OVERVIEW
A Strong Day For Equities

In yesterday’s release of the Federal Reserve minutes from their late July meeting, the market received some hopeful news about the much-anticipated interest rate cuts we've been waiting for.

The minutes revealed that Fed officials are leaning towards reducing interest rates soon. Although they chose to keep rates unchanged in July, most officials suggested that if economic conditions continue as they were—meaning if inflation keeps declining and the labor market shows more stress, as indicated by recent non-farm payroll data—cutting rates at their September meeting seems almost certain.

The market is already pricing in this potential September rate cut, which would be the first since the emergency rate reductions at the beginning of the Covid-19 pandemic.

Even though the Fed decided to hold rates steady in July, some officials were in favor of cutting rates at that meeting. They believed that recent improvements in inflation and the rising unemployment rate made a strong case for at least a 0.25% rate cut, or 25 basis points.

The minutes also highlighted a shift in priorities. Most officials are now more concerned about the job market and see fewer risks from inflation which isn’t a surprise.

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

This news is actually quite positive for the market. The biggest thing that keeps markets stuck or volatile is uncertainty. With the Fed’s latest update, we now have a much clearer picture.

It’s becoming pretty evident that the Fed will cut rates in September. This is based on the trends we’re seeing: inflation is dropping, and the job market is showing signs of stress. These are exactly the conditions the Fed was waiting for to lower rates.

For traders, this means less guesswork and more confidence in what’s coming next. With the path forward looking clearer, it should lead to smoother market movements and help drive trends more firmly in one direction- higher.

Nasdaq

The large-cap stocks have been trading sideways for the past two sessions as buyers and sellers figure out the $482 level, which has become a key point of control. This sideways movement is actually a good sign because we’ve been seeing higher lows even during this consolidation period.

We expected a normal pause in the market, and that’s exactly what we’ve seen. We thought the pause might extend a bit more, potentially pulling back towards $479 to let the 10-day EMA catch up before pushing higher again.

Overall, the upward trend remains strong, and there are no major concerns that would change this positive outlook. With the technical indicators lining up and a favorable macro environment—thanks to the expected rate cuts—the QQQ seems poised to move above the $482 level and should head towards $495.

The visible range volume profile (VRVP) shows that there are low volume areas up to that $495 mark, suggesting this will probably be quite a sharp move assuming we don’t pullback to that rising daily 10-EMA before that.

S&P Midcap 400

The midcaps had a small breakout late in yesterday’s session, pushing the MDY above $556, which was a short-term resistance level. Now, they’re gearing up to target $562, which we think might be the next level where they face some resistance.

Overall, the midcaps look very promising. The volume from yesterday’s move was strong, and the trend is very bullish. The macro environment is favorable for midcaps, and the visible range volume profile (VRVP) doesn’t show significant supply above that would cause problems before reaching the late July highs.

Russell 2000

The small caps are also looking strong, but they still need a bit of a push to break out of the recent sideways trading. Yesterday’s volume was decent but not exceptional, and there’s some clear resistance around $216 that’s causing a few hurdles.

This isn’t a major concern, especially considering the positive movement in the QQQ and MDY. It’s quite likely we’ll see a break above $216 today or tomorrow, provided no major negative news hits the market.

If we can push through the $216-$218 range, we could see a sharp and exciting rally up to the IWM’s point of control at $223. This would be a significant move and quite thrilling to watch.

DAILY FOCUS
There Is So Much Opportunity

Right now, there’s an exciting array of stocks setting up, and we’ve got a lot of great trade ideas. We haven’t seen a market like this in a while, and with the upcoming rate cut, equities are likely to push higher.

Today, we’re looking to increase our long positions as we expect the market to continue moving up, especially with tomorrow’s Fed meeting on the horizon. There might be a slight pause, but we’re confident that any dip will be short-lived, as the Fed is unlikely to dampen the current optimism.

When you spot a stock breaking out, trust your strategy and be confident. Enter early when the stock breaks the 5-minute opening range highs and make sure you use the right position size.

This is the time to build long positions, not in a couple of weeks when the best stocks might already be at new highs. Focus on stocks with the largest weekly bases, the highest average daily ranges, and the strongest fundamental outlook.

Stock To Watch
Focus On These On A Strong Reaction

SOUN: SoundHound AI, Inc

• SOUN is one of those growth stocks with a compelling story, impressive technicals, and the potential to be worth 10 times its current value (currently at a $2B market cap).

• The current daily flag pattern for SOUN dates back to February 2024 when the stock rallied over 300% in less than a month. Since then, it has been consolidating sideways along the daily 200-EMA, while small-cap stocks have generally underperformed.

• There was an attempted breakout yesterday that didn’t pan out, but if the $5.50 level can be broken, we plan to enter SOUN with significant size.

• This is a stock you don't want to miss. Many traders—both institutional and retail—are closely watching it, and the massive accumulation base signals strong interest. Plus, SOUN is part of the hottest market theme right now: AI.