OVERVIEW
Selling Pressure Hits, but Leaders Still Holding Up

🔴 Risk-Off (for now): Equities got hit hard after the bond auction, with IWM and QQQ both reversing lower on heavy volume. Small caps broke their 10EMA, and QQQ faded above POC. It’s the first real sign of risk unwinding in weeks.

📉 What’s Happening?: Despite the weakness, large-cap tech and crypto-related names like MSTR are still absorbing pressure well. BTCUSD broke out to new highs, and blockchain equities remain tightly coiled, though they could decouple if broader markets stay weak.

🔑 Key Takeaway: This looks like a short-term shakeout, not a trend change—yet. Watch for stabilization near key EMAs and demand zones. Until we see confirmation either way, we’re staying patient and selective.

MARKET ANALYSIS
Whatever You Do, Don’t Panic

On the surface, Wednesday’s selloff looked puzzling. Equities dropped sharply, and headlines pointed to a "weak" 20-year Treasury auction. But what does that actually mean?

Let’s break it all down — from the basics of bonds to why this auction mattered — in the simplest, clearest way possible.

📘 First, What Is a Bond?

At its core, a bond is just a loan. You lend money to the government (or a company), and they pay you interest over time.

• A Treasury bond is a loan to the U.S. government.

• You get a fixed interest rate (called the coupon).

• At the end (say, in 10 or 20 years), you get your money back — that’s the maturity.

But here’s the kicker: the market value of that bond changes depending on interest rates and demand.

🧭 Who Sets the Price?

The U.S. Treasury issues new bonds regularly — like a company raising money by selling shares. These are sold at auctions, where big players (banks, foreign central banks, pension funds, etc.) bid for them.

• If there’s strong demand, yields come in low.

• If buyers are hesitant, the Treasury has to offer higher yields to attract them — that’s a red flag.

🧪 So What Happened This Week?

The Treasury auctioned $18.19 billion in new 20-year bonds.

Here’s what actually happened — and why it spooked the market:

1. Bids came in for ~$39 billion (twice the amount offered — that sounds good!)

2. But ~41% of accepted bids landed at the highest yield offered — 5.047%
   → That means a lot of buyers held back and only stepped in when the yield got sweet enough.

3. The auction “tailed” — meaning demand was weaker than expected and investors wanted more compensation for risk.

4. The bonds were priced below par ($99.40) — another signal that buyers were cautious.

🧑‍💼 Who Buys These Bonds?

There are 3 key players at Treasury auctions:

• Primary Dealers – Big banks like JPMorgan, Goldman. Required to bid.

• Direct Bidders – U.S. institutions (pensions, mutual funds, insurers).

• Indirect Bidders – Mostly foreign buyers (central banks, big overseas funds).

Here’s the good news:
➡️ Foreign buyers stepped up and took down a big chunk (82% of their bids were accepted).
➡️ Primary dealers only took 12% — which is low. That’s good. It means real buyers showed up.

If dealers had taken 30%+, that would’ve been a problem. It would’ve meant the market didn’t want the bonds and the backstops had to absorb the leftovers.

⚠️ So Why Did Markets React?

Even though the auction wasn’t a disaster, it sent a message:

That might seem small, but it hints at something bigger:

• Investors are no longer buying because of Fed expectations.

• They’re demanding a fiscal risk premium — compensation for lending to a country with $2T+ annual deficits and no sign of slowing.

That’s why yields at the long end of the curve (like 20- or 30-year bonds) are spiking — even without Fed hikes.

🧩 Why That Matters to You

Rising long-term yields = pressure on everything:

• Equities → Higher discount rates = lower valuations

• Tech and growth stocks → Most sensitive to long-duration risk

• Mortgages & corporate borrowing → Gets more expensive

• Crypto & gold → Start to shine as the system looks shaky

And here’s the deeper message:

Nasdaq

• The QQQ faded its intraday push above the Point of Control (POC), which initially looked promising, but the market couldn’t sustain the move and dropped to the daily 10-EMA.

• Yesterday’s fade saw a noticeable uptick in relative volume, indicating strong conviction behind the selling pressure.

• We’re in a wait-and-see mode today. While yesterday’s move could have been an overreaction, it’s worth noting that large-cap tech has absorbed the selling well. We’re not leaning too bearish yet but will monitor the 10-EMA for any shifts.

S&P 400 Midcap

• Yesterday’s breakdown lacked a major volume spike, which was surprising considering the sharp move.

• The current test at the visible range volume profile (VRVP) demand level should provide solid support. We don’t expect MDY to break below $540, but the broad market sell-off makes this a crucial level to watch.

Russell 2000

• Small caps were the hardest hit during yesterday’s sell-off, which was expected as they’re typically the first to feel the risk peel from the broader market.

• We saw a breakdown below the daily 10-EMA on high relative volume, signaling increased selling pressure.

• The IWM is now approaching the ascending 20 and 50-day EMAs, where we expect to see a potential bounce today.

FOCUSED STOCK
MSTR: MicroStrategy Incorporated

• Bitcoin's Surge: After yesterday’s dramatic reaction to the bond auction, where equities took a hit, BTCUSD is breaking higher, hitting new all-time highs. This is driving strength into Bitcoin-related stocks.

• MSTR Leading the Pack: MSTR (MicroStrategy) continues to be a standout in the sector, showing impressive strength. It's consolidating well after its breakout, indicating strong potential as it stays closely tied to Bitcoin’s movements.

• Watch Out for Market Weighing: While Bitcoin-related stocks are doing well, keep in mind that the broader equity market could still weigh on them. These stocks are much more correlated to BTCUSD price action, so a pullback in BTC could impact them as well.

FOCUSED SECTOR
BLOK: Blockchain Technology

• BLOK ETF Strength: With Bitcoin leading the charge, BLOK (Blockchain ETF) is one of the strongest performing ETFs we’re seeing right now. It’s a solid way to gain exposure to the blockchain space.

• Short-Term Extension: While BLOK is showing impressive strength, it’s currently extended in the short term. A pullback could provide a better entry point for those looking to capitalize on this booming sector.

• Why Blockchain?: Beyond Bitcoin, blockchain tech has massive potential across industries. It’s reshaping everything from data security to asset tracking, making it a long-term play worth considering.

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

Q: “Are technicals more important than fundamentals?”

A: It’s a nuanced question, but the short answer is both—and they must align.

Here’s the thing: Technicals guide your timing and entry points, showing you when and how to act. However, fundamentals explain the why. Why is there demand for this stock? Why is it likely to continue moving up? Without that underlying fundamental reason, a technical setup can be just a short-term blip rather than a sustainable trend (you can still make amazing returns trading these short-term momentum burst plays).

Let’s bring in William O'Neil’s perspective. O'Neil’s CAN SLIM approach is rooted in finding stocks that not only have strong technical patterns (breakouts, volume surge) but also solid fundamentals (earnings growth, market leadership, etc.). His principle? Technicals without fundamentals are like a ship without a rudder—they might move, but not in a sustainable, profitable direction.

From a supply and demand perspective: stocks rise when more buyers want in than sellers want out. But the reason why buyers want in—that’s the fundamentals. You can’t ignore the story behind the stock. If the fundamentals aren’t there, the technical setup might look nice, but it’s not likely to drive long-term success.

In our approach, technicals (especially price and volume) consistently show us where the action is. You can see it over and over again in the stocks we trade. If the fundamentals align, great. But the chart is where we make our moves.

Simply put: when you watch the technicals and let the charts guide you, you’re looking at where the market is truly reacting, not where news headlines say it should.

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