The TML Talk | February 26th, 2025

Market Overview

• Indexes and General Market Trend:
  • The NASDAQ 100 is trading under its 50-day and 65-day exponential moving averages, showing choppy, gappy action with no clear direction—could test the 200-day soon or bounce back toward 530 in a few days.
  • The S&P 500 broke below its 50-day and 65-day EMAs three days ago and remains weak, reflecting broader uncertainty and a lack of conviction after last week’s broad leadership faltered.
  • Small caps via IWM aren’t offering much comfort—undercutting recent lows and closing near intra-day lows, suggesting it’s stuck in no-man’s-land, but also not necessarily dead yet.
• Current Market Status:
  • The market’s flipped from last week’s broad, bullish setups to a rotational phase with a defensive tilt—traditional growth names like tech and semis are crumbling, while safer sectors like REITs, restaurants, and industrials hold up.
  • China’s on fire—stocks like $BABA, $LI, and $XPEV are showing immense power, driven by institutional volume, but most are extended after sharp runs, making them tough to chase.
  • Big, steady names—$V, $MA, $ORLY—carry a premium for their stability, while volatile leaders like $SNOW and $PLTR flirt with make-or-break levels post-earnings.
  • Volatility’s spiking with uncertainty in the air—post-election noise, tariff talks, or just market fatigue could be culprits, but the tape’s telling us to wait and watch rather than guess.

Key Lessons & Quotes

• “Last week, I’d have bet the farm on leadership kicking off something big—everything looked so broad and strong. Then, bam, it’s the exact opposite in a heartbeat. That’s why you don’t buy based on a feel-good vibe—watch the stocks, not my optimism. The market doesn’t care what I think, and it’ll humble you fast if you forget that.”
• “China’s got this huge bid under it—look at $BABA’s power or $LI outpacing $TSLA. It’s screaming strength. You can’t ignore it—volume’s legit, and it’s not your grandma buying. It’s institutions. Just don’t chase it up 80% in two months unless you’ve got a plan and a stop.”
• “Discretion’s the better part of valor right now—Bill O’Neil taught me that. When the market’s under its averages and leaders are breaking, you don’t need to swing. I didn’t trade a share today—watching $RACE tank late after eyeing it all day reminded me: sit tight, let it prove itself. There’s no edge in this chop.”
• “Weekly charts are my sanity check—$MNDY’s daily looks whippy, but the weekly smooths it out, shows the strength. Bill was big on counting accumulation versus distribution there. If you’ve got more distribution in a base, toss it—find something with power to the left. It’s not just noise; it’s context that keeps you grounded.”

Actionable Takeaways

• Stick to the Tape: Forget news or gut calls—watch what stocks and indexes do, not what you think they should. Leaders breaking or holding will tell you everything.
• Wait for Clarity: With markets under key averages, hold off on big bets—let stocks like $PLTR at the 50-day or $MNDY at the 23-day prove they can bounce first.
• Eye Defensive Strength: Look for tight setups in safer areas like REITs ($AHR) or restaurants ($EAT)—they’re holding up, but don’t chase extended monthly charts.
• Track China’s Power: Keep $BABA, $LI, $XPEV, and others on radar—extended now, but a pullback with volume could signal a buy if the theme persists.
• Protect Capital: In this volatility, tight stops (e.g., 1% below the 50-day) and smaller sizes are key—build a cushion to ride the whip without blowing up.

Stock Mentions and Commentary

Communication Services – Internet Content & Information:

• $SE: Holding above the 50-day after a shakeout; liquid with stellar estimates—close to actionable if it tightens further. Massive multi-year run from 100 to 600.
• $SPOT: Gapped above the 23-day and ran today; extended but a leader holding up well—watch for a rollover or another leg up.

Consumer Discretionary – Automobiles, Household Durables, Specialty Retail:

• $AS: Huge volume off the 21-week—textiles winner, actionable in a stronger market.
• $ATAT: Chinese travel ADR with an IPO U-turn flag; whippy but powerful—monitor liquidity and group momentum.
• $BABA: Chinese e-commerce titan with unreal power; up 80% in weeks—volume’s legit, but too steep to chase now.
• $CVCO: Household durables champ; holding up in a safe group—monthly’s extended from 200 to 550, but daily’s tight. Bullish in a better market.
• $EAT: Restaurants soldiering on; steady with group strength—safe play outpacing growth names.
• $JD: Chinese retail beast; whippy but powerful—monthly’s beaten down, daily’s roaring. Theme’s alive.
• $LI: Chinese EV powerhouse; massive volume and strength vs. $TSLA—too extended to buy, but don’t ignore the theme.
• $LTH: Gym stock off the 23-day that broke out of a Launchpad setup earlier in the run; shines across timeframes—needs a better market.
• $ORLY*: Auto parts leader; best of the safe bunch—uptrend’s patient but solid. Risk-off winner.
• $XPEV: Chinese EV with gaps and juice; ADR volatility—monitor for a setup in the China surge

Energy – Oil & Gas Equipment:

• $INVX: Energy equipment IPO; big earnings gap—not liquid yet, pairs with $SEI on radar.v
• $SEI: Energy name on radar; wide but stirring—needs tighter action to join the rotation watchlist.

Financials – Credit Services & Real Estate:

• $AHR*: REIT standout; tight across all timeframes—liquid with a clear stop at the Green Line. Safety play shining.
• $MA*: Tight, liquid, respects moving averages; high-rate environment winner—personality Ross loves for steady growth.
• $V*: Classic chart with tight action; premium for stability—lacking in traditional growth but hard to ignore.
• $WELL*: REIT holding up; clean chart showing real estate strength—not a trade for Ross, but signals risk-off rotation.

Health Care – Biotechnology & Pharmaceuticals:

• $ABBV*: Pharma titan shaping up; group rotation contender—watch for a lift.
• $EXEL*: Biotech near actionable; tight above the 50-day—group could save the market if tech fades. Watch for a breakout.
• $GILD: Pharma power play; steady all-around—potential market saver.
• $JAZZ: Weekly/daily extended but solid; biotech showing strength—nothing spectacular, but worth tracking.
• $MDGL: Biotech at all-time highs; extended mover—daily’s rough, weekly’s fire.
• $ZLAB: Chinese biotech with juice; power’s real—track as health care heats.

Industrials – Machinery & Energy Equipment:

• $GDS: Chinese data center play; powerful but whippy—fits the China bid, needs focus.
• $INOD: Tech services mover; earnings gap today—thin but notable in energy/industrial mix
• $JBHT: Food processing safety play; undercut with huge volume—IPO breakout potential in a better market.

Information Technology – Software & Semiconductors:

• $CHKP: Cybersecurity leader still holding; slower but steady—big-cap stability over flashier names.
• $CWAN: Software holding up; tight action—quietly resilient amid tech’s wobble.
• $MNDY: Whippy software star; undercut a gap, broke declining tops with highest volume ever—best-looking tech today.
• $NVMI: Rare semi holding the 23-day; fighting to stay alive—watch if it leads or craters with the group.
• $PLTR: Teetering at the 50-day post-break; liquid leader—needs a bounce to regain trust. Tough buy now.
• $SAP*: Big, slow ADR winner; all timeframes glow—stable tech few hype.
• $SNOW: Post-earnings at 181 after hours; AI name at resistance—watch for a gap-and-go or sell-the-news fade.
• $SSNC*: Tech one-off holding the 50-day; steady software for financials/healthcare—nothing flashy but notable.

Materials – Metals & Mining:

• $AEM*: Gold play holding up; clean, liquid chart—flight-to-safety vibe, though not always defensive.
• $MT: Steel name on watch; steady but unexciting—materials quietly holding.

ETFs & Miscellaneous:

• $KWEB: Chinese stocks ETF with power; not set up but screaming strength—confirms the China theme.
• $SMH: Top gainer today but holdings look broken; semi rally feels shortable—watch for leadership clues.
• $BRK.B: Buffett’s cash pile breakout; huge volume on earnings—safe portfolio signal when risk is off.

Ross’ Watchlist

• Communication Services: SE SPOT
• Consumer Discretionary: BABA CVCO EAT JD LI LTH NATH ORLY* XPEV
• Energy: SEI
• Financials: MA* V*
• Health Care: ABBV* EXEL* GILD MDGL ZLAB
• Industrials: GDS INOD JBTM
• Information Technology: CHKP* CWAN MNDY* NVMI PLTR SAP* SNOW SSNC*
• Materials: AEM* MT
• Real Estate: AHR* WELL*