Become A Better Trader
Serious Traders, Serious Results

Join Swingly Pro—the ultimate trading community for swing traders looking to level up come to connect, learn & profit.

Download our desktop and mobile app to get exclusive access to:

• Weekly Trade Walkthroughs: Detailed analysis of recent trades, breaking down what worked and why.

• Market Pulse Indicators: Stay ahead of the market with our top indicators, updated regularly.

• Our Portfolio: Follow along with real-time updates on our portfolio moves.

• 2x Weekly Seminars & Weekend Reports: Get answers to your trading questions and insights on the upcoming week.

• Daily Live Market Research Group: Collaborate with other traders in our live research groups to stay sharp.

• A Network of Like-Minded Swing Traders: Connect with traders who share your passion and ambition.

• TradingView Scans & Custom Indicators: Access our carefully curated scans and indicators to spot winning setups.

• The Swing Trading School: Enroll in our comprehensive trading school, complete with exams to test your knowledge and keep you sharp.

We’re so confident you’ll love Swingly Pro that if you’re not satisfied within the first month, we’ll refund you in full.

Join today and discover why thousands of swing traders worldwide trust us to help them take their trading to the next level!

OVERVIEW
Where Is The Breadth Expansion?

Yesterday, we finally got the breakout we were hoping for in both the semiconductor and tech markets, and Nvidia played a crucial role in this movement. This is great news for all of us who have been keeping a close eye on the market!

If you recall from our previous discussions, we emphasized how important it was for Nvidia to maintain its gains from Monday. If it hadn’t done so, it could have created some serious turbulence in the US stock market, making it even harder for us to see that next upward leg we’re looking for.

So, why has our focus been so heavily on Nvidia? Let’s break it down into three main reasons:

AI is the Big Trend: Right now, artificial intelligence (AI) is the hottest topic in the market. Companies are racing to harness AI's potential, and Nvidia has established itself as a leader in this space. They produce chips that can tackle complex AI tasks, such as image recognition and speech processing. This is a big deal because as AI technology advances, the demand for powerful chips will only grow, and Nvidia is right at the forefront of this revolution.

Market Influence: Nvidia isn’t just any tech company; it’s one of the largest players on the US stock exchange. When Nvidia does well, it tends to lift the entire market. Conversely, if it had pulled back after its recent rise, it would have likely sparked concerns across various sectors. Nobody wants to see a wave of negativity in the market, especially when we’re trying to build on momentum. Keeping Nvidia strong helps keep market sentiment positive, which is something we all benefit from.

Investor Sentiment: Big institutional investors watch Nvidia like a hawk. Their confidence in the tech sector often hinges on Nvidia's performance. When Nvidia shines, it encourages these investors to put more money into tech stocks, boosting prices across the board. This creates a ripple effect—more buying leads to more gains for many companies, not just Nvidia.

Now, with Nvidia's successful breakout, we’re seeing not just a positive sign for them, but a hopeful outlook for the entire tech and semiconductor sectors. It's a reminder of how interconnected these companies are and how a strong performance in one can uplift many others.

Let’s talk about the other side of the coin. While it’s fantastic to see Nvidia sustain its move, we need to ask ourselves: where’s the expansion across the other AI-related names?

Typically, stocks in the same industry or theme tend to move together. Think back to when the Israel-Iran tensions were making headlines, or when China-related stocks were surging. During those times, it felt like a whole group was moving in sync, creating momentum that was hard to ignore. But right now, that’s not happening.

This divergence raises some red flags. It’s likely that Nvidia’s strong performance is overshadowing its peers. As the leader in the AI space, Nvidia is attracting a lot of attention and capital from big institutional investors. These players are eager to jump on a multi-month breakout of a high-growth stock like Nvidia, which means they might be funneling their money into Nvidia and leaving other stocks behind.

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

At the moment, there’s no reason to adopt a bearish stance. The markets are still showing some growth, which means it’s essential to stay proactive. Be sure to run your scans both in the premarket and throughout the trading day to spot the best setups. Also, keep a close eye on previous breakouts to determine if they're picking up momentum.

We’ll dive deeper into this in our daily action section later in the report. If you missed Nvidia's move on Monday, it’s wise to exercise a bit of patience. It might take a little while for that positive sentiment to spread to other stocks in the AI sector.

While Nvidia is taking the lead, it’s important to remember that other stocks might need time to find their footing. However, today doesn’t seem to offer many opportunities for new exposure. The list of A+ setups is rather thin, and we’re also seeing an increasing number of breakdowns and false breakouts, which adds to the uncertainty.

Nasdaq

The Nasdaq is on the verge of breaking out above its multi-month descending resistance level around $488. While the volume wasn't spectacular, it was decent enough to spark interest. The big question today is: can the QQQ hold this breakout, or will it fade away?

Looking at the visible range volume profile (VRVP) on the right side of the chart, we notice very little supply until we reach $493, and eventually, the all-time highs at $503. If this breakout is going to sustain itself, the low overhead supply suggests that the QQQ could move swiftly to those all-time highs.

However, we need to see a significant increase in volume to confirm this breakout. Yesterday's participation was relatively lackluster, and the current expansion in the Nasdaq seems heavily reliant on just one stock—Nvidia. This concentration could be a concern if other stocks don't start contributing to the rally.

That said, the QQQ still looks quite bullish. Until we see a solid reason to doubt this momentum, we’ll continue to take things as they come.

S&P Midcap 400

The midcaps are currently facing a tough battle to break above a dense overhead supply level at $586. This level also coincides with the MDY’s point of control (POC), which has been a point of rejection for the index multiple times. Despite these challenges, the MDY is displaying resilience by setting a series of higher lows and finding solid support on the rising daily 20-EMA.

We’re also seeing a notable contraction in volume as the price range narrows, which is a classic sign that a significant move could be brewing. It’s a situation to keep an eye on, as the market often surprises us when it consolidates like this.

Overall, while the midcaps may be struggling at the moment, their ability to hold support and form higher lows could set the stage for an upcoming breakout.

Russell 2000

The small caps are in a similar situation to the midcaps, experiencing a contraction in both traded volume and price range, which has now reached a critical point. We’re looking at a scenario where we could see either a high-volume breakout above the POC at $219 or a high-volume breakdown below the rising 50-EMA, which we've managed to hold so far.

The IWM is hanging on by a thread in a significant supply and demand zone at $214. This level was always expected to create some choppiness. If the index fails to hold this key support, it could lead to a challenging few weeks for small caps, potentially driving them down to the rising 200-EMA.

DAILY FOCUS
Stuck Between A Rock & A Hard Place

Right now, we’re caught in a bit of a holding pattern, with everything in a standstill as the market tries to decide whether to follow Nvidia’s lead. Unfortunately, we’re seeing a high number of breakdowns across various sectors, which isn’t the kind of action we want to see when a potential leg higher is forming.

That said, we’re not going completely risk-off. We already have a solid list of healthy growth names in our portfolio, including Nvidia. However, until we see more life in other stocks, we won’t be forcing any trades. Instead, our focus will be on managing risk and avoiding unnecessary losses until a clear direction emerges.

While there have been several failed breakouts lately, there are still promising setups in the market. It’s just a matter of being patient and waiting for them to materialize. Most importantly, we need to be incredibly selective about the trades we take.

WATCHLIST
Buy Them Right, Or Don’t Buy Them At All

AAPL: Apple Inc

• Apple (AAPL) is gearing up for a potential breakout from its multi-month consolidation pattern, a setup we first noticed forming back in July—similar to what we've seen with Nvidia. As AAPL approaches a critical juncture, teetering on the brink of breaking above its descending level of resistance, we're keeping a close eye on how this develops.

• Currently, AAPL is our primary focus. While there are plenty of attractive opportunities out there, the substantial bases forming on high-quality stocks like AAPL shouldn’t be overlooked.

• It’s worth noting that AAPL tends to move slowly and has a lower Average Daily Range (ADR). To enhance potential returns, consider using a leveraged ETF to amplify the stock's volatility. However, exercise caution with your position size and risk management. Keep your maximum risk (R loss) aligned with what you would use if trading AAPL directly, ensuring that you don’t expose yourself to excessive risk.

AUR: Aurora Innovation, Inc.

• AUR is making waves in the AI and self-driving automobile sector. Over the past week, it has developed a very tight volatility contraction pattern, marked by declining volume and the stock being wedged between its daily 10 and 20-day exponential moving averages (EMAs). This setup indicates that the stock is coiling for a potential breakout, which we find exciting.

• With the technology sector, especially stocks like Nvidia, showing strong momentum, AUR is another name we're prioritizing today. The synergy between AI advancements and the automotive industry positions AUR favorably within this leading theme.

• We're eyeing a breakout above the $5.65 level on high relative volume, which would trigger a long position for us. However, given the high incidence of fake breakouts we've observed recently, we'll be cautious. To manage our risk effectively, we'll allocate half-sized risk on this trade. This approach allows us to participate in the potential upside while safeguarding against possible stop-outs.