OVERVIEW
A Major Rebound In Large Tech Stocks

The market's powerful rally yesterday was likely driven by growing certainty around the upcoming rate hike decision. At first, stocks fell when the core consumer price index (CPI)—which excludes volatile food and energy prices—came in a bit higher than expected. This disappointed investors who were hoping for a larger half-point rate cut from the Federal Reserve.

However, as traders adjusted their expectations, an 85% chance of a smaller, more predictable 25 basis-point cut started to seem more certain. This sense of stability may have given investors the confidence to jump back into the market, driving stocks higher. When investors have a clearer picture of what's coming, they tend to feel more secure, which often leads to a stronger market response like the one we saw yesterday.

S&P 500 ETF

We saw the captilisation weighted SPY make a tremendous rally after intially selling off down to it’s point of control at $544 which caused dip buyers to come in, on one of the strongest intraday rallies we’ve seen in a very long time to push the market up over +1% and breakout from a very small voliatlity contraction that we saw get built up.

The equal-weighted S&P 500 (RSP) had a strong day yesterday, despite initially dipping below its 50-EMA after the rough CPI data. It managed to rally +2% off its lows and is now hovering near its point of control at $173. This move, however, highlights a key divergence from the SPY (capitalization-weighted), where the big gains are being driven by large and mega-cap stocks like Nvidia, which soared +8%.

This divergence suggests that, for now, larger names are leading the charge, while smaller stocks are playing catch-up. Chances are, we'll continue to see the bigger stocks out in front, but this leadership could eventually trickle down to the broader market. The good news is we're seeing a large number of setups forming, which indicates that the rally may broaden.

So, what does all of this mean for today’s session?

This is good news traders. We’re likely seeing the bottom, as yesterday’s rally showed significant buying intensity. We'll be watching closely to see if this momentum continues today. The PPI report, which comes out an hour before the market opens, probably won’t derail the rally’s progress. Expect large technology stocks to lead the charge (we’ll dive into the Nasdaq below), but the key will be whether the rally broadens out.

We have a solid list of stocks from small to mega-caps and a healthy spread of setups across the board. If this positive momentum persists and spreads, it would signal that confidence is returning more broadly to the market.

Nasdaq

The Nasdaq looks absolutely brilliant right now. This is a textbook example of a “wedge pop” if you’re familiar with Kell’s Cycle of Price Action—cick here if you want to learn more.

Over the past 3-4 sessions, we've seen a series of higher lows and a contraction in volatility, culminating in an enormous high-volume green day. This surge has propelled the large technology stocks through the daily 10 and 20-EMAs, setting them up to test the point of control (POC) at around $470. The Visible Range Volume Profile (VRVP) reveals a low volume pocket extending up to that POC level, which should help the QQQ make a push to test this area, likely today.

A lot of the QQQ's movement yesterday was driven by the biggest technology stocks, as the QQQ is capitalization-weighted and closely tracks tech giants like Nvidia and Apple, which have the largest weightings.

We need to highlight the QQQ's weekly chart, which looks impressive—almost "monstrous," as we might say in “professional” terms. The chart shows a textbook volatility contraction, characterized by a very narrow trading range and exponentially decreasing volume. This setup indicates that the QQQ is primed for a significant move.

If the QQQ can break through this multi-month descending level of resistance, we’re looking at a potentially strong uptrend going into the end of the year. The charts suggest that we could see clear skies ahead for the QQQ if it manages to overcome this key resistance.

S&P Midcap 400

The midcaps are gearing up for what looks like a major green day, aiming to fill the low volume pocket on the Visible Range Volume Profile (VRVP) up to $548. They tested their point of control (POC) yesterday and, following the SPY and QQQ’s lead, saw dip buying push prices higher.

The daily timeframe of the midcaps is showing a 4-day Volatility Contraction Pattern (VCP), and with the larger indices performing well and a robust list of setups in the market, it’s looking promising for the MDY to see a significant rally soon.

Assuming the PPI doesn’t bring any major surprises, we expect the MDY to rise around +1.22% today as it tests the declining indices above.

Russell 2000

The small caps are showing strength, gapping up in premarket trading and setting up for a potentially strong period ahead. They recently tested their rising 200-EMA, which aligns closely with the point of control (POC), and there's been noticeable demand around the $203 level.

The IWM has exhibited long wicks in recent sessions, consistently closing near the top of the trading range. These long wicks indicate that while there’s been selling pressure at the start of the session, it’s been met with strong buying demand as the index approaches its POC and 200-EMA. This pattern suggests that buyers are stepping in decisively whenever the index nears these key levels.

DAILY FOCUS
It Only Takes One Bull Rally…

Right now, it looks like the market is coming out of a major decline and setting up for a potential Stage 2 uptrend on the daily timeframe. For those unfamiliar, this means we could be looking at higher share prices after the significant distribution and decline we’ve seen in recent weeks.

There’s a wealth of setups emerging, and we’ll cover all of them in today’s daily report card on Swingly Circle. Our approach is to cast a wide net and place around 0.5R positions on stocks from our focus lists that start to break out. We’re keeping position sizes smaller due to the Fed talks next week and the high number of setups forming. This style of swing trading tends to have a lower win rate but offers high risk/reward, so managing risk is crucial. We aim to avoid getting caught in too many small losses by being overly optimistic.

Given the strength of the QQQ, which tracks large technology stocks, we’ll be closely monitoring stocks in this sector. For example, Apple is forming a promising base and looks ready to push higher.

Remember, it only takes one well-managed bull rally to turn your account around. Never trade blindly and always manage your risk. Assume you might be wrong on any trade and never risk more than your system dictates. For us, this means risking between 0.25R and 1R per trade, depending on the performance of our last three trades—strong performance allows for higher risk per trade, up to a maximum of 1R.

WATCHLIST
The Two Textbook Looking Setups.

AAPL: Apple, Inc

• AAPL looks like it’s finally emerging from a multi-week base that began forming back in July, when it made a strong push up to around $240. After that, it experienced a retracement, with a series of lower highs and higher lows gradually developing.

• What really caught our attention is the last week or so, where we saw volatility contract significantly, as evidenced by declining volume and a tighter trading range.

• With the way SPY, QQQ, and NVDA performed yesterday, we believe AAPL is primed for a major breakout this week. We’re watching closely for the descending level of resistance to be taken out. Once that happens, we plan to load up a 0.5R position using a 3x leveraged AAPL ETF to amplify the ADR% and take advantage of the increased volatility.

FUBO: FuboTV, Inc.

• FUBO, a small-cap in the television subscription industry, has been consolidating for 10 inside days, trading between its 200-EMA and 20-EMA.

• Today, it's gapping up premarket into and above the 200-EMA, a significant development for the stock. FUBO hasn’t sustained a move above its 200-EMA in a long time, so a breakout on high volume would likely trigger a Stage 2 uptrend and bull run.

• With the IWM ready for a big move today and the overall strength in this sector, as shown by the QQQ, FUBO looks very promising.

• Combine this with its stellar fundamentals—exponential revenue growth and high ADR—and FUBO could be one of today’s standout plays.