OVERVIEW
Mixed Risk-On

• Market remains top-heavy, but selective strength is emerging beneath the surface.

• Breadth is weak, but IWM and MDY show early signs of rotation—buyers are stepping in at the 50-day.

• Mega-cap tech still vulnerable, while small/mid-caps and Bitcoin are quietly reclaiming levels.

• Still not an easy “buy and hold” environment like May—selectivity and timing are everything right now.

• Focus on clean setups, recent earnings names, and tight post-pullback entries.

Today’s theme: it’s a harder tape—but there’s still opportunity for those who can adapt quickly.

MARKET ANALYSIS
The Whiplash Effect

One day it’s breakdowns on weak breadth, the next day it's chip stocks flying on tariff exemptions. Welcome to August—the ultimate whipsaw zone.

This morning, futures are up—tech leading again—as traders digest Trump’s new 100% chip tariff plan, which exempts U.S.-based manufacturers. Semis love it: NVDA, AMD, and SMH are all bid in premarket. Apple’s adding fuel with another $100B commitment to U.S. suppliers, sending it up 2%.

But under the surface, it’s still a game of selective strength—and only the sharpest names are working.

The Market Is Top-Heavy—But Tradable

• The Nasdaq is doing the lifting, but breadth is still weak

• Most stocks aren’t participating in this bounce

• Failed breakouts are everywhere, especially in mid- and small-caps

• But true relative strength names are coiling, holding EMAs, and setting up (things like HOOD, ZS & VST)

This isn’t May 2025, where you could buy strength and let it run for 20%.

Now? You have to hunt, wait, and snipe. The edge is in stock selection, not index exposure.

Chop Conditions Require Precision

• Volatility is collapsing, with one-month realized vol near year-to-date lows

• Economic data is mixed, not disastrous

• Sentiment is reactive, not trending

That’s why we’re getting two-day pops and two-day drops.
You can trade this—but not with May’s mindset.

What Matters Now:

• Ride semis if you’re in—just don’t overstay

• Stick to tight risk, clear pivots, and setups with volume confirmation

• Keep a watchlist of relative strength leaders—they’re telling you where money will flow once this range resolves (those stocks refusing to break below their 10/20 EMAs whilst the market dipped last week).

Nasdaq

The tech-led strength this morning is undeniable — QQQ has broken above the $569 volume shelf on the VRVP, and we’re seeing strong premarket moves from mega-cap names like NVDA, AAPL, and PLTR. This is where the strength is. But it’s increasingly concentrated.

The equal-weighted QQQE tells a very different story — it remains well below its 10 and 20 EMAs and has barely bounced, which highlights the growing divergence under the surface. Once again, we’re back to a regime where just a handful of names (AI, mega-cap tech) are doing all the heavy lifting — not unlike what we saw in early 2024.

S&P 400 Midcap

Midcaps have lagged the rally, but this morning we’re seeing some notable strength. MDY is now reclaiming the $577 zone and pushing above both the 10- and 20-EMAs. Yesterday’s red hammer candle off the 50-EMA came on low relative volume—but the level held, and buyers stepped in again today.

This suggests the classic “buy-the-dip” reflex is still alive. While MDY remains below the July highs and continues to underperform QQQ, the defense of the 50-EMA is meaningful. It shows there's still interest in rotating capital into midcap exposure—especially as mega-cap crowding gets extreme.

Implication: It’s still a second-tier group in terms of strength, but keep it on radar. A reclaim of the $580 zone could shift the structure back in bulls’ favor.

Russell 2000

Small caps (IWM) are showing more strength than midcaps this week. Yesterday’s session was important: IWM reclaimed both the 10- and 20-EMAs with authority and printed a long lower wick—clear evidence of dip demand. This morning, it's continuing higher.

Given small caps typically carry more short interest than midcaps, this bounce signals a healthy push down the risk curve. This will be very important a market that is just about mega-cap tech is not healthy.

Implication: If this momentum holds, it opens the door for secondary breakouts across under-owned, high-short-interest names. Keep scanning the small-cap universe for fresh setups.

FOCUSED STOCK
DUOL: Gapping Higher Post-Earnings

Duolingo (DUOL) has struggled technically for months—but yesterday's earnings may have just flipped the script. The stock is now gapping over the 10/20/50 EMAs on both the daily and weekly chart, reclaiming key territory after a prolonged downtrend.

From a fundamental/technical alignment view, this fits the “N” in O’Neil’s CANSLIM model—New product, New leadership, or New highs—and DUOL is offering that in the form of new earnings strength.

Still, it’s not a blind buy. Follow-through matters. We want to see a strong close above this volume shelf before trusting the move.

🔒 Swingly PRO members received this trade idea premarket—along with 8 others, including earnings setups, pullback plays, and fresh breakouts.

Join us inside PRO to get the full edge, every day.

FOCUSED GROUP
IBIT: The Easiest Way To Play Bitcoin

Bitcoin’s push of the 10-week EMA is a crucial character defense—and IBIT, the iShares spot BTC ETF, remains one of the cleanest ways to get exposure without trading crypto directly.

This bounce is constructive, but it’s not free and clear: both BTC and IBIT have clear supply overhead, with the POC sitting right above. Volume was muted on the way down, and now we’re looking for evidence of real demand stepping in.

For now: bullish signal, not yet a breakout.