MARKET ANALYSIS
Here’s All You Need To Know

• The market is taking a small breather this morning after another record session, but the underlying message has not really changed. We are still seeing major strength in the AI trade, and the strongest areas of the market are still being rewarded.

• Nvidia remains the key tell. The stock bounced very well yesterday and continues to act like the main liquidity engine behind this market. As long as Nvidia holds firm, it is very difficult to argue that the AI trade has meaningfully broken.

• The important point is that this is no longer just Nvidia carrying everything by itself. We are now seeing serious strength across AI infrastructure, data center hardware, cloud, connectivity and server names. HPE surged after its biggest earnings beat since 2018, Marvell ripped higher after Jensen Huang described its role in data center connectivity as essential, and Microchip also caught a bid on data center growth.

• That tells us the AI theme is still broadening. The market is not only buying the obvious chip leaders. It is starting to reward the companies sitting around the AI buildout as well, from servers to networking to cloud software.

• Software also had a major risk-on session yesterday. The cloud ETF had its best day since April 2025, with more than a third of its holdings up over 10%. That fits very well with the rotation we have been discussing in XSW. Semiconductors led first, then AI infrastructure followed, and now software is starting to attract real liquidity again.

• This is why the market still looks constructive beneath the surface. Yes, futures are slightly lower this morning, but that looks more like digestion after a powerful move than a real change in character.

• The one major stock-specific warning is Alphabet. The stock is lower after announcing an $80B stock sale to help fund its AI buildout, even with Berkshire Hathaway involved in the deal. The market is clearly asking a harder question now: who benefits from AI spending, and who has to keep funding it?

• AI suppliers are still being rewarded aggressively. The companies forced to spend huge amounts to stay competitive may get treated more selectively.

• Oil remains the macro risk in the background. Iran headlines are still messy, and crude moved higher after reports that talks with the U.S. could stall and that Iran may move toward a fuller Hormuz blockade. Trump later said talks are continuing rapidly, so the market is still dealing with conflicting headlines.

• For now, equities are choosing to focus on AI strength rather than oil risk. That is bullish, but it also means we cannot ignore crude if it starts moving higher again with force.

• The risk is entry quality. A lot of these moves are now very extended, so the best opportunities are not in chasing the biggest green candles. The better trades are in clean pullbacks, tight bases, and groups where liquidity is starting to rotate before the move becomes obvious.

S&P 500

46.52%: over 20 EMA | 50.89%: over 50 EMA | 53.47%: over 200 EMA

• SPY is still sitting at a very elevated level, now around 8.39 ATR multiples above the 50-day EMA. We are seeing some weakness in premarket, but yesterday’s session still showed strong participation, with relative volume coming in at 79% of the 20-day average.

• The more important point is what is happening underneath the index. Nvidia had a very strong breakout yesterday on 138% relative volume, with a 90 relative strength rating versus the SPX. That was exactly the kind of pullback-long opportunity we flagged last week, and it now becomes the template for what we want to see across other growth leaders.

• AMD is another example. It pulled back into the 20-day moving average yesterday, held the level, and bounced well. The caveat is that AMD is still extremely extended at around 10.18 ATR multiples above the 50-day EMA, with a 98 relative strength rating versus the SPX. That makes it leadership, but not clean fresh-entry territory unless the pullback is tight and controlled.

  

  MAGS VRVP Daily & Weekly Chart

• The biggest thing to watch today is the MAG7 complex. The MAG7 is coming down toward its 20-day moving average in premarket, around $69.07. Yesterday’s pullback came on 121% relative volume, which makes it a proper distribution event.

• The structure also looks like an Adam and Eve style double top on the daily chart, which increases the likelihood of a 20-day EMA test. If the 20-day EMA fails to hold, we would expect a deeper move toward $67.45, which is about 3.34% below yesterday’s close, or roughly 2.5 average daily ranges.

• This is the most important area for the health of both the S&P 500 and Nasdaq. The rally has broadened, and we are seeing real strength in mid-caps and small caps, but the cap-weighted indices are still being held up heavily by MAG7. If MAG7 weakens meaningfully, SPY and QQQ will feel it.

• The broader read is that SPY is extended and vulnerable to short-term cooling, but the market is not broken. The best long opportunities are not in chasing SPY at highs. They are in leaders pulling back into major moving averages, exactly like Nvidia did.

S&P 400 Midcap

48.75%: over 20 EMA | 53.50%: over 50 EMA | 55.25%: over 200 EMA

• MDY bounced from its rising 10-day EMA yesterday, and the bounce came on 83% relative volume versus the 20-day average. This is constructive because price is pulling into support and being bought up with improving participation.

• This is not a perfect volatility contraction pattern because the average true range and volume are not contracting in a perfectly linear way. It is closer to a high-tight flag or short-term consolidation near highs.

• The important part is that the lows are being supported around the 10-day EMA.

• The visible range volume profile on yesterday’s lows showed roughly 70K shares traded green versus 60K shares traded red, which gives us a slight imbalance in favor of buyers.

• We also saw relative volume spike on the 10-day EMA tests on May 28th and again on June 1st. That is important because it shows buyers are stepping in on pullbacks rather than waiting for breakouts.

• In this kind of bull market, pullbacks into rising moving averages that are bought on higher relative volume are typically signs of accumulation.

• MDY remains one of the healthier areas of the market because it is not as technically stretched as SPY, QQQ or the leading semiconductor names.

Russell 2000

53.74%: over 20 EMA | 59.97%: over 50 EMA | 59.45%: over 200 EMA

• IWM pulled back a little more aggressively than MDY, but the structure still looks healthy.

• The intraday range was roughly 1.47%, which is almost exactly in line with its average daily range. That means we did not see any worrying expansion in downside volatility.

• We would not be surprised to see IWM drift back toward its rising 10-day EMA around $286.66.

• The key point is that IWM is still not technically extended. It is sitting around 4.07 ATR multiples above the 50-day EMA, which is very manageable for a high-beta index like the Russell 2000.

• Because of that, we do not see evidence for a deeper flush yet. Short-term weakness toward the 10-day EMA would likely be a pullback opportunity rather than a reason to turn bearish.

• Small caps remain one of the cleaner expressions of risk appetite because they have reset better than mega-cap tech and still offer better asymmetry for fresh exposure.

FOCUSED STOCK
GOOGL: An Immediate Long Play Idea

ADR%: 2.19% | Off 52-week high: -7.9% | Above 52-week low: +132.9%

• GOOGL remains one of the main stocks on watch today. The stock is down sharply in premarket, around 2.89%, and we believe this is setting up an imminent pullback-long opportunity.

• GOOGL is now likely to test the 50-day moving average, which is around $360. That level also aligns closely with the 10-week moving average, making it a very important higher-timeframe support zone

• We are not seeing a major expansion in relative volume on the daily structure, apart from the expansion we saw on Friday. That means this still looks more like a short-term-cycle pullback than a true breakdown on the intermediate trend.

• On the weekly chart, GOOGL is now coming directly into the rising 10-week moving average, and we believe that level is highly likely to hold.

• There is also a gap from the April 29th to April 30th earnings move, between $355.71 and $365.85. That is roughly a 2.85% runaway gap, and we are likely to fill that area before price attempts to bounce.

• The ideal setup would be a move into the 50-day EMA and 10-week EMA cluster, followed by demand stepping in.

• We would look for entries as close as possible to that moving average zone, with stops below $365, where the visible range volume profile starts to become denser and where prior support was established around April 27th and April 29th.

  

  NVDA VRVP Daily & Weekly Chart

• The framework here is very similar to what happened with Nvidia. Nvidia pulled back in a very linear way into its 10-week EMA last week, bounced from that level, and then expanded materially yesterday. That is exactly the type of behavior we are now looking for in GOOGL.

• This is the current market playbook. When leading growth stocks become extended, the only clean way to get long is to wait for controlled pullbacks into higher-timeframe moving averages.