OVERVIEW
Protect Your Hard Earned Gains

🟥 Risk-Off: The market is showing signs of fatigue, with high relative volume fades and key breakdowns across major indices. Despite some strong individual stock performances, broader risk-off sentiment is creeping in. Equity markets are under pressure, and caution is necessary.

📉 What’s Happening?: We’re seeing increased volatility, particularly in tech stocks and small caps. Key market leaders like AAPL are struggling, and overall sector rotation is occurring. Market breadth is weakening, and the rising concerns over tariffs and global tensions are amplifying risk.

🔑 Key Takeaway: Protect your gains. While there’s still strength in individual sectors, the broader market appears vulnerable to more downside. Be cautious with new positions, manage risk actively, and watch key support levels closely. It's crucial to stay disciplined, especially in a volatile environment.

MARKET ANALYSIS
What Just Happened?

Trump reignited trade war concerns, threatening:

• A 50% tariff on the European Union “within days.”

• Levies on foreign-made iPhones — a direct hit at Apple and U.S.-EU supply chains.

This headline hits two macro nerves at once: global growth and big tech. But the selloff didn’t begin here.

📉 What’s the Context?
This move lower was already in motion.

• Momentum had started to stall late last week.

• Leaders were fading and breadth was thinning.

• The Nasdaq was up 20%+ in just a few weeks — a pullback was coming.

So this might be less of a “cause”… and more of an excuse.

🧠 What Matters:
Markets don’t top on a single headline. They top when leading stocks break down and failed rallies get sold. We’re not there yet — but this is the first real stress test in a while.

🔑 Key Takeaway:
Stay objective. Tariff headlines create noise — but the signal will come from how markets respond to support tests today. If dip buyers step in, this may mark a high-conviction reset. If not, risk-off mode could accelerate. Watch the rising 10, 20 and 50 day EMAs for demand to step in which will show support is very much still there.

Nasdaq

📈 Still the Strongest — But Cracks Are Forming: The Qs continue to be the strongest segment of the market, with the rising 10-day EMA holding stubbornly — even as many large-cap tech names begin to fade. Leadership is narrowing.

🔻 Two Sharp Rejections: Wednesday’s rejection at the point of control (POC) came on the heels of the 20-year bond auction scare. Then Thursday, we got another intraday pop followed by a high relative volume fade in the final 30 minutes — textbook distribution.

🔎 What Now? Premarket action shows QQQ breaking down further. There’s a low-volume pocket below current prices, and we expect at minimum a test of the rising 20-day EMA in the next 1–3 sessions. Short-term downside still in play.

🧠 Key Watch: If that 20-day breaks, we’ll be watching whether buyers defend, or if we transition from digestion → de-risking.

AAPL: Apple’s Anchor

Apple has quietly been forming a clean bear flag over the past 1–2 weeks — and as of this morning, that pattern is breaking lower with volume stepping in.

Given Apple’s weight in both the QQQ and SPY, this breakdown matters. When the second-largest stock in the market loses structure, it exerts real pressure on passive flows.

🧠 Context: This isn't about Apple alone — it's about what it represents. When key generals like AAPL start breaking, the odds of broader de-risking go up. If this bear flag plays out fully, it likely accelerates the Nasdaq’s short-term correction.

S&P 400 Midcap

🟥 Breakdown Confirmation: After a brief contraction in the MDY, the breakdown from Wednesday was confirmed with further weakness yesterday. We saw a rejection at the 10-EMA during the intraday retest.

🔍 No Panic Yet: Relative volume hasn't spiked, suggesting a more measured pullback rather than a panic-driven sell-off. The visible range volume profile shows dense demand, offering support.

⚖️ Key Support: The rising 50-day EMA remains the level to watch. While the market is taking a breather here, failure to hold this key support could signal a deeper breakdown, but we don't expect that yet. This setup is more about consolidation than capitulation.

Russell 2000

🟥 Breaking Major Support: Small caps are struggling the most, now gapping below all key support levels. The IWM is heading toward its final demand zone, marked by dense volume clusters around the $200 area.

⚠️ Buyer’s Test: The key question is whether buyers step in aggressively here. This level is critical—if it's defended, we could see stabilization. If not, the downside risk increases significantly.

📉 Bear Market Risk: A failure to hold this demand zone would reverse the last five weeks' gains and confirm a bear market stretch in the IWM, marking a potential painful period for small caps and further deterioration in market breadth since December 2025.

Note: It’s very important to remember that this applies to all the groups above – the average stock in the small, mid, or large-cap space has performed extremely well recently.

So, it’s not just as simple as looking at the indices. More on this in the Q&A section.

FOCUSED STOCK
PLTR: Palantir Technologies Inc.

📌 Why It Matters:
Forget the indices for a second — the health of the market often shows up first in its leaders. PLTR has been one of the strongest names of this entire cycle. That’s why we watch it so closely: when leaders break, the market usually follows.

🔍 What We’re Seeing:

• We’ve been long PLTR and it's building the right side of a potential cup-and-handle — constructive, but...

• It’s battling with descending resistance over the past week. Sellers are showing up at predictable levels.

• If PLTR loses support and confirms a breakdown, that’s our clearest signal yet to flip the broader stance from risk-on to risk-off.

⚠️ Key Takeaway:
This isn’t just about one stock — it’s about what PLTR represents. If it fails, it’s a signal that institutions are starting to sell their winners. And when the leaders get hit, the rest usually follows.

Watch this name very closely today on the major gap-down open.

FOCUSED SECTOR
GDX: Gold Miners

📉 Stocks down → 🟨 Gold up
One of the most basic macro relationships: when equities fall, capital rotates into defensive assets like gold.

Earlier in 2025, when stocks were selling off hard, gold surged to all-time highs. But as equities rallied in recent months, gold began distributing. Now that markets are wobbling again — gold’s catching a fresh bid.

📊 What's Happening:

• Trump’s EU tariff comments have added pressure to equities, fueling risk-off sentiment.

• In response, gold and miners (GDX) are seeing renewed strength — a classic rotation into safety.

• GDX is pushing into the upper end of its range with rising premarket volume — early signs of accumulation.

⚠️ Key Takeaway:
If equity weakness persists, expect this group to stay in play. Keep it on radar — especially if GDX breaks above range with conviction.

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

Q: “When you guys say relative strength, how do you actually measure that?”

A: This is a nuanced concept, and there’s more to relative strength than just looking at a number or a ratio. Let’s break it down.

At its core, relative strength refers to how a stock or asset is performing relative to its benchmark—typically the S&P 500 (SPX). Some traders use tools that measure this, providing a score (out of 100) to show how much stronger the stock is compared to the index. These scores can be helpful, but they only give us a snapshot, not the full picture.

Here’s where it gets interesting: True relative strength is seen in price action, not just numbers.

🔑 Key Concept: It’s like a game of pressure. Think of the market as a big ocean, and the stock you’re watching is a beach ball submerged underwater. In a downtrend, most stocks are going to float lower, pulled by the gravity of the market.

But high relative strength stocks? They act like that beach ball trying to resist the pull. They’re not only refusing to break down below their key support levels (such as 10, 20 or 50-day moving averages), but they’re also fighting to stay afloat—they push back harder every time the market dips.

The stronger the resistance, the more you know it’s likely a high-conviction name.

So, how do you measure that strength in real-time?

1. Price and Volume: Watch for stocks that are consolidating above key moving averages (like the 10, 20, or 50-day EMAs), while the broader market is struggling. Volume spikes as the stock pushes through resistance, but even during pullbacks, the stock tends to hold strong and doesn’t give up ground easily.

2. Behavior During Market Pullbacks: Pay attention to how the stock behaves when the market faces selling pressure. If the stock isn’t breaking down like others—it’s a tell. It’s a stock that is in control of its own narrative, independent of broader market sentiment.

3. High-Volume Breakouts: When that stock finally breaks higher, you should see a surge in relative volume—indicating institutional participation and real conviction behind the move. Stocks with relative strength will attract more buying interest even in uncertain or choppy markets.

🔑 Takeaway: In a way, relative strength is also about your mental perception as a trader. It's like having a radar for stocks that have their own momentum. You can train your eye over time to spot these subtle divergences—when a stock isn’t acting like everything else, when it keeps bouncing off support even when the market is weak, and when it acts decisively at key technical points.

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