MARKET ANALYSIS
Here’s All You Need To Know

• Yesterday’s session was weaker beneath the surface than the headline indices suggested. While some benchmarks hovered near highs, there was a noticeable increase in failed moves, intraday reversals, and breakouts that could not hold. That internal behavior matters far more than where the S&P or Dow closed.

• We saw a growing number of turnarounds and failed follow-throughs across previously strong names, particularly in parts of large-cap and mega-cap tech. These were not aggressive selloffs, but they were clear signs of supply stepping in at higher levels and momentum stalling.

• Futures are softer again this morning, extending that theme of digestion rather than continuation. This is coming after a strong start to 2026, and the market is now clearly transitioning from directional momentum into a more selective and rotational environment.

• Macro headlines remain active, but markets continue to treat them as secondary. Geopolitical developments around Venezuela and U.S. control over oil output created noise, yet oil prices remain contained, reinforcing that this is not being priced as a systemic risk event.

• What is increasingly relevant is event risk. Traders are now positioned ahead of Friday’s December jobs report, which will be one of the first major economic “reality checks” of the new year. With prior labor data showing signs of cooling late in 2025, this report carries outsized importance for rate expectations and short-term positioning.

• Adding to that, a potential Supreme Court ruling on the legality of Trump-era tariffs introduces another near-term uncertainty point, particularly for globally exposed sectors, commodities, and industrial supply chains.

• CES continues to shape sentiment inside technology, but the reaction is becoming more differentiated. AI remains the dominant narrative, yet capital is no longer flowing uniformly into the largest names. Instead, we are seeing selective strength and rotation, with some tech stocks pushing while others fail outright.

Nasdaq

56.86%: over 20 EMA | 53.92%: over 50 EMA | 60.78%: over 200 EMA

• The QQQ printed a gravestone doji at highs, which on its own carries only about a 51% probability of a meaningful reversal. Statistically, that makes it a weak signal in isolation. That said, this candle formed directly into a known supply zone around 628.

• Price pushed into that supply, failed, and retraced roughly 0.7% from the highs. Relative volume on the session was not particularly elevated, but the structure itself does resemble a failed push rather than a clean breakout.

• From here, the most likely path is a short-term mean reversion lower of roughly 0.8%, bringing price back toward the rising 10-day EMA and the point of control near 621.

• Importantly, this does not invalidate the broader intermediary trend. The NASDAQ remains in a very tight contraction, but this attempt higher has so far acted as a bull trap rather than a continuation move.

• The key level to watch now is the 10-day EMA. If price pulls back into that level and holds, the structure remains constructive. However, a failure of the 10-day EMA would materially change the near-term risk profile.

• In that scenario, the next viable demand zone sits around 613.42, which aligns with the rising 50-day EMA, the 10-week EMA, and the lower demand zone we have marked. That would imply roughly a 1.65% downside move from current levels.

• One of the most important tells here is the divergence versus the equally weighted NASDAQ. The QQQE continues to hold its breakout and is flagging at all-time highs, while the cap-weighted QQQ is struggling to gain traction.

• This is a clear signal that technology as a sector is not weak, but leadership is highly capitalization-dependent. Mega-cap and large-cap tech are lagging, while smaller and mid-sized tech names are quietly carrying strength.

• From a positioning standpoint, this reinforces the idea that if you are looking for tech exposure, it makes sense to move down the capitalization curve rather than forcing trades in the largest names.

S&P 400 Midcap

64.16%: over 20 EMA | 69.17%: over 50 EMA | 61.90%: over 200 EMA

• The mid caps remain the strongest index we track, and yesterday’s pullback did nothing to damage that view. Price contracted at highs without undercutting Tuesday’s lows, which is a critical detail. A failure there would have been a much more concerning signal.

• Relative volume on the pullback came in around 88%, which is muted and consistent with healthy consolidation rather than distribution. On the weekly timeframe, volume is already expanding meaningfully, and with two full sessions remaining, the MDY is on track to exceed the volume seen during the week of December 15.

• Structurally, this still looks like an intermediary trend breakout that is digesting gains. The ideal outcome from here is continued sideways action at highs, forming a tight flag. That would keep momentum intact and offer higher-probability continuation setups.

• A deeper pullback that takes out Tuesday’s lows would represent roughly a 1.17% move lower. While that is not our base case, recent market action has been erratic enough that it cannot be ignored entirely. For now, though, the mid caps remain the clear leader.

Russell 2000

49.53%: over 20 EMA | 62.07%: over 50 EMA | 62.33%: over 200 EMA

• Small caps also showed relative strength yesterday. While the IWM experienced a wide intraday range of roughly 1.1%, the move lower was met with immediate demand near 254. That response produced a red hammer candle and a sharp intraday recovery of about 0.6%.

• That type of price action is constructive, especially when viewed in relative terms versus the broader market. Demand showed up exactly where it needed to, and the structure remains intact.

• This is where a lot of traders get misled by headlines. When mainstream commentary talks about the market being weak or consolidating, it is usually referring to the SPY or the QQQ. It is rarely a statement about the market as a whole.

• When you break the market down by capitalization, the picture is very different. Mid caps and small caps continue to outperform, and that strength is clearly visible in the MDY, the IWM, and reinforced again by the behavior of the QQQE.

FOCUSED STOCK
SSRM: The Number 1 Precious Metals Name

ADR%: 4.78% | Off 52-week high: -14.5% | Above 52-week low: +216.1%

• Our focus stock today is SSRM, a precious metals mining name with primary exposure to gold. Structurally, SSRM continues to behave exactly how you would expect a strong trend-following name to behave during a consolidation phase.

• Following the sharp expansion after earnings in the week of December 3, the stock has built a series of higher lows and held firmly above its rising 20-week EMA. Last week’s pullback found support precisely at that level around 20.82, reinforcing it as a clear demand zone.

• Since then, price has continued to compress, with both range and volume tightening meaningfully. This kind of contraction, particularly when it occurs above rising moving averages, is typically constructive rather than concerning.

• SSRM also offers meaningful momentum. Its ADR sits just under 5%, making it an efficient vehicle when precious metals move. As gold and silver consolidate near their highs, these are exactly the types of miners we want to track closely for continuation opportunities.

• Zooming out further, the longer-term context remains very strong. SSRM broke out aggressively in early August, rallying roughly 110% from that base. Since December 2024, the stock has not closed below its 20-week moving average, which speaks to the strength of both the primary and intermediary trends.

FOCUSED GROUP
XBI: Biotechs Leading Once Again

• Biotech saw a decisive breakout yesterday, accompanied by exceptionally strong participation. Relative volume expanded to roughly 185% on the session, which immediately puts this move into the category of institutional-grade activity rather than short-term noise likely of a bull trap.

• Price pushed cleanly through the point of control at 122.72, which also aligned with the 10-day EMA. More importantly, this breakout followed a successful rebound off the rising 10-week EMA earlier in the week. That bounce matters, as it reaffirms the intermediary trend and confirms that longer-term demand is still active in the group.

• From a weekly perspective, volume is expanding meaningfully. We are already trading at roughly 79% of the 20-week average volume with two full sessions still remaining. At this pace, biotech is likely to finish the week with the highest volume since early December, potentially exceeding the week of December 8, which marked the last notable participation peak.

• Relative strength for the group is currently sitting around 92, which is notable given how choppy and selective broader growth has been. While technology and other high-profile growth segments continue to struggle with follow-through, biotech has quietly produced a steady stream of tradable momentum names.

• This has been a recurring theme. Healthcare broadly, and biotechs in particular, have attracted consistent speculative interest at a time when many traders are overly focused on mega-cap tech. The result has been persistent upside in areas that are often ignored or avoided.

• The primary risk to be aware of in biotech is event-driven volatility. Many of these stocks move on trial data, FDA decisions, or unexpected announcements rather than traditional earnings cycles. Any exposure here needs to be sized appropriately, with a clear understanding of upcoming catalysts.

• That said, from a pure price, volume, and relative strength perspective, biotech is acting like a leadership group and deserves attention.