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OVERVIEW
We Told You So…

After weeks of an overhyped market correction, the entire U.S. market has bounced back, hitting new highs across the board. Every sector and market cap group is on the rise, gearing up for a strong finish to the summer.

Yesterday was a turning point. The best-case scenario we predicted played out, showing that worries about the economy's health have finally settled down. With that, we've seen a wave of investment flooding back into the stock market.

The CPI and PPI data released earlier this week provided the macroeconomic spark everyone needed. Despite the labor market showing signs of weakness with rising unemployment, the real takeaway is that the Fed is likely to cut interest rates and lower borrowing costs. This is a clear signal: growth is on the horizon.

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

With the recent data suggesting a potential rate cut and renewed investment confidence, today’s market session—and likely the foreseeable future—should be bullish.

We can expect to see earnings-driven pivots gaining traction, more breakout stocks performing well, and a broad-based rally across small and large-cap stocks alike. This contrasts with the rallies of the past two years, which were largely driven by a few mega-cap stocks benefiting from high rates, while smaller businesses struggled.

Now, with rate cuts on the horizon, smaller companies are set to attract more interest. We anticipate that the IWM and MDY (representing small and mid-cap stocks) will outperform the QQQ (tech-heavy index) as traders seek higher-risk growth assets with the potential for greater rewards.

These stocks, having been beaten down during years of high interest rates and tight monetary policy, are ready for a rebound.

Nasdaq

The Nasdaq is surging towards its point of control (POC) at $483, with a robust +2.5% gain yesterday and nearly nine consecutive days of upward movement.

Volume has been picking up slightly in recent sessions, but it's clear that many investors are still sitting on the sidelines. This actually excites us because it suggests that the rally might just be getting started. We had anticipated more volume in the past few days, and the fact that there's been less indicates that many potential buyers—who may have shifted their assets to defensive securities or are waiting for a better entry—have yet to jump in.

From a technical perspective, we expect a continuation of this trend today. The QQQ is not overly extended above its 50-day EMA, but it is significantly stretched above its 10-day EMA, which could lead to some intraday volatility. This pullback would be healthy, allowing the EMAs to catch up and supporting demand. This consolidation could set the stage for the QQQ to push into the $490s next week.

S&P Midcap 400

The midcaps experienced strong momentum yesterday, with the MDY gapping up +1% at the open and quickly reaching for $553.

While we're not big fans of this gap up—since gaps often get filled eventually, which could lead to a retracement in the coming days or weeks—we can't overlook the continuation we saw on Wednesday.

All major exponential moving averages are trending upwards, the price is well above the point of control (POC), and volume is increasing. These factors suggest that higher prices are likely.

Today, we might see some consolidation or a potential gap fill, though this scenario isn't the most probable. Despite this, we expect the day to end on a strong note with gains in the green.

Russell 2000

The small caps are looking strong right now. Yesterday’s trading saw very high relative volume, significantly surpassing that of the past week or so. The IWM is just about to close a gap, which might pose some challenges down the road. Additionally, the small caps are eyeing a major gap up to $216, a target we highlighted a few sessions ago, and it seems like the IWM is on track to fill that gap any day now.

We’re very bullish on small caps and high-growth stocks at the moment. It appears that both technical indicators and macroeconomic fundamentals are perfectly aligned for these stocks, setting the stage for continued strength and very high profit gains- if you can find the right stocks.

DAILY FOCUS
Best Believe You Should Be Risk On

We’re at the start of a significant rally that’s gaining momentum with interest rates coming down. This is a big opportunity, folks. As growth stock swing traders, we know that the most profitable moments come at the beginning of market rallies, not at the end. Now is the prime time to secure low-risk positions in stocks with exceptional bases and strong relative strength. Over the next few weeks and months, this could be your best chance to capitalize on the upcoming growth.

This may not happen today exactly as we did have a big 2-3 day burst of momentum so it is very possible the market takes a pause today, but nevertheless in the short-medium term, things look very good.

If you've been following our beginner swing trading walkthrough, you’re already familiar with stage analysis. Right now, stocks are breaking out of Stage 1 bases and moving into Stage 2 uptrends.

This is a crucial moment. It means you should have already started building positions in the top stocks from your focus lists.

ASTS: AST SpaceMobile, Inc

• This is one that we spoke about several times and in it’s breakout yesterday managed to climb +50% in a matter of a few hours.

• This is the power of trading high growth, high ADR% stocks breaking out of volatility contraction patterns (VCP).

We will go over our position in ASTS within our Swingly Pro report this coming sunday, and discuss how we entered the trade, how we found it and show you all the other small cap growth stocks that are likely to make the same moves next week.

Click here to join Swingly Pro to make sure you don’t miss out on these trades.

WATCHLIST
These Could Fly Today

MSTR: MicroStrategy incorporated

• MSTR, a Bitcoin mining stock, has built one of the most impressive and textbook multi-month bases we've seen in the market today.

• Recently, MSTR received very bullish news: it became the first Bitcoin-related stock to have its own ETF tracking it. This development should increase demand and drive MSTR higher.

• While MSTR may not meet all our fundamental growth criteria, its technical setup is strong. Much like ASTS, sometimes the most compelling opportunities come from stocks with a captivating story behind them.

POWL: Powell Industries, Inc

• POWL, an engineering stock tied to the semiconductor and AI sectors, boasts exceptional fundamental growth and strong technicals.

• The stock has formed a large volatility contraction pattern on its daily chart, stretching nearly seven months. We’re closely watching how POWL approaches a potential breakout above this descending range.

• Today, we'll be keeping an eye on the $167.50 level. A breakout above this price on high volume will trigger a long position for us.