OVERVIEW
🟥 Risk-Off: Failed Rallies & Fake-Outs

Jobs miss locked in a September Fed cut, but inflation data this week (PPI Wednesday, CPI Thursday) will decide whether easing comes in controlled quarter-point steps or gets front-loaded.

Nasdaq (QQQ): Friday’s gap-up into $573–575 supply failed; hammer close at 10-EMA. Likely inside day today between 10-EMA and $580 shelf- constructive if it consolidates, but breadth still too weak.

Midcaps (MDY): Evening Star reversal at $602 supply on declining volume. Classic bull-trap setup — needs $600 reclaimed with conviction, or odds favor digestion/pullback.

Small Caps (IWM): Same Evening Star, but volume confirmed demand off the 10-EMA. Strongest breadth profile of the three indices, but supply into $240 caps near-term upside. Best bull case is sideways consolidation.

TSLA: Most-watched base in the market. Supply wall at $350–355 capped Friday’s breakout attempt. Two clean plays: breakout above $355 on volume, or mean reversion to $339 (10/20 EMA cluster).

Biotech (XBI): Healthcare leadership baton is now in biotech. Clean trend integrity above 20-EMA, consistent accumulation, and one of the only “clean tapes” left. Focused names (e.g. TNGX) continue to build controlled volatility bases.

MARKET ANALYSIS
The September Chop Alive & Well

Last week’s weak jobs print effectively locked in a September Fed cut. Futures imply rates end 2025 at 3.5%–3.75%, consistent with quarter-point moves at each of the three remaining meetings. There’s still optionality for a half-point cut if the labor market softens further, but the base case is measured easing.

This week’s PPI (Wednesday) and CPI (Thursday) will decide how aggressively the Fed can move. If inflation is tame, the Fed has cover to cut in sequence. If it stays sticky, policymakers face pressure to front-load cuts — which would inject volatility rather than calm it.

Morgan Stanley’s Michael Wilson framed it as a “transition from rolling recession to rolling recovery.” In his words, the risk isn’t whether cuts happen, but whether the policy response is large enough to steady the cycle. Short-term chop, he argued, is the setup for a stronger finish into year-end and 2026.

The market is pricing that optimism aggressively: the S&P 500 sits less than 1% from record highs, even as breadth deteriorates and breakouts fail. That disconnect is the tell as the Fed path is supportive, but tape structure hasn’t confirmed.

📌 Takeaway: This is where traders go wrong: trading the story instead of the tape. Our edge is always in price and volume, not in the headline narrative.

Nasdaq

% over 20 EMA: 44.55% | % over 50 EMA: 46.53% | % over 200 EMA: 64.75%

Friday’s session was a perfect snapshot of the current chop regime. QQQ gapped above the $573–575 supply zone (the “red box” we’ve flagged since the July 31st rejection) and initially looked set to confirm Thursday’s push.

Instead, the move failed as strength faded, the gap filled, and price slid back to the rising 10-EMA, where buyers finally stepped in. The session closed with a red hammer: not bearish on its own, but a reminder that rallies remain fragile.

The key takeaway is behavioral. Chasing gap-ups has had no edge as there’s no marginal buyer to sustain them. Conversely, buying weakness into defined support continues to deliver the best 1–3 day bursts. That remains the only reliable structure in this tape.

Looking ahead, we expect today to resolve as an inside day, likely contained between the rising 10-EMA and the $580 VRVP supply shelf. That would be very constructive as a pause here would allow consolidation to reset the structure for a higher break.

But until we see that, and a meaningful improvement in breadth and breakout follow-through, conditions remain weak beneath the surface (sitting in cash is a great idea).

S&P 400 Midcap

% over 20 EMA: 73.25% | % over 50 EMA: 68.75% | % over 200 EMA: 47.63%

Midcaps just printed what textbook technicians call an Evening Star pattern which is a three-candle reversal formation with strong statistical backing.

Thomas Bulkowski’s research ranks the Evening Star as one of the highest-performing candlestick signals, testing as a bearish reversal 72% of the time. But the nuance matters: the strongest outcomes come after upward breakouts in bear markets.

In contrast, in bull markets after extended runs, the pattern is more prone to producing bull traps and sideways digestion than clean breakdowns.

Friday’s price action fits that profile. MDY surged intraday to tag $602, stretching directly into supply, before fading sharply and leaving the three-bar reversal in place.

More importantly, relative volume was very low on the move, and the prior three green candles in the uptrend showed declining volume as price advanced. Typical tape-reading would tell you this is a red flag as higher prices with lower participation typically means institutions aren’t pressing their bets.

That sets up the conditions for a false breakout or exhaustion gap, where retail chases highs only to be met by distribution.

📌 Key Levels: Support sits back near $582 (the anchored volume shelf), with resistance defined at Friday’s $602 high. If MDY can’t reclaim $600 on volume, the odds favor digestion or pullback.

Russell 2000

% over 20 EMA: 72.63% | % over 50 EMA: 69.97% | % over 200 EMA: 62.35%

Small caps printed the same Evening Star reversal structure that showed up in MDY. The distinction, however, lies in the tape behind it: while MDY’s push came on declining relative volume, IWM’s bounce off the rising 10-day EMA carried much stronger volume support.

That’s an important signal as buyers were active in defending demand, where midcaps showed hesitation.

Breadth also continues to favor IWM. On a percentage basis, small caps hold the healthiest profile versus both QQQ and MDY, reinforcing that leadership rotation isn’t fully absent, it’s just narrower than it looks.

That said, supply is obvious into $240, and the tape isn’t positioned for a decisive breakout today. Our daily scans confirm it: while a handful of IWM components remain technically constructive, there’s broad fading across the index.

For bulls, the most constructive outcome here would be consolidation beneath $240, letting breadth and setups rebuild before another attempt higher.

FOCUSED STOCK
TSLA: Two Easy Ways To Play This

ADR%: 3.57% | Off 52-week high: -28.2% | Above 52-week low: +65.4%

Tesla remains one of the most closely tracked stocks in the market. Since late May 2025, it has been building a massive base, and into September we’re seeing relative volume expand as price presses against the descending resistance line that has capped the entire structure.

Friday’s breakout attempt looked convincing intraday, but the Visible Range Volume Profile (VRVP) highlights the issue: there’s a dense band of supply stretching from $350–$355.

That’s precisely where the move stalled, and it’s why we did not enter. In a tape this weak and choppy, pressing breakouts into heavy supply is low probability until the level is cleared decisively.

That said, the setup remains critical. The longer Tesla absorbs supply in this zone without breaking down, the greater the pressure builds for resolution. A confirmed close above $355 on volume would mark supply absorption and open a path toward the $370–380 zone.

Another way to play it: if today’s breakout attempt fails, the clean mean-reversion trade is a pullback toward the rising 10- and 20-day EMA cluster near $339 - roughly –4.8% lower.

In that scenario, Tesla resets against short-term moving average support before making another attempt.

FOCUSED GROUP
XBI: Healthcare Is Still King

Biotech has quietly become one of the cleanest trend structures in the market. XBI’s breakout above the 200-day EMA near $88 in early August marked a true repricing event as the ETF has not traded back below its 10- or 20-day since.

Volume confirms this as unlike much of the market, where rallies have been one-day squeezes followed by reversals, XBI shows sustained accumulation with breakouts holding, shallow pullbacks defended, and a long list of XBI stocks pushing

The sector rotation framework adds weight. First, leadership came from pharma (XPH), which drove XLV higher. Now capital is migrating into higher-beta biotechs as the classic progression when confidence builds in a sector.

As long as XBI defends its 20-day EMA, the structural bias remains higher, with the next supply zone sitting around $100–105 where a major volume shelf could act as the next test.

TNGX continues to set up as one of the more constructive small-cap biotech structures. After stalling at the August highs, Friday’s reversal looked heavy but the pullback stopped precisely at the Point of Control (POC) on the VRVP.

That level held, and premarket action shows buyers stepping back in.

The bigger picture is cleaner than the daily chop suggests. Since July, TNGX has built a linear contraction base above both its 50- and 200-day EMAs.

That type of steady volatility compression is what typically precedes sustained directional resolution. Volume on Friday confirmed interest: the surge into resistance came on the heaviest relative activity since early August.

📌 Takeaway: This is an early-stage uptrend with the right technical ingredients with institutional defense at the POC, higher-timeframe base construction, and controlled volatility contraction.

As long as the stock holds above the $6.60–6.70 demand shelf, the structure argues for eventual resolution higher through the $7.40–7.50 zone.

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

Q: “Can you break down how the Visible Range Volume Profile works? I see you guys include it in all of your reports, but I’m still unsure how to actually use it.”

A: The Visible Range Volume Profile (VRVP) is one of the most underutilized but critical tools for understanding where the market has committed real capital.

Unlike standard volume bars (volume by time), the VRVP maps volume by price level.

This difference makes it far more actionable when you’re assessing supply, demand, and the likelihood of continuation versus reversal.

Point of Control (POC) = Gravity Center

The POC is the single price where the most volume has changed hands. That’s where the market has agreed on value. Around the POC, supply and demand are balanced so expect chop, head-fakes, and failed momentum. You want to see the POC get respected in uptrends and you want it so it rejected in downtrends (for those looking to short).

If it pulls back into POC and holds, that’s where institutions reload. If it slices back through with force, that’s a character change: fair value has shifted, and the trend is repricing.

High-Volume Nodes (HVNs) = Sticky Zones

Big blocks of volume show where the market has gotten comfortable. These zones act like flypaper. Price gets stuck here until something big dislodges it.

If you’re long into an HVN, understand it’s where rallies stall unless real sponsorship shows up. This is why a lot of traders like to scale out some profits into HVNs as they know supply is likely waiting.

Low-Volume Nodes (LVNs) = Air Pockets

Markets hate low-volume zones. When price enters an LVN with speed, it tends to cut straight through with no friction and no chop. These are your “fast trade” areas: if you catch a breakout into an LVN, stay with it. If you fade into one, know you’re betting against velocity.

Value Area Highs/Lows (VAH/VAL) = Edges of Acceptance

70% of all volume sits inside the value area. The edges are where acceptance turns to rejection.

• Breakout above VAH on size → that’s new demand, usually continuation.

• Breakdown below VAL on size → that’s distribution, usually trend acceleration.

• Failures at the edges → mean reversion. Some of the cleanest fades you’ll ever take come from failed pushes outside VAH/VAL.

Timeframe Context = Why Profiles Shift

VRVP isn’t fixed. It’s a mirror of what you’re looking at. Zoom in, you see tactical levels. Zoom out, you see structural levels where funds and institutions are anchored. The game is connecting the two.

• Daily/weekly profiles → show you where the big money has memory.

• Intraday profiles → show you where today’s flows are leaning.

The best trades line up when a short-term LVN or POC sits right on top of a long-term level.

Character Change = The Real Signal

The single best use of VRVP is spotting when the tape’s behavior changes.

• Example: Price bangs its head against an HVN for weeks, then rips straight through with 3x relative volume → the crowd is trapped, a new leg has begun.

• Example: A stock keeps bouncing at VAL, then finally cracks it clean with sponsorship → that’s distribution, and weak hands get carried out.

These moments matter far more than lines on a chart. They’re the difference between grinding chop and true repricing.

We know this can be really confusing so please dont be afraid to email us or respond to this email for more info!

In Swingly Pro, we talk about how to build these exact systems so no member has to guess. We all know exactly when the market is ours to attack, and when it’s time to step aside and raise cash

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