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OVERVIEW
Market Breakdown: An Acceleration Lower

Starting with the macro economic outlook, the trade war continues to keep investors on edge as the future of tariffs remains uncertain. President Trump’s recent decision to pause tariffs on automakers from Mexico and Canada provided some temporary relief, but the looming 25% tariffs are still in place. There are now discussions about possible exemptions for agricultural products, but the real issue isn't just the tariffs themselves—it’s the confusion and lack of clarity surrounding them. With such uncertainty, the market is struggling to understand what to expect next, leaving investors uncertain about how to properly price the risks.

In the midst of this economic confusion, there is some good news: 221,000 Americans filed for unemployment benefits last week, which is lower than expected. This suggests fewer people are losing their jobs, offering a positive sign amid all the uncertainty. However, it’s not all good news—continuing claims, which track people who’ve been unemployed for longer, rose by 42,000. This signals ongoing challenges for those still struggling to get back to work.

Nasdaq

Jumping straight into the technicals, there’s been a lot of discussion online about the bounce off the rising 200-EMA on the QQQ over the last two sessions. It’s true that volume was higher compared to previous sessions, and yesterday’s strong close is definitely a positive sign. However, this is where we need to step back and ask ourselves: What’s the prevailing trend? In an uptrend, one or two days of sideways movement or pullbacks don’t invalidate the overall trend. The same logic applies here—we need to see much more positive action before we can get excited about the potential of a meaningful bounce.

Looking at the last three weeks, we’ve actually seen volume accelerating as the market breaks lower, which indicates that participation is increasing on the downside, fueling the ongoing downtrend.

The 200-EMA on the QQQ is indeed an important level to monitor, and while we could potentially see a flag pattern form here—which would be a sign of consolidation—the QQQ is still in a very weak position overall. At this point, there’s no compelling evidence to suggest it’s time to get aggressive on the long side just yet.

S&P Midcap 400

The midcaps are showing a very similar technical setup, with volume ramping up significantly as the MDY continues to break down. It's now trading below its Point of Control (POC) and all of its key daily moving averages, including the 10, 20, 50, and 200-EMA, all pointing toward bad news.

That said, the high-volume bounce yesterday is interesting, and we could see some exhaustion on the selling front, potentially setting the stage for a reversal. However, it's still too early to confirm this as a sustainable change. We need to wait for more price action to develop.

Over the next week or so, the most productive thing to watch for would be if volume starts to decline while the price action stays solid and moves sideways. Alternatively, we could look for a double or triple bottom or an inverse head and shoulders pattern to form. However, we’re still quite a way off from seeing this develop. Patience remains key for now.

Russell 2000

The small caps followed their larger-cap counterparts with a bounce yesterday, continuing from Tuesday's action. While some short-term relief in the IWM and MDY is welcome and not unlikely, the real question remains whether this will evolve into a genuine reversal or just a bear flag before another leg lower. This uncertainty is precisely why trying to time the bottom by going long carries a very low probability of success. The prevailing negative momentum makes it a risky play.

DAILY FOCUS
The Power Of Keeping An Open Mind

The market is a funny place. It’s often when the news reaches peak fear or when bearish sentiment is at its highest that we see reversals. The same holds true for the upside; when optimism is at its peak, that’s when markets sometimes start to turn. The key here is that no one, not even the most seasoned traders, can predict with 100% accuracy when these reversals will happen or what will trigger them.

The AAII Investor Sentiment Survey, which gauges how the average investor feels about the market, clearly shows that bearish sentiment is significantly outweighing bullish sentiment. This suggests we’re likely approaching a one-year bearish high within the next few weeks, with expectations pointing toward the market potentially finishing in the red.

While the sentiment survey is by no means an accurate or precise tool for predicting future market moves, it provides valuable insight into the overall market mood. What’s certain, however, is that the price action (the tape) is telling the story of a Stage 4 downtrending market. All the major indices are breaking lower, and the volume accompanying this breakdown is not decreasing—it’s actually increasing.

It's incredibly important that when you come into each trading session and analyze your daily scans, you don’t enter those sessions with a pre-set bearish or bullish mindset, as that would cloud your judgment and press your opinions onto the market. Instead, come in with a blank slate. Your goal should be to analyze where the money is flowing:

• Is money going into the equities market or out?

• Which themes or groups are trending higher or lower?

• Which stocks are showing the greatest resilience against the downward pressure?

• Are the indices showing a change in character, heavier relative to their recent trend?

It’s helpful to use a notepad and jot down your thoughts throughout the session. This process keeps you objective, allowing you to assess the market's movements based on real-time data rather than emotion. This helps you make better, more informed decisions as you react to the market, rather than trying to predict it based on preconceived notions.

WATCHLIST
The Resilient Few

SVM: Silvercorp Metals Inc.

• SVM (Silvercorp Metals), a silver mining stock, has been building a long-standing Stage 1 base on its weekly chart since late 2022. Recently, we’re seeing a significant surge in both volume and price action, as SVM is nearing a crucial resistance level around the $3.90-$4 range. This marks a key point where the stock is dangerously close to breaking out.

• It’s not surprising to see precious metal-related stocks, whether gold or silver, performing well in the current market environment, especially considering how they typically move inverse to equities. While this dynamic has held true for many years, it’s worth noting that specifically gold’s relationship with equities has shifted recently due to the sheer amount of money printed since the COVID-19 pandemic. However, gold and silver remain safe-haven assets in times of market uncertainty.

• SVM is one to watch closely. A breakout from a two-year-long base represents a major shift in the primary trend direction. If the stock can decisively move past that $3.90-$4 level, it could signal the start of a new bullish phase.

OSCR: Oscar Health, Inc.

• OSCR, a healthcare stock, has been basing since early 2024 and is now in the process of forming a significant base on its weekly chart. The stock has been consistently creating a series of higher lows, showing a clear pattern of linear contraction.

• While it's still too early to consider entering long exposure at this point, OSCR serves as an excellent example of the type of technical chart you want to identify when running your daily scans during a bearish market phase. The higher lows and the overall consolidation reflect potential for a future breakout as the stock builds its base.

• During a market downturn, charts like these are particularly valuable, as they indicate that the stock may be positioning itself for a significant move once broader market conditions improve.