PRIOR DAY ANALYSIS
Up & Down

NASDAQ

We experienced a somewhat bewildering trading session yesterday. The QQQ initiated the day with a notable -2% gap down, descending well below its preceding session's support at $424 and nearly testing Monday's lows at $418.

We've observed three descending touchpoints, following two from early last week and a third from Wednesday's rejection highs at $430, neatly aligning with the declining daily 20 & 50-EMA and weekly 10-EMA. This establishes a significant level, now marked as a descending resistance line. In an optimistic scenario for the bulls, this barrier must be overcome. We mark this as the beginnings of what may very well become a bear flag to a deeper mark down to at least the $400 level.

Small Caps

The Russell 2000 is also forming what looks like to be the potential beginnings of bear flag in between a now descending level of resistance supported by five total touchpoints beginning on the 10th April. Although it is early to tell whether a flag will form, we are seeing price being rejected against this resistance level and the daily 10 & 20- EMAs.

The Bull Case

While it's unlikely, we can't dismiss the potential formation of a double bottom pattern. This pattern signifies a shift in trend and momentum, indicating a reversal from previous price action. Typically, it occurs when buyers show willingness to defend prior price levels, while passive sellers dominate the market, leading to a reversal in the prevailing trend.

If this pattern indeed materializes, it could mark a significant turning point in market sentiment and potentially present new opportunities for strategic positioning.

SECTOR ANALYSIS
Defence Leading

LOOKING AHEAD
Why We Ignored Earnings

All major indices, including the NASDAQ, S&P 500, SPDR S&P Midcap, and Russell 2000, are currently in pronounced downtrends. In such clearly defined downward trends, irrespective of individual stock quality or earnings guidelines, the prevailing market sentiment remains bearish and very much confused. Thus it's not conducive to consider adding, at the very least, long exposure but any exposure whatsoever.

We strive to simplify trading as much as possible, as this approach has consistently enabled our team to outperform the markets. We avoid attempting to be 'clever' or engaging in activities where it's difficult to discern market direction with high probability.

Since the sell signal in mid-March and the natural conclusion of our bullish positions, we have patiently held cash. While in hindsight, looking to short would have been profitable, it's impossible to predict the duration of a pullback.

It's important to remember: every correction begins with a pullback, but not every pullback will escalate into a correction. Coupled with the fact that the market is in an uptrend 67% of the time, this reaffirms our focus on long-only strategies.

FOCUS LIST
Our Relative Strength Leaders

GCT: GigaCloud Technology Inc

• GCT continues to demonstrate resilience by maintaining its multi-month base, with both volume and price exhibiting well-managed contraction.

• In yesterday's session, our concern arose briefly as GCT dipped below its rising daily 10 & 20- EMAs. However, the stock swiftly rebounded and reclaimed these levels effortlessly.

• We anticipate GCT to defend its current position and ideally continue its sideways movement, facilitating an even tighter contraction in volatility. This consolidation phase may pave the way for a potential breakout in the near future

WULF: TerraWulf Inc

• WULF encountered resistance at the two-year-long base, yet it retains a promising outlook for the next bull run.

• This Bitcoin miner showcases exponential revenue growth and boasts a very high average daily range (ADR), indicating its potential for substantial rallies, potentially upwards of 500%.

• Despite the recent resistance, WULF's fundamentals suggest it could emerge as a significant winner once the market sentiment turns bullish again.

SMR: NuScale Power Corporation

• SMR achieved a breakout above its range in yesterday's session, marked by a decisively complete candle.

• Despite being a growth and momentum leader with exceptional technicals, our entry has been hindered by the prevailing bearish market sentiment.

• We are closely monitoring SMR, hoping to witness either a continuation of its upward trajectory or, ideally, a retracement back to its base followed by sideways movement.

• A prolonged sideways consolidation, amidst the current market climate, could potentially fuel a more aggressive and powerful breakout when the market sentiment shifts.