The TML Talk | May 11th, 2025

Market Overview

• Indexes and General Market Trend:
  • The NASDAQ looks set to gap higher Monday morning following positive headlines on a U.S.-China tariff deal, testing key resistance at the 200-day moving average. Leadership breadth continues to expand, supported by strong action in technology, communication services, and crypto-related stocks. Bitcoin’s breakout to new highs above $104,000 adds to the risk-on tone, but volume remains light, suggesting potential for early volatility.
  • The S&P 500 mirrors the NASDAQ’s structure but remains slightly weaker, holding just below the 65-day exponential moving average.
  • Small caps, via $IWM, continue to lag, trading well below the 200-day moving average and struggling to reclaim the declining 65-day exponential moving average.
  • The Dow shows similar weakness, struggling to hold key moving averages with wider swings. Sector rotation favors software, biotech, and aerospace & defense.
• Current Market Status:
  • Market health has strengthened since the recent follow-through days, but many leading stocks are now extended. Earnings season remains a key risk, with multiple high-profile reports this week. A healthy pullback to the 10-day or 21-day moving averages would offer better setups. Continued rotation into new groups will determine whether the rally can sustain momentum or fade after the gap.

Key Lessons & Quotes

• “We’re set to gap higher Monday morning on China tariff headlines, but the real test is whether that strength holds after the bell or gets sold into.”
• “Leadership continues to expand, and that’s the clearest signal of market health. Watch what the leaders are doing—price always tells the truth.”
• “You’ve got popular names like Tesla, PLTR, and Netflix grabbing attention, but the quieter, less obvious stocks often work better.”
• “There’s no edge in holding through earnings without profits. I don’t care how perfect the setup looks—if earnings are tomorrow, you’re gambling, not managing risk.”
• “Use the gap up as information. If your leading stocks aren’t moving with the market, that’s a sign to shift your focus. Don’t waste time on laggards.”
• “When you find stocks respecting the 10-day or 21-day moving averages, those are the spots to build size and manage risk. It makes trading easier and more repeatable.”

Actionable Takeaways

• Avoid Earnings Gambles: With earnings season ongoing, sidestep large positions in stocks reporting this week unless holding significant profits.
• Wait for Post-Gap Setups: Use Monday’s gap as information. Avoid chasing extended names. Wait for pullbacks or consolidations near key moving averages.
• Focus on Liquid Leaders: Target stocks showing tight action above the 10-day or 21-day moving averages with increasing volume on support holds or breakouts.
• Monitor Group Strength: Software, biotech, and aerospace & defense lead. Watch for secondary setups within these sectors and confirmation from group peers.
• Scale Gradually: Start with small positions (5–10%) and add only if the stock confirms strength with volume and price expansion.
• Stay Disciplined on Exits: Manage positions around the 10-day or 21-day moving averages. Do not let winners turn into losers.

Stock Mentions and Commentary

Information Technology – Software & Cybersecurity:

• $APP: Post-earnings breakout holding gains above 10-day; watching for launch pad consolidation to develop with volume.
• $CRWD: Building handle on long-term base; monitoring for breakout through recent highs with confirming volume.
• $FTNT: Weak post-earnings action; relative strength fading but still monitoring if group rotation continues.
• $IONQ: Quantum computing leader extended after breakout; monitoring for consolidation near 10-day or 21-day.
• $OKTA: Stage-two breakout holding gains; constructive setup forming above 21-day moving average on light volume.
• $OSIS: Extended IT name with strong trend; wide and loose personality makes it a lower priority.
• $PLTR: Double-bottom with handle forming; AI and data analytics leader watching for position build above 21-day.
• $QBTS: Explosive move last week on strong volume; extended but watching for secondary consolidation to develop.
• $RBRK: Cybersecurity IPO showing leadership; monitoring for first pullback to 10-day moving average for low-risk setup.
• $RGTI: Tight setup ahead of earnings; small position taken with stop below bunched support levels.
• $ZS: Extended security leader; needs to tighten above 10-day to set up next viable entry.

Communication Services – Internet Content & Entertainment:

• $SPOT: Post-earnings breakout holding above 10-day; watching for tight consolidation to trigger next entry.
• $NFLX: Leading liquid growth name near highs; extended but remains a priority on secondary setups.
• $RBLX: Constructive action post-earnings with tight closes; positioned for potential continuation higher.

Consumer Discretionary – Automobiles & EVs:

• $TSLA: Testing 200-day resistance after multiple rejections at $300; small position held with defined risk.
• $RIVN: U.S.-based EV manufacturer improving on volume; watching for breakout above key moving averages.
• $XPEV: Chinese EV stock showing relative strength under 50-day; watching for breakout above declining resistance.
• $ZEEKR: Low-priced Chinese EV showing strong move; speculative continuation watch with volume confirmation.
• $CVNA: Volatile leader forming high handle; monitoring for breakout or pullback to 10-day for defined entry.

Financials:

• $HOOD: Extended post-earnings move into resistance; watching for digestion near 10-day moving average.
• $COIN: Riding crypto momentum with Bitcoin at highs; monitoring for pullback to key moving averages.
• $CVNA: High handle forming with wide ranges; watching for breakout or pullback to 10-day support.
• $TOST: Strong post-earnings move holding gains; extended but monitoring for secondary consolidation setup.
• $DAVE: Low-float earnings mover; extended now but watching for base development after large breakout.

Health Care – Biotechnology and Pharmaceuticals:

• $CDXC: Speculative low-float biotech showing early accumulation; watching for improved liquidity before entry.
• $DOCS: Pre-earnings setup holding tight near 50-day; waiting for post-report clarity before committing.
• $GRAL: Small-cap biotech leader showing power; watching for secondary setup near 10-day moving average.
• $HALO: Pullback after breakout; watching for tightening action near moving averages for re-entry.
• $TEM: AI-driven health tech name showing higher lows on weekly chart; watching for breakout confirmation.

Industrials – Aerospace & Defense:

• $DRS: Extended but leading aerospace name; watching for pullback to 10-day or 21-day for possible entry.
• $ERJ: Volatile defense name showing leadership; monitoring for secondary continuation pattern to form.
• $ESLT: Extended but holding strong trend; watching for high-tight flag continuation if volume improves.
• $KRMN: Defense IPO tightening near highs; monitoring for breakout continuation in strong aerospace sector.
• $TTAN: Strong IPO pulling back to prior breakout area; monitoring for confirmation of support and continuation.

Materials:

• $AEM: Gold miner holding near highs; watching for tight action near support before re-entry.
• $AGI: Another gold miner near highs; monitoring for consolidation to build better entry.
• $FNV: High-priced gold leader with smoother trend; watching for support hold near moving averages.

Utilities:

• $GEV: Utility leader focused on AI power infrastructure; holding strength, high-priority watch for continuation.
• $NNE: Nuclear energy peer with earnings risk; waiting for post-report confirmation to assess strength.
• $OKLO: Nuclear power leader with earnings risk this week; watching for post-report setup opportunity.
• $SMR: Similar structure to OKLO with earnings risk; monitoring for constructive post-earnings action.

ETFs

• $IBIT: Bitcoin ETF trading near highs; monitoring for continuation alongside broader crypto trend.

Ross’ Watchlist

• Communication Services: RBLX SPOT AEM EGO LZMH GEV OKLO
• Consumer Discretionary: CVNA TSLA XPEV
• Consumer Staples: HOOD TOST
• Financials: HOOD TOST
• Health Care: ABT CDXC DOCS GRAL HALO MCK TEM WAY
• Industrials: DE DRS ERJ ESLT KRMN LOAR NNE PSIX
• Information Technology: APP CYBR OSIS PLTR RBRK RGTI SNOW TTAN ZS
• Materials: AEM EGO
• ETFs/SPAC: IBIT LZMH
• Utilities: GEV OKLO