MARKET ANALYSIS
Here’s What You Need To Know

• U.S. equity futures are starting the holiday-shortened week with a constructive tone, led by strength in technology, as Nasdaq futures trade roughly 0.7% higher and the S&P 500 adds around 0.4% premarket.

• Leadership is coming from the AI complex, with Nvidia, Oracle, and Micron all higher following renewed optimism around chip demand and AI infrastructure spending.

• Nvidia is gaining after reports that shipments of its H200 chips to China could begin as early as mid-February, subject to regulatory approval. While not a done deal, the news has been enough to reignite short-term momentum across semiconductors.

• This follows a mixed but stabilizing week for equities. The S&P 500 and Nasdaq both closed higher on the week, while the Dow lagged after a strong run earlier in December, suggesting rotation back into the AI trade rather than outright risk-off behavior (which this isn’t).

• Importantly, last week’s rebound helped relieve some of the pressure that had built up across growth stocks, with AI leaders beginning to participate again after a period of underperformance.

• Outside of equities, precious metals continue to confirm strength. Gold and silver pushed to fresh record highs, reinforcing the broader theme of demand for real assets amid ongoing fiscal and monetary uncertainty.

• Liquidity will naturally thin as the week progresses, with an early close on Wednesday and markets shut on Thursday, which tends to amplify moves but also limits follow-through.

• If this strength can hold into the close and carry through the shortened week, it improves the odds that the market can stabilize into year-end rather than continuing the recent choppy decline.

Nasdaq

53.46%: over 20 EMA | 55.54%: over 50 EMA | 57.42%: over 200 EMA

• QQQ put in a genuinely strong rebound on Friday, reclaiming the 613 resistance area that had capped price for most of the week.

• That rebound followed an aggressive undercut of the 50-day and 10-week moving averages (~610) on Wednesday, with buyers stepping in quickly into Thursday.

• While Friday’s volume was average (~99% of the 20-day), the weekly context is far more important.

• On the weekly chart, QQQ:

  • Cleanly bounced off the rising 20-week moving average

  • Held the weekly point of control near 603

  • Reversed higher exactly where trend support needed to hold

• Price also reclaimed both the 10- and 20-day moving averages, which had capped upside since the Eve-style rounded top formed after the Dec 10 peak.

• We are gapping higher, which is objectively strong, but not an area to chase.

• There remains meaningful overhead supply from ~620 to 628:

  • 620–623.5: heavy trapped long exposure

  • Historically, these zones often create near-term selling pressure as underwater longs look to exit

• Structurally, the market continues to improve:

  • Higher lows have been forming since the late-November capitulation near 581

  • Last week’s volume expanded to ~155% of the 20-week average

• Importantly, there was no loss of the 20-week moving average, which significantly reduces the probability of a stage-four or intermediary markdown phase.

• Short-term caution around gap behavior is warranted, but support held exactly where it needed to. Structure is very constructive, downside risk appears increasingly asymmetric, and this continues to look more like the Nasdaq working its way back toward all-time highs.

S&P 400 Midcap

61.75%: over 20 EMA | 63.50%: over 50 EMA | 61.00%: over 200 EMA

• MDY printed an exceptionally strong session on Friday, bouncing cleanly off the 10-day moving average at the open and holding it throughout the day.

• Relative volume expanded to ~117% of the 20-day average, confirming that buyers showed up with intent.

• This rebound matters because mid-caps had just gone through a full week of heavy supply after failing at the December 12 highs.

• Last week’s price action was defined by:

  • Long upper wicks

  • Repeated failures near highs

  • Clear evidence of distribution and trapped long exposure

• The visible range volume profile reflected this clearly, with heavy green volume stacked above price, creating persistent sell pressure as longs exited on strength.

• Friday resolved that pressure decisively and price retested the prior breakout level and flipped it from resistance into demand, which is the ideal character change scenario.

• That transition from resistance → support is exactly the type of behavior we want to see after a corrective phase.

Russell 2000

62.01%: over 20 EMA | 62.22%: over 50 EMA | 63.30%: over 200 EMA

• IWM did not show the same level of strength as mid-caps on Friday, but the action remains constructive.

• Short-term, there is still meaningful overhead supply up toward ~254, which price will need to work through.

• On the daily chart, a potential head-and-shoulders structure is forming:

  • Left shoulder: Dec 4–9

  • Head: Dec 10–15

  • Right shoulder: established last week

• That pattern needs to be acknowledged, but it is not confirmed, especially given strength elsewhere in the market.

• On the weekly chart, the setup is more encouraging:

  • Price pulled back toward ~247

  • Buyers stepped in aggressively

  • A red hammer reversal candle formed on ~145% of the 20-week average volume

  • This coincided almost perfectly with the rising 10-week moving average

• That type of weekly reversal significantly reduces downside risk and from a broader perspective, small caps still look capable of pushing back toward the 257 area, and potentially higher.

• That said, we are likely seeing a rotation underway:

  • Nasdaq breadth is accelerating

  • Liquidity appears to be rotating back into mega-cap tech and AI

• As a result, small and mid-caps may see increased volatility as capital shifts, even if the higher-timeframe trend remains intact.

FOCUSED STOCK
MSFT: Friday Was Extremely Bullish

ADR%: 1.6% | Off 52-week high: -12.2% | Above 52-week low: +41.7%

• Microsoft delivered a very powerful session on Friday, printing just under 300% relative volume on a red hammer candle, which is exactly the kind of signal you want to see when demand is stepping in with intent.

• Buyers showed up precisely at the rising 10-day and 20-day moving averages (≈482–485), reinforcing that short-term trend support is being defended aggressively.

• This also aligns with the successful test of the 50-week moving average earlier in the week (~472), a level MSFT has now held consistently since mid-November.

• From an intermediate-term perspective, the weekly structure resembles a controlled consolidation / bear-flag-type structure, but the context matters: this is occurring alongside re-acceleration in Nasdaq leadership and AI-related breadth.

• The weekly volume expansion is the standout feature here at ~155% of the 20-week average which strongly supports the idea that this is accumulation despite the recent volatility.

• While MSFT is not the fastest RS leader in the Nasdaq, it sits in a high-asymmetry zone, where downside appears increasingly defined while upside participation improves with broader tech strength.

• From a trading perspective, this is exactly the type of name you want on the radar when markets rotate back toward quality, liquid, mega-cap AI exposure with favorable risk-reward.

FOCUSED GROUP
PBW: Clean Energy Ready To Breakout

• Clean energy continues to compress tightly on the weekly timeframe, with higher lows in place since mid-November, signaling a clear contraction phase.

• Last week’s price action was especially constructive, as PBW bounced cleanly off the 200-week moving average (~30) at a level that often defines long-term regime shifts.

• The weekly candle printed a narrow-body red hammer, highlighting seller exhaustion and stabilizing demand right at a major structural support.

• What stands out most here is the character change: instead of sharp rejection below long-term averages, price is now consolidating directly on top of the 200-week, which is a materially different behavior.

• This type of long-duration compression at a major moving average often precedes powerful expansion phases, especially when broader risk appetite improves.

• With capital rotating back into growth and thematic areas, clean energy is beginning to quietly rebuild a base, rather than chasing upside momentum prematurely.

• Within the clean energy complex, solar (see TAN ETF) stands out as a sub-group to monitor closely as leadership begins to re-emerge.