OVERVIEW
Why Is Everyone So Bearish?

If you only listened to the headlines, you’d think the market was on the verge of disaster. Fear & Greed indicators lean bearish, and mainstream media is filled with talk of stubborn inflation, rising commodity prices, major stock breakdowns (like NVDA weeks ago), and the latest Trump tariff drama. Meanwhile, what’s actually happening? Both the S&P 500 and Nasdaq just hit all-time highs.

This disconnect isn’t new—it happens all the time. The market spends a significant portion of the time in consolidation (historically, sideways trends make up about 70% of market behavior). These choppy periods can be frustrating, but they serve a purpose: digesting gains, shaking out weak hands, and setting up the next major move.

Right now, we’re in one of those phases. The best traders aren’t overreacting—they’re staying patient, watching breadth, and tracking strong individual stocks instead of obsessing over just the indices. The key is to recognize that these stretches of sideways action are normal. If history tells us anything, it’s that prolonged consolidations often lead to powerful breakouts.

Nasdaq

The Nasdaq hitting all-time highs yesterday is an impressive milestone, and what’s even more encouraging is the healthy consolidation above the breakout level. While we are seeing some profit-taking, demand remains strong—particularly on intraday dips and retracement attempts. The last two daily candles have shown clear signs of buyers stepping in, reinforcing the strength of this move.

In the very short term, we could see a quick test of the rising 10-EMA on the daily chart. However, this isn’t something to be concerned about. More likely, we’ll see sideways action until the 10-EMA catches up, providing a launchpad for QQQ to continue its move higher. This type of price action is textbook bullish—strong breakouts followed by orderly consolidation and dip-buying interest.

The equal-weighted QQQE is where we’re seeing the strongest bullish action of all—and that’s an extremely positive sign. The best, most widespread, and powerful rallies happen when the equal-weighted version of the Nasdaq outperforms, because it signals that strength isn’t just concentrated in a handful of mega-cap stocks, but rather broad participation across the index.

Right now, QQQE is at all-time highs and showing impressive relative strength, even outperforming the market-cap-weighted QQQ. Yesterday’s inside day reflects minimal selling pressure, which suggests that buyers remain firmly in control. When equal-weighted indices lead, it often fuels more sustainable rallies, as market breadth strengthens and more stocks contribute to upside momentum.

S&P Midcap 400

Midcaps continue to fight it out at their Point of Control (POC), where they found some consolidation yesterday. There’s not too much to overanalyze here—midcaps remain one of the more lagging groups in the market, and they still have a lot of work to do before breaking out of this multi-month range.

The key focus today on MDY is whether it can hold the POC and ideally make a leg higher to test the descending resistance overhead. This will be a major test, as overhead supply remains high, but given how strong large caps have been, it’s reasonable to expect some sympathy strength to filter down into midcaps.

More importantly, many midcap stocks are setting up well, and at the end of the day, stocks drive indices—not the other way around. If individual names continue to improve, the broader midcap index will eventually follow suit.

Russell 2000

Just like midcaps, small caps (IWM) remain the weakest link in the market from a capitalization standpoint. This is especially clear when comparing IWM to QQQ and QQQE, which have shown much stronger momentum.

IWM has now spent four straight sessions hovering around its Point of Control (POC) but has yet to attract the buying pressure needed to break above this pivot and push toward overhead resistance.

Today's focus, much like with MDY, is on whether IWM can hold or reclaim its POC. However, the bigger concern is the ascending support below—if small caps lose this level, it will likely extend the time needed for any meaningful progress. This would also widen the divergence between large and small-cap stocks, reinforcing the relative weakness in this space and pulling more capital away from the Russell 2000.

DAILY FOCUS
Profitable Trading Should Be Boring…

One of the biggest reasons traders fail to reach their full potential isn’t a lack of technical knowledge—it’s the inability to sit on their hands and wait. The real challenge in trading isn’t making money when the market is running hot—it’s keeping those profits intact when conditions turn choppy.

The truth is, profitable swing trading isn’t glamorous. The market only gives two to three truly strong periods each year where aggressive long exposure makes sense. The rest of the time? You need to stay patient, manage existing positions, and wait for the right moment rather than forcing trades in suboptimal conditions.

Right now, we have a lot of promising setups, but conditions remain choppy. While this can be frustrating—especially when you’re eager to put on risk—you don’t have to be first. If the strength in SPY, RSP, QQQ, and QQQE is real, it will spread to other areas of the market, triggering breakouts and trend continuation in individual stocks.

We are risk-on and will continue to roll the dice on the best-looking setups that are proving themselves in this market. While conditions remain choppy, we are seeing strong action in key areas, and as long as that continues, we will stay engaged and take our shots.

The vast majority of trades will be small wins or small losses, and that’s completely fine. Success in trading isn’t about having a high win rate—it’s about maintaining a high risk/reward strategy. The goal is always to capture the handful of big winners that every cycle provides. That’s where the real money is made.

The key to this approach? Keeping losses incredibly small while letting winners compound. No single trade should ever break you, but one big winner can make you. That’s why disciplined execution and patience are everything. If strength in the indices holds and breadth continues to improve, we expect to see more follow-through in individual names.

This is the time to trust the process, stay sharp, and keep taking calculated risks—because when conditions finally align, the market rewards those who stayed in the game.

WATCHLIST
Our Top Stock To Watch

QBTS: D-Wave Quantum Inc.

• QBTS has firmly established itself as the leader in the quantum computing space, delivering a massive +1000% rally to close out 2024. After that explosive move, the stock has been consolidating constructively, and yesterday we saw a surge in volume, which initially triggered a breakout.

• This morning, QBTS is breaking out again in pre-market, and we’ll be watching for a 5-minute opening range high entry. Given the high ADR (Average Daily Range), position sizing needs to be small and controlled.

• These high-flyer momentum stocks can be incredibly volatile, with sharp rallies followed by aggressive pullbacks, which is why the opening range breakout is crucial for execution.