PRIOR DAY ANALYSIS
Right On Cue

NASDAQ

Yesterday, the large-cap stocks opened higher than their declining daily levels, likely raising the hopes of many inexperienced traders. However, they later faded during the session, ultimately dropping below the opening level.

We observed another instance of a low-volume strong open and close, which seems to be becoming somewhat of a pattern in the QQQ's behavior.

As we discussed in our last report, it's crucial for the QQQ to defend the $427 level. This becomes even more pertinent if, in the unlikely event, we were to see what all the bulls would be hoping for—a sharp rally back to the low $433 level.

The Visible Range Volume Profile (VPVR) serves as a tool in technical analysis, presenting the volume traded at various price levels over a specified time frame. It allows us to visualize the distribution of trading activity throughout a given trading session.

Price Levels: Price levels are graphed along the vertical axis, typically positioned on the right side of the chart.

Volume: The volume traded at each price level is represented by horizontal bars or a histogram, with the length of each bar indicating the volume traded at that specific price level.

Range: The Visible Range Volume Profile is typically adjusted to display volume data for a specific period, such as the entire trading session, a day, a week, or a customised range.

Profile Shape: The shape of the volume profile offers insights into market sentiment and potential support or resistance areas. For example, areas with higher volume may indicate stronger support or resistance levels.

The point of control (POC) is the price level with the highest trading volume within a specified time frame. It indicates where the market had the most interest and can act as a reference point for traders, signalling potential support or resistance levels.

From the QQQ's VPVR breakdown on the daily chart, it's evident that we're far below the POC level, with a substantial gap below $424.

If the NASDAQ falls below this level, there's a high probability of a rapid decline to the next significant volume level at $409, followed by a period of sideways consolidation.

Concerningly, the daily and weekly EMAs are not in proximity to these levels, with the closest being the daily 200-EMA, situated at $400.

Russell 2000

The small caps present a somewhat more promising, yet still comparable, scenario. The IWM (Russell 2000 ETF) found support at its daily 10-EMA after reclaiming the $197 level with a gap-up open.

Despite this, the volume remains notably low, suggesting that this rally is likely short-lived, possibly preceding a downward move towards the high $180s.

LOOKING AHEAD
Stingy Buyers

The action plan for the day remains unchanged. We stand by our assessment that this is merely the start of a bear flag pattern before a more significant downward movement.

While both the QQQ and IWM have retraced a substantial portion of their gains, it's essential for readers not to be swayed too easily.

Trading revolves around investing in a business at the point of maximum leverage, where the trader can achieve the highest reward for the lowest risk.

Whether the QQQ is at $400 or $500, what truly matters is seizing the opportunity when momentum swings in your favour. Avoid fixating on specific price levels and instead focus on adapting your strategy to the evolving market conditions. This flexibility allows you to capitalize on favourable momentum regardless of the price point, maximising your trading potential.

An Institutional Retreat

The graph provided depicts the prevailing defensive sentiment in the market, marked by a notable shift towards leading industry groups centred around commodities.

This defensive posture indicates that a significant portion of investors are favouring assets perceived as less vulnerable to economic uncertainties or market downturns. Commodities, particularly precious metals like silver and gold, are frequently sought after as safe-haven investments during periods of heightened volatility or economic instability.

FOCUS LIST
The Diamonds in the Rough

Our list of market leaders remain roughly unchanged given the overall market climate. We urge all of our readers to add the following to their watchlists and closely monitor their progression throughout the market’s movements over the coming weeks.

GCT: GigaCloud Technology Inc

• One of the very few growth names that is still holding all of its key moving averages—a true market leader.

• Very strong revenue growth and relative momentum.

WULF: TeraWulf Inc

• The Bitcoin mining stock, a favorite among the "meme" crowd, continues to show exceptional resilience with remarkably high relative volume and a year-long base.

• This volatility contraction, combined with its position in a hot sector and revenue growth, positions it as a potential winner over the next cycle, particularly if Bitcoin surpasses its all-time highs.