The TML Talk | May 18th, 2025

Consumer Staples:

Market Overview

• Indexes and General Market Trend:
  • The NASDAQ and S&P 500 each rose five consecutive days into week’s end, confirming a clear shift in tone from tentative strength to developing leadership. The NASDAQ emerged as a relative leader, breaking above short-term resistance with volume increasing, and closed the week extended above short-term moving averages. The S&P 500 followed, reclaiming the 200-day SMA by Friday’s close, though volume confirmation remained moderate.
  • Small caps via $IWM remain below key long-term averages but continue to improve, closing higher four out of five days. The Dow, still muted and range-bound, underperformed growth-led indexes, reflecting a market rotating toward more speculative and thematic sectors. Broader confirmation came through software, education, and select healthcare sectors showing multiple tight patterns and accumulation.
• Current Market Status:
  • A confirmed rally is in place, bolstered by rotation into growth sectors such as cybersecurity, fintech, and high-beta consumer names. Stocks like APP, PLTR, and HIMS are forming or extending constructive bases, while leaders like TSLA and BROS now trade well above moving averages—highlighting the shift from initial breakouts to second-wave setups.
  • Moody’s U.S. credit downgrade triggered a post-market reaction, yet futures held and began rallying Sunday night—suggesting a temporary volatility event more than a trend-changing catalyst. Historically, downgrades have proven to be lagging indicators, and the backdrop of strong earnings, double follow-through confirmation, and expanding leadership supports a bullish bias until proven otherwise.
  • Volatility remains elevated, and gaps lower are possible, but the dominant trend remains intact. Traders should be prepared for sharp intraday reversals, but also ready to act on strength as leading groups continue to broaden and constructive patterns emerge across multiple sectors.

Key Lessons & Quotes

• “We’re at the point now where I can finally say we are seeing clear groups lead. They might not be the most exciting—educational services, aerospace defense, that sort of thing—but now we’re starting to see software join. And rather than it just being everything software, I can start to see cybersecurity starting to shape up very clearly. I’m seeing some enterprise software names starting to shape up. So, as the Robloxes of the world get extended way above their 10-day and need to take a break, hopefully that money rolls into all the ones that are setting up now.”
• “Moody’s downgraded the U.S. at the end of the day Friday. If you’re watching after hours, everything sold off. But the two prior downgrades weren’t coming off a double follow-through day with brand new leadership and a broadening tape getting healthier under the surface. I have no idea what’s going to happen Monday, but my plan is simple: I’m going through my portfolio to make sure I know exactly where I’m getting out of each stock. No more than 8%. That’s my line. My goal is to not get knocked around—so I can add on weakness if the setups allow.”
• “It’s amazing how similar this is to that scene in the movie 21. You either have a hot deck or you don’t. When the deck is hot, even hands that usually don’t work start working three times in a row. And that’s the kind of tape we’re in. If you’re patient enough to wait for the hot deck and you’re selective with your entries and your sell stops, it becomes easy not to lose money. And then making money becomes much easier as the market goes your way.”
• “If I could go on a Mediterranean vacation for three weeks, come back and pick my spots—I think I’d be fine. There are that many bases forming now. I’ve seen enough over the last couple of weeks that I can say, this doesn’t look like a narrow rally anymore. It’s expanding. The setups are getting better. And I’d rather be ready to buy into volatility than sell because of it. This downgrade may end up being one of those things where the headlines were scariest right as the market was bottoming.”

Actionable Takeaways

• Use Logical Stops on Gap Down Opens: Set and honor hard stops below key moving averages or 7–8% max drawdowns to prevent losses from compounding if volatility accelerates.
• Identify Add Points into Support: Focus on names that show RSNHBP behavior while testing 10-day, 21-day, or 50-day moving averages with constructive intraday reversals.
• Track Sector Confirmation Closely: Focus on groups like software, cyber, education, and footwear where multiple names are forming similar bases, showing institutional alignment.
• Watch Rotation Away from Extended Names: Names like TSLA, RBLX, and CRWV are extended; capital may rotate into secondary setups such as PLTR, CLS, and APP if markets digest gains.
• Require Volume on Breakouts: Ensure breakouts come with volume above the prior day—even if below average—to confirm conviction and avoid low-volume traps.

Stock Mentions and Commentary

Communication Services – Broadcasting, Streaming & Internet:

• $NFLX: Strong post-earnings leader, holding above 10- and 21-day EMAs. RS line remains firm, but extended—needs light-volume pullback to base top for a lower-risk entry.
• $SPOT: Shook on earnings, then recovered—now flagging constructively above 21-day. Volume trend is mild; watch for reclaim of prior highs on volume.

Consumer Discretionary – Restaurants, Education, & Leisure:

• $BROS: Tight consolidation post-earnings; one of the group’s most orderly bases. RSNHBP and volume trends suggest it’s viable above the short pivot.
• $ONON: Footwear standout with strong revenue trend. Tightening under highs—weekly shows base-on-base structure; actionable on breakout if volume aligns.
• $RIVN: Still whippy with character flaws—lags peers, under prior resistance. Needs volume surge and tightening action to improve.
• $TSLA: Cleared $340 pivot on strong volume; now extended. $334 low from Thursday is key support—potential add on orderly pullback to 10-day.
• $XPEV: Setting up on weekly timeframe—constructive volatility contraction forming. RS improving; watch for high-volume breakout confirmation.
• $ZK: Illiquid but tighter than peers; forming structure near highs. Needs volume confirmation to break above consolidation range.

Consumer Staples – Specialty Retail:

• $SN: Recent shakeout followed by tight action—robotics and kitchen segment name. Could build a second-stage base; watch volume near breakout level.

Energy – Utilities & Nuclear:

• $NRG: Defensive energy name in strong uptrend. Holding 21-day after multi-week move; viable if group rotation persists.
• $OKLO: Recent IPO tied to nuclear theme—volume rising but still erratic. Watch for defined base before considering.
• $SMR: Strong action in nuclear group—tight weekly range under highs. Holds rising 10-day; RS line nearing highs.

Financials – Capital Markets, FinTech & Insurance:

• $COIN: Highest volume in company history on recovery from ransomware headline. RSNHBP; viable on breakout continuation or retest of 10/21-day confluence.
• $HOOD: Acting well—tight daily, holding short-term MAs. RS improving; could trigger above near-term resistance on volume.
• $LMND: Best structure in insurance space—tight above 21-day with RSNHBP. Buyable on breakout with stop below short-term low.
• $OSCR: Wide and loose, though recent closes above 200-day are constructive. Still needs a character shift and tighter base.
• $ROOT: Trending near highs; earnings ramp intact. Constructive base forming—needs volume through pivot to confirm.

Health Care – Biotech & Pharmaceuticals:

• $BCRX: Post-earnings flag above gap-up level. Tight and liquid; among few biotechs with earnings. Watch for continuation signal.
• $BPMC: Attempting to break long consolidation base. Less liquid—needs volume and RS confirmation to trigger.
• $GILD: Monthly handle forming below base top; 50-day reclaim could confirm move. Large cap with institutional sponsorship.
• $GRAL: Wide and volatile, but weekly/monthly pattern tightens. Watch for support around 21-day to form defined pivot.
• $HIMS: Highest volume ever post-product launch. Extended, but viable on pullback to 10-day if support holds.
• $RPRX: Quiet consolidation after uptrend. Holds rising MAs; buyable on breakout through short-term highs.
• $VRNA: Riding 21/23-day since Jan. RSNHBP forming; viable above short pivot if volume aligns.

Industrials – Construction & Ground Transportation:

• $LYFT: Lags Uber significantly—still in a Stage 1 range. Volume improving, but below resistance; better names elsewhere.
• $ROAD: Strong RS in infrastructure group—tight above 10- and 21-day. Setting up near short-term breakout zone.
• $UBER: Among best liquid leaders—trending above rising MAs. RSNHBP, viable on support or flag breakout.
• $WRD: Poor technicals, but linked to Uber via AV partnership. Volume rising off lows—watch for defined base.

Information Technology – Cyber Security, Gaming, & Software:

• $APP: Software name with RSNHBP forming under $417. Tight range post-earnings; viable if volume confirms breakout.
• $CLS: Semiconductor with breakout past double-bottom pivot. Held gains above rising 10-day—volume constructive.
• $CRWD: Cybersecurity leader still trending above 10-day. Extended short-term—watch for retest or handle to develop.
• $MSTR: Bitcoin proxy—moves in tandem with crypto. RSNHBP setup; could follow IBIT or BTC trend for next entry.
• $NVDA: Mega-cap semi regaining momentum. Above 10/21-day with improving RS; earnings ahead—volatility likely.
• $PLTR: Tight daily range just below prior highs. RS line building; viable breakout watch as group rotation builds.
• $SITM: Under-the-radar semi reclaiming highs—volume light but consistent. Needs RS pop and group support to confirm.

Thematic ETFs – Cryptocurrency & Quantum:

• $IBIT: Tracks BTC directly—constructive base forming. RSNHBP visible; buyable on volume breakout or pullback into 21-day.
• $BITU: Leveraged BTC proxy; viable only for short-term exposure. Pricing decay risk high—tight stops required.
• $QTUM: Quantum ETF—tracking group trend. Light volume; best used as thematic confirmation, not primary trade vehicle.

Ross’ Watchlist

• Communication Services: NFLX SPOT
• Consumer Discretionary: BROS EBAY EPSM GRPN LOPE LRN ONON TSLA XPEV
• Consumer Staples: CHEF
• Financials: COIN HOOD LMND OSCR SOFI TOST
• Health Care: BCRX BPMC GILD GRAL HIMS RPRX VRNA
• Industrials: LYFT PSIX ROAD UBER
• Information Technology: APP CLS CRWD LIF MSTR NET PLTR QBTS SITM SNOW TSSI TTAN TWLO
• Materials: TGLS
• Thematic ETFs: IBIT BITU QTUM
• Utilities: GEV NRG OKLO