OVERVIEW
Confidence Is Through The Roof

Today's market overview is going to be short and relatively uneventful, with a steady 1% gain across the board, from the smallest to the largest companies, as opportunities continue to emerge. Technology and Consumer Discretionary stocks stood out as the biggest gainers, driving the market to its longest winning streak since last November, with eight consecutive days of growth. Yesterday saw strong performances from Tesla, Nvidia, and AMD, as major AI-related stocks continued to surge.

This upward trend follows a solid week of gains, signaling a market recovery after recent recession concerns. As of Monday morning, traders are betting on a 72% chance that the Fed will cut rates by 0.25% at the upcoming meeting, with a 28% possibility of a 0.50% reduction, according to the CME FedWatch tool. However, the release of the Fed's July meeting minutes on Wednesday could shift these expectations.

Nasdaq

The Nasdaq surged by 1.3% just before the market closed and is now approaching a key resistance level at $482.

Yesterday’s rally saw unusually low trading volume. While this suggests that sellers are inactive and buyers are in charge, the low volume also raises the risk of a sharp pullback at this resistance point. This could lead to a period of sideways trading and consolidation, giving the market time to digest the gains made since early August. We anticipate this kind of consolidation to happen.

S&P Midcap 400

The trading volume in the MDY (Midcap ETF) reveals where investors are currently concentrating their efforts: on smaller, riskier segments of the equity market.

Yesterday, midcaps gained 0.9%, breaking through a major resistance level at $554, which had been a challenging barrier over the past two sessions, as indicated by a high volume cluster on the visible range volume profile (VRVP).

The increased volume in the MDY compared to the QQQ supports the idea that the current rally is driven by renewed interest in smaller, more speculative stocks that have been largely ignored for the past two years. This suggests that the real action in this rally is happening in these previously underappreciated market segments where the volatile stocks are.

Russell 2000

Interestingly, the IWM (Russell 2000 ETF) had the lowest relative volume compared to other indices, which is unexpected given that small caps usually attract more attention during periods of high growth speculation.

Despite this, the Russell 2000 had a strong performance, rising to the $215 resistance level. This level is expected to create some turbulence due to the existing supply zone there.

It wouldn’t be surprising to see the IWM experience some intraday fluctuations or stall at this point. However, the very bullish candle from yesterday’s session indicates strong momentum in the IWM’s move.

While the low volume is a concern, similar to what we see with the QQQ, it’s not something to overly stress about at the moment.

DAILY FOCUS
Just Be Careful Not To Overtrade

In a bull rally, you should be seeing plenty of trendline alerts as stocks break out frequently.

While it’s great to find new opportunities and add risk, don’t just buy stocks because they show a breakout candle. Stick to your entry rules. For us, we use the first 5-minute candle that breaks and closes above the opening range high as our signal to enter a trade. This approach helps avoid getting trapped in fakeouts and reduces the risk of false breakouts.

We’ll continue to look for new setups, but we wait for clear and obvious breakouts rather than trying to anticipate or outsmart the market.

The biggest mistake you can make is overtrading and taking multiple small losses, which can erode your profits. Stay disciplined to avoid unnecessary losses and preserve your capital.

Stock Of The Day
This Is Already Breaking Out

MSTR: MicroStrategy Incorporated

• MSTR is showing an incredibly tight pattern in its 6-month-long volatility contraction, forming a bull flag on the daily chart.

• Recently, MSTR received some positive fundamental news with the announcement of a Bitcoin ETF that will track MSTR, which could attract more buyers and drive up its share price.

• Although Bitcoin has been underperforming lately, MSTR is breaking out of its base in pre-market trading and testing the daily 20-EMA level at $141.

• If MSTR manages to push above the 5-minute opening range high and the daily 20-EMA, we will definitely consider adding to our long positions.

Become A Better Trader
Acces Our Complete List Of Daily Setups!

Join Swingly Pro to receive daily trade updates and connect with a serious community of traders.

Get access to:

• Weekly Trade Walkthroughs

• Market Pulse Indicators

• Our Portfolio

• Join Live Weekly Q&A Session & Weekend Report

• Join Daily Live Market Research Groups

• Network Of Other Swing Traders Like Yourself

• TradingView Scans & Indicators

• Receive Personalized Feedback With Performance Sessions

If you're not satisfied within the first month, we'll refund you in full.

Click here to find out why we’re trusted by 1,000+ traders, worldwide.