Market Overview
Market indexes experienced significant volatility throughout the week, with the NASDAQ enduring a sharp selloff that tested key moving average support before stabilizing. The major indexes demonstrated concerning weakness on Wednesday, followed by a substantial gap down on Friday that ultimately reversed intraday to reclaim the 50-day moving average. The containment of price action through Friday’s recovery suggests potential consolidation rather than distribution, though the wide and loose nature of recent trading creates elevated uncertainty around near-term direction. The undercut pattern at the 65-day moving average resembles a Jesse Livermore shakeout structure, positioning the market for either a double bottom formation or additional sideways time required for sustainable trend resumption.
Rotational dynamics revealed fragmented sector behavior, with leadership clarity deteriorating significantly from prior weeks. The semiconductor group demonstrated divergent performance, with memory stocks including SanDisk, Western Digital, and Seagate showing superior relative strength while broader chip names experienced selling pressure. Small-cap indexes continued lagging at prior all-time high resistance near the 244 level on the Russell 2000, maintaining patterns of resistance at multi-year breakout zones. Biotechnology and healthcare equipment sectors emerged as relative strength pockets during the volatility, with numerous names exhibiting accumulation characteristics despite broad market weakness. The oil and gas sector displayed surprising resilience, suggesting potential rotation into traditionally defensive areas as growth leadership rebuilds base structures.
Leadership characteristics demonstrated the need for additional base building time following extended advances in numerous former leaders. The absence of clear standout groups setting up traditional growth patterns indicates a market in transition, requiring patience for new leadership to emerge from constructive consolidations. Setup quality trends suggest a minimum two to three week sideways consolidation period necessary before sustainable breakout opportunities develop across multiple sectors. The forward outlook remains conditionally constructive given the lack of failed leadership patterns and the presence of healthy relative strength in select pockets, suggesting current volatility represents normal digestion of gains rather than systematic trend deterioration. However, the inability to identify at least two or three sound traditional growth groups leading with multiple high-quality setups signals caution is warranted until leadership clarity improves.
Key Lessons & Quotes
“When I can’t clearly see the leadership picture while the indexes are healthy, it’s no longer a hot deck to me anymore.”
“You got to have at least two or three sound, traditional groups of growth leading the market.”
“Don’t kick yourself with should have, would have, could have – you likely wouldn’t have done what you think in reality, and if you did, you’re not being honest about the other trades that wouldn’t have worked.”
“Not losing money is such a big deal. Not getting stuck preserves your mental capital and keeps you ready with a clear mind when everything finally sets back up again.”
“Listen, if you’ve found something that’s working for you, keep doing it until it doesn’t. You don’t need to confirm it with anyone if you’re making money.”
Actionable Takeaways
- Prioritize leadership clarity over index behavior, requiring visibility into at least two or three traditional growth groups with multiple stocks setting up high-quality bases before aggressive positioning
- Implement patience-based approaches during periods of fragmented rotation, preserving capital and mental bandwidth for clearer setup opportunities rather than forcing trades in choppy environments
- Monitor for shakeout plus three patterns at key support levels, recognizing these can provide early entry opportunities ahead of traditional double bottom formations for active traders willing to accept higher risk
- Focus position-building strategies on stocks demonstrating exceptional relative strength during market weakness, particularly those holding moving average support while broader indexes test lower levels
- Consider two to three week minimum consolidation timeframes for optimal base development following extended advances, allowing moving averages to catch up and declining tops lines to form tradeable resistance levels
- Rotate attention toward sectors showing accumulation during weakness, particularly biotechnology, healthcare equipment, and memory storage groups demonstrating institutional sponsorship despite market volatility
- Maintain aggravation-free trading approaches by avoiding anticipatory positioning ahead of unclear market resolution, accepting that missing early moves is preferable to suffering whipsaw losses in choppy conditions
Stock Mentions and Commentary
Communication Services
| Ticker |
Setup Description & Key Themes |
GOOGL |
Leading quantum name benefiting from Willow chip catalyst; Holding 21-day and 23-day exponential average confluence after breaking 10-day; Base-on-base monthly pattern from end of 2021 developing stage one A structure; Amongst best holding mega-cap names |
Financial Services
| Ticker |
Setup Description & Key Themes |
HOOD |
Big leader in fintech group with shakeout pattern undercutting support; Potential double bottom formation similar to April pattern; Fifteen times advance from 10 to 150 followed by move from 85 area demonstrates power; Rising 50-day moving average maintains constructive structure; Green line breakout just occurred on monthly |
FIGR |
Blockchain lending IPO showing resilience during market volatility; 50-day moving average near short-term averages creating support confluence |
Technology Hardware & Semiconductors
| Ticker |
Setup Description & Key Themes |
NVDA |
Demonstrating superior relative strength avoiding undercut pattern that broader market experienced; Earnings catalyst approaching this week with potential for significant market impact; Percentage of NASDAQ means its movement heavily influences index direction |
AMD |
Exceptional relative strength through market volatility with wide whippy action becoming new personality; Purple line preference holding support; Historical laggard that tends to catch up powerfully once semiconductor rotation resumes |
MU |
Micron moving with SanDisk and Western Digital as memory storage leaders; Holding up amongst best in semiconductor group alongside storage names |
AVGO |
Semiconductor equipment leader showing similar NASDAQ-like pattern with shakeout plus three potential; OpenAI chip partnership providing fundamental support |
SNDK |
Big leader in storage space showing first instances of selling after extended channel advance; Currently extended requiring additional base time; Overall group strength validates storage theme with this name leading sector |
STX |
Seagate hard drive storage showing massive power; Potential 21-day re-breakout setup developing as second-tier citizen in storage group behind SanDisk and Western Digital |
WDC |
Western Digital stronger than Seagate within storage group; Purple line preference personality with tight consolidation forming; Clear moving average respect characteristics |
Software & Technology Services
| Ticker |
Setup Description & Key Themes |
CRWD |
Leading cybersecurity software name at new all-time highs; Big whippy wide personality but benchmark security software stock; Significantly stronger than ZScaler |
CRDO |
Networking stock with massive move from 20 to 170; Similar market pattern with potential for recovery; Later stage but showing strength with room for continuation |
COMP |
Software name popping up showing potential rotation interest; Cup-shaped base with launch pad pattern; Trades almost 12 million shares providing sufficient liquidity despite nine-dollar price |
FROG |
Software stock with massive monthly base pattern holding up exceptionally well on light volume; Eight-day and 21-week exponential average providing perfect support confluence |
PAY |
Payment software on monthly showing Stan Weinstein stage one into stage two pattern; Potential rotation beneficiary in software group |
Transportation Services
| Ticker |
Setup Description & Key Themes |
LYFT |
Rideshare platform with earnings catalyst and volume coming in; Volume dried up as it pulled back; Full self-drive autonomous theme providing fundamental backdrop; Performance enhancer candidate for swing trading; Liquid enough for active management |
Healthcare & Biotechnology
| Ticker |
Setup Description & Key Themes |
CGON |
Biotechnology IPO with powerful run-up pulling back; Big base on monthly with powerful run versus weekly; No earnings or sales but rather liquid; Filled with up-on-volume screen alongside many biotechs |
GH |
Healthcare stock holding up like champ with awesome revenue stream; Lacks earnings sought but super powerful coming out of constructive area; Relative strength barely budged during market weakness |
INSM |
Another biotech with incredible chart and actual revenues; Love the way it trades; Liquid high-priced biotech with revenues preferred over any other; Gap up one case getting extended but amongst strongest biotechs |
IRON |
Big base working on monthly with second monthly close above weekly resistance; Three weeks tight with volume coming in; Fantastic revenue stream with growth trajectory |
LGN |
Diversified company involved in data centers, semiconductors, life sciences, healthcare, education, and real estate; Engineering services solutions with fabrication and HVAC installation; Earnings before the open with gap up then strength; Diversified exposure across multiple growth themes |
Energy & Solar
| Ticker |
Setup Description & Key Themes |
DQ |
Solar energy name holding up surprisingly well; Wild stock with personality outside typical wheelhouse; Group among those holding up relatively well; Requires swing or day trading approach given volatility |
Precious Metals
| Ticker |
Setup Description & Key Themes |
GLD |
Gold ETF showing one to three week pullback to 10-week line; Could use couple weeks sideways at bare minimum after massive moves; Preference for trading pure gold ETF rather than picking individual mines |
Nuclear & Utilities
| Ticker |
Setup Description & Key Themes |
GEV |
Similar WLDN look but more wide and loose; Four weeks tight holding 21-week exponential average; Relative strength already through average moving through 50-day; Could be real powerhouse if caught on volume with breakeven or one percent sell stop |
Wireless Infrastructure
| Ticker |
Setup Description & Key Themes |
WLDN |
Three-week flat consolidation getting really tight; Holding launch pad with relative strength clear; Stock unfazed while NASDAQ dealt with three difficult days; Four weeks tight at 21-week exponential with earnings and sales; Superior setup compared to other biotechs on list |
