OVERVIEW
Small Caps Continue To Climb

The stock market had a strong performance yesterday, kicking off a busy week with numerous corporate earnings reports and Fed speakers lined up. Investors are also still processing the impact of the assassination attempt on Trump and what it means for the presidential election.

The Dow Jones went up by 0.5%, hitting an all-time high. The S&P 500 added 0.3%, just missing its own record high, and the Nasdaq gained 0.4%. Blue-chip stocks like Caterpillar, JPMorgan Chase, and Chevron did really well and helped lift the Dow.

Tech stocks have been driving the recent rally, with hopes that the Fed will cut interest rates soon. Tesla, Apple, and Alphabet all saw gains on Monday. Bitcoin also surged past $63,500, boosting crypto-related stocks like Coinbase, Marathon Digital, and MicroStrategy.

On the downside, solar energy stocks took a hit. SolarEdge announced layoffs due to excess inventory and a market downturn, causing their stock to drop sharply, along with FirstSolar.

Jerome Powell spoke in New York and mentioned that while inflation is improving, the Fed doesn’t need to see it drop to their 2% target before cutting rates. Meanwhile, the yield on 10-year Treasurys went up slightly to 4.23%, crude oil futures dropped, and gold prices rose.

Nasdaq

Despite experiencing a red day, the QQQ continued its overall uptrend on Monday, maintaining its position above the daily 10 EMA. This resilience indicates a strong underlying bullish sentiment, suggesting that investors remain confident in the tech sector's long-term prospects. The ability to stay above the 10 EMA, even on a down day, demonstrates that the QQQ is still in a healthy uptrend and may soon resume its upward trajectory.

The slight pullback could be seen as a normal part of the market's ebb and flow, potentially offering a buying opportunity for those looking to enter or add to their positions in the QQQ. As long as it remains above key support levels, the trend remains intact. This stability amidst a minor dip suggests that the uptrend is well-supported and could continue if positive sentiment and strong fundamentals persist.

S&P Midcap 400

The MDY continued its impressive uptrend with yet another green day, closing at $555.23. This performance highlights the strong bullish momentum in midcap stocks, as the MDY is trending well above all of its daily EMAs. The consistent upward movement, coupled with strong buying volume, underscores investor confidence in the midcap sector.

This robust trend suggests that the MDY is well-supported and likely to maintain its upward trajectory in the near term. The solid buying volume further reinforces this positive outlook, indicating that investors are actively adding to their positions. As long as this buying interest persists and the MDY remains above its key moving averages, the uptrend is expected to continue, potentially offering more gains.

Russell 2000

The IWM marked its fourth consecutive green day yesterday, closing at $217.19. This consistent performance mirrors the strength seen in midcaps, as the small caps have also experienced a very impressive breakout. Supported by huge buying volume, investor confidence in the small-cap sector remains high, suggesting a strong bullish sentiment.

The IWM is trending well above all its daily EMAs, reinforcing the positive outlook for this index. The sustained buying interest indicates that investors are optimistic about the continued growth potential in small caps. As long as this trend holds and the IWM stays above key support levels, it is likely to continue its upward climb, offering promising opportunities for further gains.

DAILY FOCUS
Optimism Amongst Small Caps

The market appears calm, presenting an opportunity for us to add exposure where appropriate. We'll be keeping a close eye on any valid setups, particularly in the small and midcap sectors, which have shown strong performance and investor confidence recently. The impressive uptrends and high buying volumes in these sectors indicate robust bullish sentiment, making them attractive areas for potential gains.

Additionally, it's important to note that the retail sales report will be released one hour before market open, which could influence market sentiment and trading strategies. This data could provide further insights into consumer behavior and economic health, impacting various sectors. Furthermore, Powell's comments yesterday reinforced the belief that interest rates will be cut soon, which could boost market optimism and drive further investment. With these factors in mind, we'll stay vigilant and ready to act on promising opportunities as they arise.

WATCHLIST
Huge Breakout

MARA: Marathon Digital Holdings

• MARA specialises in cryptocurrency mining, focusing primarily on Bitcoin. The company aims to create a sustainable and efficient mining operation by leveraging cutting-edge technology and strategic partnerships to increase its mining capacity and profitability

• The stock had been forming a volatility contraction pattern for several months, hovering around its point of control, but it has finally seen a major breakout.

• This breakout has been supported by significant buying volume, indicating investor confidence is high. We could see MARA rise further in the coming days.

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