MARKET ANALYSIS
Why We Believe A Rally Is Coming

• Futures are higher into a pivotal macro day. The S&P and Nasdaq are pushing toward record levels again as traders position ahead of the delayed PCE release at 10am. The Nasdaq has risen in eight of the last nine sessions, showing strong risk appetite.

• Rate-cut expectations are fully anchored for next week. Markets now assign roughly nine in ten odds of a cut on Wednesday. With the Fed in blackout mode, today’s data becomes the final input before the decision.

• PCE will dictate the next two weeks of price action. A soft or in-line print reinforces the disinflation trend and clears the way for a clean year-end rally.
  A hotter print risks a jump in yields and a quick unwind in stretched areas of the market- this is the most consequential macro release since early autumn.

• Labour data continues to cool without cracking. Jobless claims just hit their lowest level since 2022 while announced layoffs for the year are now above 1.2 million. The combination supports the “cooling but not collapsing” narrative that markets have embraced.

• Global markets add support. Europe is green and tracking a second week of gains. Asia closed mostly higher. The weaker dollar and rising industrial metals show that global positioning is already shifting toward an easier US policy stance.

• Sector rotation remains firmly risk-on. Industrials and tech continue to lead. Staples and healthcare lag which is expected as money rotates into growth stocks. Small caps outperform as traders lean into easier financial conditions. This rotation aligns with an early-cut, soft-landing backdrop.

Nasdaq

68.31%: over 20 EMA | 55.44%: over 50 EMA | 57.42%: over 200 EMA

• Nasdaq is pushing broadly, not just mega-cap driven with the QQQ and QQQE moving in tandem, confirming healthy underlying breadth.

• Index is now pressing into a major supply shelf at 625, the exact level where the early-November breakdown originated.

• Price printed a hammer reversal inside prior supply which does show clear evidence of absorption and we also see that above 623, the visible range volume profile shows a thin zone up to 630, meaning little overhead supply and a high probability of a fast move if triggered.

• If buyers press above 626.76, expect a swift extension into 630 due to the low-volume pocket overhead.

• Nasdaq may chop between 620–626 as the market digests this week’s move.

• A move down toward the rising 10-day EMA (~615) remains structurally bullish and would likely be bought (a -1.15% expected move).

• The equally weighted Nasdaq (QQQE) is tracking QQQ almost perfectly, signaling:

  • No liquidity drain from mega caps.

  • Broad buyer participation.

  • Stronger probability that breakouts across the market stick.

Key levels to know

• 625 → Current supply test; where sellers defended in early November.

• 626.76 → Breakout trigger. A decisive push through here should accelerate.

• 629–630 → Next major resistance / psychological magnet; aligns with the gap left open during the November breakdown.

• 615 → Rising 10-day EMA; natural pullback target if price pauses or consolidates.

S&P 400 Midcap

72.81%: over 20 EMA | 58.35%: over 50 EMA | 60.34%: over 200 EMA

• Midcaps continue to outperform both mega caps and big tech, which is one of the strongest signals you can get in a risk-on environment.

• Yesterday we saw a clean resolution higher from last week’s contraction, with a breakout over 605 that briefly pushed MDY into new all-time highs before a small intraday rejection.

• Relative volume came in elevated but still contained at 86% of the 20-day average, showing steady participation without signs of exhaustion.

• The price action is showing exactly what we want to see during a structural trend expansion:

  • Higher lows being built consistently.

  • Prior supply turning into demand as these zones get reclaimed and defended.

  • Buyers showing willingness to absorb dips rather than chase extensions.

• The key takeaway that midcaps are outperforming both the broad market and the large-cap complex, which is critical because genuine risk-off phases rarely begin with small and midcaps leading.

• If this were a fake-out or a short-lived rally, we would not be seeing synchronized strength across the entire risk spectrum — from mega caps all the way down to small caps.

Russell 2000

76.01%: over 20 EMA | 59.85%: over 50 EMA | 61.50%: over 200 EMA

• Small caps delivered the strongest breakout of all major indices yesterday, with volume coming in just under 100% of the 20-day average — a meaningful signal given how elevated November volumes were during the capitulation at 230.

• Since the 28th of November, we’ve now had two full sessions of expanding relative volume, showing real participation behind this move rather than passive drift.

• IWM is sitting just 0.4% off all-time highs, with price pushing cleanly through multiple supply zones that capped the prior two months of trade.

• The 246 level has now turned into a clear demand shelf, validated by three consecutive bounces (Monday, Tuesday, Wednesday). That character shift alone tells you buyers are in control.

• Given the straight-line advance over the past two weeks, chop into 253 or a controlled pullback toward 248 would be completely normal and even healthy. It would further confirm that prior supply has flipped into demand.

• On the weekly chart, the move off the 20-week EMA at 236 is already +7%, so the market has earned a pause without changing the broader trend.

• There is nothing in this structure that signals risk off — quite the opposite.

• And it’s important to remember: indices lag market leaders.

  • Growth groups are breaking out across the board.

  • Communications is strong.

  • Quantum computing names are catching major bids.

  • Leadership is widening, not narrowing.

FOCUSED STOCK
NVDA: The AI King Is About To Rally

ADR%: 3.41% | Off 52-week high: -34% | Above 52-week low: +77.1%

• NVIDIA is the number one stock on our radar right now. The structure, the base, the leadership, and the behaviour across semis all point to this being one of the highest quality setups in the entire market.

• Price is getting extremely close to clearing the entire 10, 20 and 50 day EMA cluster. These moving averages have been compressing for weeks, and NVIDIA finally closed above the 10 day EMA for the first time since the breakdown started in early November.

• Yesterday’s rejection came exactly at the declining 20 and 50 day EMAs near 18425, which lines up with a dense supply shelf on the weekly volume profile that stretches up to roughly 18445. That is the breakout level to watch.

• What matters more is the response. NVIDIA sold off early, tagged its daily point of control at 181, and immediately found demand. That intraday absorption confirms buyers are sitting underneath this range.

• This is happening while a huge number of semiconductor names are breaking out and growth leadership is broadening. The group is firing as a unit, which is exactly what you want to see before a major leader makes its move.

• NVIDIA has now been building a base for 126 days since late July. Throughout that entire period, it has continued to hold higher lows and protect its rising 20 week EMA. This is exactly how long bases form before explosive continuation legs.

• This is the type of setup where you want to actively look for long exposure. NVIDIA is still the dominant AI leader, and when a stock of this calibre comes out of a multi month base, the asymmetry is heavily skewed to the upside.

FOCUSED GROUP
PBW: Clean Energy Quietly Breaking Out

• Clean energy is starting to move as a group, with PBW and ICLN breaking out together and showing the strongest collective strength we have seen in months.

• PBW cleared its 31.30 breakout level yesterday after a four day volatility contraction against the rising 10, 20 and 50 day EMA cluster.

• PBW also reclaimed its 200 week EMA at 31.65 and is now holding above it, which is a major character shift for a sector that has been under pressure for most of the year.

• ICLN is confirming the move with its own breakout through short term resistance and rising daily EMAs, creating a clear alignment across the clean energy complex.

• This is a high growth sector and it is now moving in sync with other high beta groups like semiconductors, communications, quantum and speculative tech.