OVERVIEW
Healthy & Constructive Action: Bullish

🟩 Risk-On: Despite recent volatility in global trade talks and some pullbacks, large-cap tech, and leading sectors remain in strong positions. The digestion process unfolding is a healthy consolidation rather than a trend reversal.

📉 What’s Happening?: The sharp pullbacks in small and mid-cap stocks, coupled with strong support from large caps and tech, highlight a rotational digestion rather than broad-based weakness.

MARKET ANALYSIS
Tariff Turbulence… or Just Noise?

Over the weekend, President Trump agreed to delay his proposed 50% tariff on EU imports — initially set to kick in on June 1 — after a call with European Commission President Ursula von der Leyen. The new deadline is now July 9, with both sides reportedly ready to restart negotiations swiftly.

This back-and-forth is becoming a pattern: bold tariff threats to rattle the markets, followed by walk-backs or extensions just before the deadline. Friday’s headlines sounded alarming, but the weekend's developments dialed the heat down fast.

Let’s zoom out for a second — because this is key:

📌 The last two weeks have been packed with “bad” news — EU tariffs, bond auction volatility, fading large caps, and signs of exhaustion. Yet, the market’s reaction has been remarkably resilient. Every dip has met buyers.

That’s not what weakness looks like — it’s what underlying strength looks like.

What we’re seeing isn’t a breakdown — it’s digestion. Risk assets are pulling back, yes — but it’s happening in an orderly, rotational way.

Nasdaq

🏆 Still the Leader: Large- and mega-cap tech remains the dominant force in this market, and QQQ continues to lead all major segments. Despite the pullback last week, we saw a textbook undercut-and-reversal—exactly what you want to see in a healthy uptrend.

🧩 Constructive, Not Concerning: The undercut we saw last week reinforces the idea of a controlled, orderly round of profit-taking—not a structural breakdown. Premarket strength today has QQQ reclaiming its Point of Control (POC) at $520. That’s the level to watch.

🏗️ Cup & Handle in Play: Since the February breakout, QQQ has been forming a classic cup-and-handle pattern. With price now curling off the handle’s low, we believe the right side is setting up to resolve higher—potentially triggering a fresh leg up this week.

🏛️ Quick Breakdown: What’s a Cup & Handle?

A Cup and Handle is a classic bullish continuation pattern. It’s formed in two parts:

• ☕ The “Cup”: A rounded base, showing a period of consolidation after a prior uptrend. It signals buyers absorbing supply.

• 🏗️ The “Handle”: A shallow pullback that forms after the right side of the cup — typically on lighter volume. This shakeout helps remove weak hands before a breakout.

When the handle resolves to the upside on strong volume, it often triggers powerful continuation moves — especially in leading stocks or ETFs like QQQ.

S&P 400 Midcap

🔍 Pullback ≠ Panic: Last week’s sharp pullback in MDY looked concerning on the surface—but the absence of high relative volume told a different story. Volume is often the most overlooked yet most revealing signal. Without it, sharp moves often lack conviction.

🧠 Why It Matters: A breakdown with surging volume would’ve indicated strong selling pressure. But this pullback into dense demand came on muted volume, signaling that institutions aren’t aggressively exiting. That’s why our Friday report emphasized patience over panic.

🎯 Today’s Focus: All eyes on $545. If MDY can hold this key level, it opens up the opportunity to reclaim the rising 10- and 20-day EMAs. That would create a low-volume pocket back toward the Point of Control (POC)—and potentially resume the trend higher.

Russell 2000

Small caps took the brunt of last week’s broad market pullback, but importantly, IWM isn’t in dangerous territory — yet.

• Friday’s low held precisely at the lower bound of the Visible Range Volume Profile (VRVP) demand zone near $202 — a level that had to hold, given the thin support structure beneath it.

• This morning’s premarket action shows a gap back up into the Point of Control (POC), signaling buyers are stepping back in at the expected zone.

• We’re now watching closely to see if IWM can reclaim and hold its rising 10/20-day EMAs. A retest of those levels is likely, but so far, the pullback appears constructive — simply a retest of the prior breakout level near $200 from two weeks ago.

🔍 So far, so good: As long as this zone holds, we continue treat this as a healthy digestion, not a breakdown.

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FOCUSED STOCK
INOD: Innodata Inc.

INOD stands out today with one of the strongest technical setups across the entire small-cap space.

• We’re tracking a multi-month volatility contraction, marked by a persistent series of higher lows since late 2024 — clear signs of accumulation and strength.

• Price action has tightened aggressively against a well-defined descending level of resistance, with the Point of Control (POC) being tested and respected again over the past week.

• The structure is extremely constructive: strong relative strength, declining volume, and price compressing within an increasingly narrow range — a textbook recipe for an explosive move if triggered.

If this breaks out, it could be the next name to deliver strong extension out of a multi-month base — one of the highest probability patterns we track.

FOCUSED SECTOR
CIBR: Cybersecurity

CIBR has been the undisputed sector leader ever since its major breakout in late April — in fact, it was one of the first groups to start showing strength during this market leg higher. Since then, it’s gone essentially straight up.

What makes this especially noteworthy is how textbook the action has been:

• Over the past 7–10 days, CIBR began forming a clear volatility contraction pattern (VCP), showing tight price action and low volume — exactly the kind of pause you want to see in a strong trend.

• On Friday, we saw a reclaim of the rising 10-EMA on low relative volume — classic constructive behavior during a consolidation.

• This morning, we’re seeing strong premarket follow-through with CIBR pushing toward all-time highs again.

This is exactly how top-down momentum traders identify alpha:

→ Strong sector (CIBR)
→ Clean consolidations within the uptrend
→ High-probability setups forming in leading names within the group

We expect CIBR to challenge and likely take out all-time highs imminently. If you’re scanning for opportunities, look for the top-performing individual stocks inside this group.

Q&A
Got a trading question? Hit reply and ask!

Q: “How do you actually know which breakout will work, and which will fail?”

We don’t — and that’s exactly the point. One of the biggest misconceptions newer traders have is thinking the edge comes from knowing which setup will succeed. But the reality is, we assume every new trade is more likely to fail than succeed.

That’s not pessimism — it’s statistical awareness. Our system is built around a sub-50% win rate. We expect losses. That’s why we size positions small (typically <0.5% of equity per trade) and focus on minimizing downside rather than maximizing prediction.

The edge comes from aligning with the broader trend. We look to go long on stocks that are showing strength — those that are pushing higher, holding above key moving averages, and showing clear signs of demand. But even more important than the breakout itself is the context before the move: we want to see price tightening, volume drying up, and volatility contracting. These are called volatility contraction patterns — they represent tension building before potential release.

You can’t control the outcome of a single trade, but you can control the process. If you focus on trading with the trend of the group, the sector, and the market, and only take high-quality contraction setups, your odds improve. Repeat that edge over 1,000 trades, and the law of large numbers takes over.