MARKET ANALYSIS
What You Need To Know

• U.S. equity futures are steady this morning after another constructive session for risk assets. The S&P 500 and Nasdaq have now put together back to back gains, and importantly, the strength is coming from the growth complex rather than defensive positioning.

• Nvidia delivered another powerful earnings report, with revenue up 73% year over year and data center sales up 75%. More than 91% of total revenue is now tied to data center and AI infrastructure. Guidance came in ahead of expectations. The stock reaction has been controlled rather than euphoric, which suggests positioning was elevated but not extreme.

• Jensen Huang pushed back on the narrative that AI is going to structurally destroy software incumbents. That matters because software stocks have been hit hard on valuation concerns. If the market begins to accept that AI enhances rather than replaces enterprise software, there is room for multiple expansion across the space.

• Salesforce traded lower after softer forward guidance, which shows the market is still sensitive to long duration growth expectations. The debate in software is no longer about next quarter’s earnings. It is about terminal value and how durable those cash flows are in an AI accelerated world.

• Executives from Amazon, Meta and OpenAI are set to meet President Donald Trump to commit to supplying their own power for AI data centers. That tells you something important. AI infrastructure spending is not slowing. It is being institutionalized at both corporate and federal levels.

• Weekly jobless claims came in at 212,000, below expectations and still within a tight historical range. There is no evidence of stress in the labor market. Employment stability remains a tailwind for consumption and overall economic resilience.

• Copper futures are on track for a seventh straight monthly gain, the longest streak in fifteen years. The Global X Copper Miners ETF is up sharply year to date. Industrial metals strength typically reflects forward looking demand expectations, which aligns with the current risk on tone in equities.

• Trade policy remains noisy. After the Supreme Court limited emergency tariff authority, a 10% tariff was implemented under a different legal framework. That keeps geopolitical uncertainty in the background, but markets are currently focused far more on earnings and growth acceleration.

• Growth is the strongest trade right now and the macro backdrop is not restrictive. The labor market is stable, AI capex is expanding, industrial commodities are confirming economic momentum. Earnings from the largest AI beneficiary have validated the infrastructure buildout.

• At the same time, sentiment toward growth had deteriorated meaningfully in recent months which reset positioning and this has created asymmetry to the long side. Now that catalysts are clearing and price action is improving, capital is rotating back into the Nasdaq and megacap complex.

Nasdaq

59.40%: over 20 EMA | 52.47%: over 50 EMA | 52.47%: over 200 EMA

• The descending broadening wedge thesis that we have discussed for the past few weeks has now fully validated. The breakout occurred with roughly 100% of average volume, price reclaimed the 10, 20, and 50 day EMAs, and also pushed back above the 10 week moving average.

• The key catalyst that was hanging over the market, earnings from Nvidia, is now behind us. With that uncertainty removed and the reaction constructive, growth has a clear runway.

• We discussed that descending broadening wedge formations resolve higher approximately 83% of the time based on historical studies. That statistical edge has now played out. The highest quality entry was Tuesday’s break above the 27 day resistance zone that had capped price since January 28. Yesterday’s gap higher was tradable but far less optimal due to event risk.

• Importantly, this is not a one stock rally. When you look at the equal weighted Nasdaq through QQQE, strength is broad. Participation is expanding across the capitalization spectrum, not just in a single megacap name.

• Breadth confirms this shift. Roughly 60% of Nasdaq stocks are now above their 20 day EMA, a decisive improvement and materially stronger than other segments. From a momentum standpoint, growth is now the cleanest trade on the board.

S&P 400 Midcap

46.98%: over 20 EMA | 58.29%: over 50 EMA | 66.08%: over 200 EMA

• Mid caps printed a red hammer candle yesterday as they tested the 10 day EMA near 651 and bounced. The reaction was constructive, but participation was lighter.

• This segment was previously the strongest and most extended area of the market. That outperformance now works against it from a momentum standpoint. When capital rotates, it typically flows toward the segment with the greatest upside asymmetry, not the one that has already delivered.

• Breadth in mid caps is beginning to cool, with roughly 47% of stocks above their 20 day EMA. That is materially weaker than the Nasdaq reading.

• We are not bearish mid caps. The structure is still healthy. However, we do not expect them to outperform in the near term. The leadership baton has clearly rotated toward large cap and mega cap growth.

Russell 2000

48.46%: over 20 EMA | 53.51%: over 50 EMA | 61.99%: over 200 EMA

• The Russell 2000 remains in a larger 42 day base. It successfully defended its rising 10 week moving average and 50 week EMA earlier this week, which keeps the intermediate structure intact.

• Relative volume continues to decline during this consolidation, which is constructive. However, there is meaningful overhead supply. Visible volume data shows heavier selling pressure up toward 266, with more shares transacted red than green in that region.

• The base is broader and less explosive than what we are seeing in the Nasdaq. That suggests patience is required before a decisive breakout.

• From a pure momentum perspective, small caps are unlikely to be the immediate source of acceleration. Liquidity is rotating into the areas where the long trade had not yet been fully repriced, which is primarily the growth complex.

FOCUSED STOCK
META: A Perfect Trend Defense

ADR%: 3.04% | Off 52-week high: -17.8% | Above 52-week low: +36.6%

• Meta has formed a clear Adam and Adam double bottom on the weekly structure, with the first bottom in November and the second in February. That larger base provides structural context.

• Inside that weekly structure, a second smaller double bottom formed around 628 to 630 during the recent pullback. Tuesday’s defense of the ascending trend line marked the highest probability entry. That pullback into support is how swing traders gain asymmetry.

• The ascending trend line has now been respected multiple times over the past six weeks, adding statistical weight to that support level.

• There is a visible low volume pocket above current price that stretches toward roughly 715. Once price clears supply around 665, there is very little historical congestion overhead. That creates the potential for a fast move of approximately 10%.

• The optimal entry was the pullback into 630. At this stage, patience is preferable. A short period of consolidation would reset risk. Breakout entries are possible, but stop out risk increases significantly when chasing strength, and position sizing must reflect that.