The TML Talk | May 4th, 2025

Market Overview

• Indexes and General Market Trend:
  • The NASDAQ continues its upward push, surviving a mid-week stress test and now nearing resistance at the 200-day moving average. Volume has lightened, and short-term overbought signals from the McClellan Oscillator suggest a potential pause. The 50-day and 65-day exponential moving averages are turning upward, reinforcing bullish momentum.
  • The S&P 500 trails slightly, testing its 50-day and 65-day moving averages with less conviction than the NASDAQ.
  • Small caps, via $IWM, show tighter action and relative strength. The Dow lags, struggling below key moving averages with wider swings. Sector rotation favors technology, education, and biotech.
• Current Market Status:
  • Market health has strengthened, with leadership expanding since the double follow-through days two weeks ago. Many leaders are extended, limiting clean setups. Earnings season adds volatility, with key reports this week posing risks to new entries.
  • Indexes are poised for consolidation near the 200-day resistance. A pullback to the 50-day or 10-day moving averages would be normal, assuming leadership holds. Rotation into new groups will signal whether the uptrend can sustain its breadth and momentum.

Key Lessons & Quotes

• “We saw the official double follow-through day not quite two weeks ago, so we continue to see the health and breadth of leadership improve.”
• “I expect to run into trouble here as we run up into this price overhead, not only the 200-day moving average, but weekly moving average here.”
• “If you have earnings in a day or two, I don’t care how well it’s set up, you’re no longer managing risk, you’re gambling.”
• “Be careful down here because you can wait till three weeks after the follow-through day in mall, you might wind up on the new roadblocks.”
• “The funny thing is I think Mike Webster posted his list from 99, don’t lose money, the power of not losing money is huge.”
• “You want to know what the market’s going to do, what are the leaders doing, are they shaping up in it, that’s what you watch.”

Actionable Takeaways

• Avoid Earnings Gambles: With earnings season ongoing, sidestep large positions in stocks reporting this week unless holding significant profits.
• Focus on Tight Action: Target stocks with tight consolidations near moving averages and clear sell stops. Avoid chasing extended breakouts.
• Scale Gradually: Initiate small positions (5–10%) in new setups, adding only after volume confirms strength.
• Monitor Group Strength: Education, software, and biotech groups are leading. Confirm group momentum before scaling up.
• Manage Psychology: Ignore FOMO and stick to your process. The market will offer setups with patience.

Stock Mentions and Commentary

Information Technology – Software & Cybersecurity:

• $APP: Early breakout attempt; small position taken near 200-day. Watching for launch pad consolidation to form.
• $IONQ: Quantum computing stock showing strength; extended short-term. Monitoring for tighter consolidation.
• $RGTI: Quantum computing name; tight setup with position added. Logical stop below bunched moving averages.

Communication Services – Internet Content & Information:

• $GOOGL: Laggard with diversified growth; signs of bottoming on volume. Interesting long, but not a leader.
• $HOOD: Volatile post-earnings; consolidating near 10-day. Needs tighter action for confident entry.
• $MELI: Strong IPO base; near highs with wide ranges. Monitoring for tighter setup.
• $SPOT: Post-earnings strength; holding above 10-day. Watching for tight consolidation near prior highs.

Consumer Discretionary – Restaurants, Retail, and Leisure:

• $AEVA: Semiconductor-auto hybrid; explosive off bottom. Watching for follow-through strength.
• $CHWY: Tight near 10-day; slower mover but constructive. Watching for accumulation to build.
• $DASH: Extended post-earnings; wide ranges. Needs tighter action for logical entry.
• $DUOL: Education leader; extended post-earnings gap. Waiting for consolidation to form buy point.
• $TSLA: Laggard under 200-day; directional potential. Small position for mental health, not a leader.

Health Care – Biotechnology and Pharmaceuticals:

• $ABT: Breakout attempt squatted; wide ranges. Needs tighter action for confident entry.
• $PEN: Top biotech name; strong hold at 10-day post-earnings. High conviction setup for continuation.

Industrials – Aerospace & Defense:

• $KRMN: IPO biotech in strong group; powerful chart. Watching for tight consolidation setup.
• $LOAR: Strong IPO in leading group; constructive action. Watching for breakout continuation.

ETFs

• $IBIT: Bitcoin ETF holding gains; strength continuing with broader crypto trend. Monitoring near highs.

Ross’ Watchlist

• Communication Services: RBLX SPOT
• Consumer Discretionary: ATGE CHWY DASH DUOL LRN LTH MELI TSLA 
• Consumer Staples: HOOD TOST
• Financials: ROOT* TOST* WRB
• Health Care: ABT ADMA GRAL HIMS NTRA PEN PTGX RGC RPRX SRRK TEM VRNA
• Industrials: BYRN ESLT LOAR PSIX RKLB UBER
• Information Technology: APP CLS IONQ OSIS PEGA PLTR QBTS RGTI SHOP TWLO
• ETFs: IBIT
• Utilities: GEV OKLO