MARKET ANALYSIS
Here’s What Matters Today

• Yesterday’s session was the first genuinely healthy bounce we have seen in several days.

• The important point is not just that the indices finished higher. It is how they bounced. The S&P 500 gained 1.18%, the Nasdaq rallied 2.07%, and the move came with real participation from the growth complex rather than a low-quality defensive rotation. After five consecutive down sessions in the Nasdaq and several days of pressure across AI, semiconductors and mega-cap tech, that matters.

• The market did what it needed to do. QQQ and SPY held the key support areas, semiconductors bounced from their rising 10-week EMA, and several high-beta growth names saw high relative-volume expansion. TSLA was one of the cleaner examples, with buyers stepping back in aggressively rather than the stock simply drifting higher on light trade.

• That is the difference between a weak oversold bounce and a constructive support reaction. A weak bounce is narrow, low-volume and led by the names that fell the most. Yesterday was better than that. The market saw money return to the same areas that had been under pressure, and that suggests investors were willing to re-risk rather than simply cover shorts.

• The geopolitical backdrop helped. The U.S. and Iran agreed to pause hostilities and allow commercial vessels to move through the Strait of Hormuz again. That removed the immediate worst-case energy shock from the tape and gave equities room to repair. Oil is still elevated around the $70 area, but it is not acting like a runaway crisis input right now.

• Fresh U.S.-Iran talks in Doha are now the next headline risk. The market is already pricing a return toward normal oil flows, so the bar is no longer low. If talks progress, equities can keep looking through the Middle East risk. If talks stall or shipping headlines deteriorate again, oil can quickly reprice higher and bring inflation risk back into focus.

• For now, though, the oil move is not controlling the tape. Equity leadership is.

• The broader first-half numbers also show why the market still has underlying demand. The Dow is up more than 8% in the first half, the S&P 500 is also up more than 8%, the Nasdaq is up over 11%, and the Russell 2000 has gained more than 21%, putting small caps on track for their strongest first half since 1991. That is not the profile of a market with no risk appetite.

• The second quarter has been even stronger. The S&P 500 is up roughly 14% for the quarter, while the Nasdaq is up nearly 20%, both tracking their best quarterly gains since the second quarter of 2020. The Dow is up more than 12%, its best quarter since late 2022. That context matters because pullbacks inside powerful quarterly advances often create sharp shakeouts before leadership resumes.

• The improvement is also global. Europe opened higher, with chipmakers bid again, and Asia was mixed but not broken. Japan and South Korea both advanced, while China’s official manufacturing PMI returned to expansion at 50.3, helped by stronger high-tech export demand. That supports the view that the AI and global manufacturing cycle is not dead, even if parts of the trade became overheated.

• China is becoming a useful macro offset. Manufacturing activity is recovering, exports are holding up better, and frontloaded U.S. demand is helping activity. The caveat is that some of this strength may be tariff-related pull-forward rather than clean organic demand. But for now, it still supports cyclicals, semiconductors and global growth sentiment.

• Gold is still under pressure as investors digest higher Treasury yields and a more hawkish Fed path. The 2-year yield jumped sharply after the last Fed meeting, and the market is still debating whether rate hikes return in the second half of the year. That matters because expensive growth and AI names can rally when demand is strong, but they remain vulnerable if yields keep pressing higher.

• UBS also made the right point this morning: AI exposure is likely to remain a major differentiator for equity performance, but diversification within and beyond AI is becoming more important. That is exactly what the tape is showing. The market still wants AI, but it is starting to separate durable winners from crowded, capital-intensive, overextended names.

• Semiconductors bounced where they needed to bounce. QQQ and SPY held where they needed to hold. Growth participation improved. TSLA and other high-beta names showed real demand. Those are bullish short-term developments.

Nasdaq

50.49%: over 20 EMA | 50.49%: over 50 EMA | 60.39%: over 200 EMA

• QQQ gave us a very important test yesterday, and more importantly, a proper hold.

• The key level is now $709. That is where the visible range volume profile point of control sits on the daily structure, making it the most densely traded zone going all the way back to May 2026. For the last four sessions, every dip below that point of control has been met with buyers stepping in and pushing price back higher.

• The bigger change is that QQQ is no longer behaving like a clean Adam & Eve double top. The failed breakdown attempt, the hold of the 10-week EMA, and the higher-low structure now forming between the June 9th low and yesterday’s June 29th candle all shift the read. Instead of the double top validating, the pattern is now starting to look more like an intermediate contraction within the weekly uptrend.

• That matters because failed breakdowns often create the fuel for the next move higher.

• QQQ also traded on roughly 100% relative volume yesterday, so this was not a low-quality drift higher. The move came with real participation. Relative strength versus the SPX has also improved to around 83, which supports the idea that large-cap tech is still one of the strongest areas in the market for pullback-long exposure.

• The upside pocket is also clean. Above current levels, there is a relatively low-volume zone up toward $734.13, which is the gap-down level from June 22nd. That gives QQQ room for roughly 1.44% of upside expansion before the next more important supply test.

• From our perspective, this dip is buyable. We have a hold of the 10-week EMA, repeated defence of the daily volume point of control, improving relative strength, and an invalidation of the Adam & Eve breakdown attempt. That is a much healthier setup than the one we were looking at last week.

• The equal-weighted Nasdaq confirms the read. QQQE is acting slightly better than QQQ, which tells us the Magnificent 7 were disproportionately responsible for the recent pressure. QQQE held its 20-day EMA, formed a green hammer candle, and is now only around 1.7% below its 52-week high. That is a strong breadth signal inside large-cap technology.

S&P 400 Midcap

64.91%: over 20 EMA | 64.91%: over 50 EMA | 65.66%: over 200 EMA

• Mid-caps also defended well, but the structure is still less clean than large-cap tech.

• MDY held its 10-day EMA on statistically high participation, with relative volume running around 137% of the 20-day average. That tells us buyers are still active on pullbacks and that the mid-cap trend has not broken.

• Breadth is also strong. Around 65% of stocks are trading above their 20-day, 50-day and 200-day EMAs. That is a healthy internal profile and supports the idea that the mid-cap complex is not under broad distribution pressure.

• The issue is not breadth. The issue is linearity. MDY has been grinding higher in a very choppy way. That makes exposure more difficult because the entries are harder to time, the exits are less obvious, and the path from setup to follow-through is less clean. In a strong market, we want price action that allows us to model risk properly. MDY is giving demand, but not a smooth path.

• That means the best way to treat MDY is still through pullbacks, not breakouts. The ETF can absolutely continue higher, but the opportunity quality is not as clean as QQQ or the leading growth names.

Russell 2000

70.36%: over 20 EMA | 67.55%: over 50 EMA | 65.74%: over 200 EMA

• IWM is showing the strongest breadth of the major index ETFs, but the same tradeability problem remains.

• Around 70% of small-cap stocks are above their 20-day EMA, which makes IWM the strongest of the major index complexes from an internal breadth perspective. That is a clear risk-appetite signal. If the market were truly moving back into defensive mode, small caps would not be holding this well.

• The visible range volume profile also supports the strength. Around the current highs, we are seeing roughly 1M shares traded green versus about 600,000 shares traded red. Across the range going back to June 12th, there is roughly a 2-to-1 buyer-aggression imbalance. That is meaningful demand.

• The problem is the same as MDY, but even more obvious: the price action is not linear enough.

• If you already bought the reflex pullbacks into the 10-day EMA, the trade is working. But if you are not already in, it is difficult to define a clean entry here without chasing. The structure is strong, but the entry quality is not obvious.

• That is the main distinction. IWM is confirming risk appetite, but it is not necessarily offering the best fresh setup right now

FOCUSED STOCK
NVDA: A Perfect Pullback Long Play

ADR%: 3.36% | Off 52-week high: -17.5% | Above 52-week low: +28.9%

• Nvidia has pulled back into its 200-day EMA around $189 and bounced yesterday on high relative volume, around 92% of the 20-day average. That is a very important support reaction because Nvidia remains one of the key leaders of the growth and semiconductor complex.

• The group backdrop also supports the trade. XSD, the U.S. semiconductor ETF, bounced yesterday from its 50-day EMA, which also lines up with its 10-week EMA.

• The move came with a very large average true range of around 8%, roughly 1.3x greater than the expected average daily range. That confirms real volatility and real demand at the support zone.

• XSD also has a 99 relative strength rating versus the SPX, making it one of the strongest ETFs in the entire market. That is important. If we are going to add growth exposure, we want it in the strongest group, after a support test, with a defined invalidation level.

• Nvidia fits that profile. The trade location is clear. Long exposure makes sense against the 200-day EMA, with stops placed below $188.33. That gives the setup structure. We are not buying random strength. We are buying a leadership name at a major moving average, inside the strongest sector complex, after the group has defended its own 10-week EMA.