights that, despite Nvidia's struggles, the majority of large tech stocks are performing well. This strengthens our confidence that the market is indeed entering a new markup phase.

We did encounter overhead supply on both the QQQ and QQQE at $512 and $94, respectively, which may act as resistance and could lead to some struggle early in today's session. However, the strong volume breakout on both the QQQE and QQQ, combined with the red hammer candlestick pattern, is actually very bullish. A red hammer indicates that selling pressure was absorbed, and the price action suggests the market is positioning itself for a potential continuation to the upside.

S&P Midcap 400

The midcaps had a strong session yesterday, comfortably breaking above their daily 10-EMA, a key level we were closely monitoring to see whether it would act as support or resistance. During the intraday pullback, the MDY tested $592, only to be met with a wave of aggressive buying pressure, signaling strong demand at that level. This breakout has now been confirmed, with midcaps emerging as one of the strongest sectors in the market right now.

Russell 2000

The small caps followed suit, finding support on their daily 10-EMA after opening the session above this level. They are now making their way toward $238, which marks the overhead supply zone on the Russell 2000, a level we are likely to test today. This could lead to some profit-taking.

Although we might see some pullback today, resulting in a potentially red session, the medium- to short-term trend remains positive. The high volume seen yesterday during the breakout reinforces the strength of this move.

DAILY FOCUS
Ride The Wave: Let The Price Guide You

Right now, the market is showing signs of real strength and is behaving exactly as expected. After the initial euphoria following the election, we saw a digestion period that allowed the leading stocks to cool down and reset. Now, the market is gearing up for a potential follow-through as we head into the final stretch of the year, heading into the holiday season.

At this point, there's no need to overanalyze. The market's price action is solid, and we've seen strong breakouts in key sectors like tech, midcaps, and small caps. With this in mind, now is a good time to consider taking on more long exposure, especially if you’ve been tracking leading stocks. By now, you should have a list of stocks that have shown consistent outperformance and are primed for breakouts. Keep an eye on those names and start positioning yourself for further moves higher.

With the strength we're seeing, consider scaling into your positions gradually, especially if you're looking to catch momentum swings in sectors that are showing relative strength. Don't be afraid to add exposure as new opportunities present themselves—particularly if the stocks on your watchlist are triggering breakouts or holding key levels of support.

It’s also important to remember the seasonal trends that come into play around this time of year. Historically, stocks tend to perform well in the final quarter, especially leading into the Christmas rally. Seasonal stocks—those that tend to outperform in Q4—are often worth focusing on during this period. Be mindful of these trends as you plan your next trades.

If you're looking to take advantage of the broader market strength, now is a good time to position yourself for the next move. Be sure to manage risk carefully and avoid chasing stocks that are at overbought levels (e.g., more than 7x ATR extension from the 50-EMA). There are plenty of actionable setups in the market right now, so don't get caught being impulsive. Instead, focus on strong, high-volume breakouts that align with the broader bullish trend.

That being said, don’t get too excited. Stick to your entry criteria and use the 5-minute opening range high (ORH) to guide your trades. If we don’t see any setups working today, there’s no need to force trades. The uptrend is likely to last for a while, so patience is key.

WATCHLIST
Two Stocks On Major Breakout Watch

ASTS: AST SpaceMobile, Inc.

• ASTS has been building a multi-month consolidation pattern, with a series of higher lows forming ever since the stock dipped below its ascending support level at $22.

• We’re now seeing ASTS approach its breakout level at $26.50, with a potential breakout on the horizon as early as today.

• What makes ASTS even more compelling is its high ADR% (+9.8%), indicating it's a key explosive name to watch. Additionally, the stock is positioned within one of the leading sectors, Communication Services ($XLC), adding further bullish potential.

IMAX: Imax Corporation

• IMAX, a consumer cyclical name, has been finding support on its rising daily 10-EMA and is now experiencing a two-day contraction between its breakout level at $25 and the ascending 10-EMA.

• Given the strength we've seen in similar stocks, coupled with how well IMAX has performed following its strong earnings report in late October, we’re closely monitoring the stock to see if the post-earnings drift (PED) continues, potentially leading to a breakout.