The market is pricing in a clear distinction that this is a risk-on environment. So much so that we have stocks like INTC and SNDK quadrupling in under a year. All I can picture is a crowd of buyers fighting eachother in line to buy stocks. We must not look at this from a perspective of when will this end. Shift your thinking into what will be the next big winner in this cycle. Remember, it’s okay to miss a large move in a stock as there will be plenty of other opportunities to catch another one.

We are in perfect environment to have many large moves born.

The next leg higher must begin with AAPL, MSFT, and NVDA. To keep these high prices on the S&P we need to see broader rallying in the mega caps.

Typically, we see the largest tech companies rallying in waves rather than simultaneously. One month AAPL could rally 10% while Microsoft is flat or even negative. This is what I mean by the market will move in waves from one stock/ sector to the next. As long as the majority of the largest weighted stocks are rising, the index will follow.

Turn your attention to the nine highest weighted stocks in the S&P:

All of these stocks combined bring in a net weight of roughly 39% of the entire S&P index. Let’s create an example out of this just to show how much the high percentages matter.

If 39% of the market is on average up +5% for the month and the rest of the market is flat. The S&P will be up around 2% for the month even though the rest of the market has done nothing.

Let’s change this up and say the 39% is up 5% but the other 61% is actually down 2%. Then the overall change on the S&P will still be positive at +0.70%.

Paying attention to the top weighted stocks is extremely important as they can dictate which direction the market is going while the majority of stocks are doing the opposite. Take this information and think what will happen if AAPL, MSFT, and NVDA, begin rallying. All of these stocks are relatively lagging recently and are on standby to drift the market higher. When looking at the current setups on the three stocks, NVDA and AAPL are the two that are currently in an uptrend. Microsoft has been in a downtrend for 21 weeks and is down -15%. Stick with what’s currently working rather fighting with what’s not.

We can use examples from the past few weeks as examples. To start off, let’s look at the Healthcare sector which we called out JNJ and MRK longs. While these trades didn’t end up working in our favor, we cut them as soon as the long setup was invalidated. Both of these stocks showed momentum to the upside with weekly closes over the 10 and 21-week EMA. Unfortunately this took a turn this week which saw a weekly close below both EMA’s. This was our sign to take these trades off and wait for price to regain strength above the 10-week EMA.

Many traders will find themselves being attached to positions and completely disregarding invalidation points. The same can apply in regards to taking profit.

JNJ

JNJ we called on longs based on price retracing to the key support level (21-week EMA). Price closed just above this support two weeks ago which validated a dip buy opportunity. The thesis for this stock was sent out inside the weekly letter:

This ultimately finished being a loser with contracts dropping -25%.

MRK

MRK had the exact same setup which ended up being -12.94%. You can see the setup sent to subscribers here:

High quality setups on these two stocks that resulted in being a fakeout.

MNST

One stock that has taken the market by storm was MNST. The company reported robust earnings sending the stock up 13% on Friday. Take a look at what we called on for this stock which has contracts already up over 100%:

In a single session these contracts doubled and have over 220 days until expiration. This paves the way for strong continuation up to 100 which will make this trade a potential 3x.

These were the main moves that needed to be noted as we wait for the other stocks in the list to continue higher. Now our focus will move into the stocks setting up large moves for the weeks and months to come.

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Once again the Iran headlines are flowing back through the Strait and Oil is not happy. The ones calling on higher inflation resulting in a market selloff are thinking a breaking point is coming. Well we got news for them.

Not happening.

They forget the one factor of markets that are potentially the most important. Markets are forward facing. If inflation is to rise but this will be proven to be temporary then this news will be shrugged off. All they have to do is pay close attention to when I call selloff and they would do very well. Very few, if any, called the Carry Trade sell and the Iran war sell as accurate as us. Granted we missed the low for longs but that’s what happens when your main goal is to capture a trend.

Plenty to cover today so let’s begin with the S&P recap:

This week started off well in our favor with the market selling off from the 7273 POC. Nearly 80 handles of downside came which took price all the way down to the 7193 POC, the lower end target for the week. Just as we expected, selling was due early in the week.

Take a look at what was said in yesterdays letter:

Our main focus now is if we can remain above a key support level to take price right back up to 7300 highs. More on this in the S&P Levels section. Let’s turn to two stocks that are primed for strong upside but have yet to show signs of relief.

Questionable Recoveries

Two stocks that were once quite strong have yet to solidify a low. All around we have plenty of stocks at highs or coming close to making one. Yet MSFT and TSLA still have yet to see any positive developments. They remain in a negative EMA stack but are starting to find some sort of support. There’s really no telling when these stocks will close this gap between the 10-week and 21-week EMA. All we can do is patiently wait for the crossover to come with a weekly close over both moving averages.

Both of these will likely pose strong trends when the day comes but for now we will avoid. While all four indexes are bullish, it’s not in my best interest to focus on shorts. Most of the shorts that happen are once the SPY and QQQ see the negative EMA stack crossover. That’s not to say shorts will not work but more so used as a safety precaution. Index strength brings a natural bid to stocks as a whole unless there’s a clear catalyst to outweigh the tide.

On the catalyst side, not one problem arises for either company. MSFT will be a dominant figure for AI while TSLA will continue to push headlines on future plans. This is nothing out of the ordinary and is building a strong coil for these two stocks to see powerful upside in the future. MSFT specifically has had warning signs for weeks and we posted warnings not to touch this stock. Since then the stock is on pace to close lower for the third week in a row.

TSLA, business as usual, pumping the stock on dreams which Elon is phenomenal at. Whether you believe the headlines or not, if money flows into the stock then there’s no questions needed to justify a rally. Simply wait for the crossover and the weekly closing price above to catch a strong upside move. While the stock was at lows during the resolution of the Iran war, we called on LEAPS. This was sent over on X for both TSLA and NVDA. Unfortunately TSLA had little follow through in pushing for a positive EMA stack and has resulted in sideways balance. Two weeks ago we parted with this idea and will leave it in the watchlist for when the crossover comes.

Having an opinion on a company is completely fine but your job is to keep that separate from intentions with the stock. All you need to focus on is the actual price.

Markets consistently misprice instruments and traders/ investors continue being caught on the wrong side even when being correct. Allow the market to tell you when your correct rather than you trying to tell the market what to do. One recent example of this can be TSLA. Anticipation of an uptrend was there once price broke over the 10-week EMA but plenty of work needed to be made to make the uptrend official. Luckily price remained sideways for an easy exit but luck is simply luck.

This is a reminder that you will not predict markets but a robust system can reward you overtime. Your job is to stack the odds in your favor and this recent example of TSLA was the opposite.

Outside of MSFT and TSLA, we did send out an update inside chat with a stock that has touched support this week. Currently bouncing off the 21-week EMA while the EMA stack is positive. If you want access to this along with the 5 other stocks sent in last two weeks, click the button below:

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Now we will shift our focus to the Volume Profile structure on the S&P.

S&P Levels

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Let’s kick this weekly letter off by diving into the database and observing what the indexes, sectors, and stocks are currently showing.

Indexes

Every index is strong right now with the DIA having the lowest EMA Diff % which means the 10-week EMA is currently 0.83% above the 21-week EMA. All other indexes are strong with the SPY being the second weakest. When looking at the Price vs 21 EMA, the QQQ is 9.75% above support. This tells us that the market rallied strong recently and is quite extended. We will not look at this as the market is selling off this week but just shows just how far price has rallied relative to the 21-week EMA. From a technical standpoint this is a very strong market and likely to continue showing this.

Sectors

On the sector front we have 8/11 sectors in a power uptrend. Same setup that is on all the indexes. Take a look at the tech sector (XLK) which is up 21.51% from key support. The next closest sector is energy which is 9.48% from support. Overall an odd mix as we typically see one of the two strong and the other weak. This combination raises red flags as Oil still has yet to begin flowing through the strait but tech on the other hand is showing this war is over. One part of the puzzle that we need to note is the mass number of layoffs is only fueling these stocks to go higher. AI continues to put pressure on the workforce which allows companies to rise to higher multiples. In my opinion, these companies may be expensive but the recent rallies are completely justified.

As we spoke on last week, JPM and BAC caught our eye as they began firing off long signals. When looking at the Financial sector (XLF) theres a clear trend change starting to develop. Price for the sector is above both moving averages while the 10-week is still below the 21-week. This will likely change soon as the difference between the two moving averages is only -0.73%.

The weakest sector right now is Healthcare (XLV). In last weeks weekly letter we posted contracts for JNJ which is one of the few strong stocks of the sector. Clear downward pressure in terms of overall sector but the EMA Diff % is improving. This is developing to be a potential strong wave of Healthcare stocks bouncing back sharply. The single best setup we noted was JNJ.

Take a look at the two stocks below which are the only ones on the radar that are showing dip buy opportunities. JNJ and MRK which are both in the Healthcare sector. No shock to us that these are pinging for long setups as the Healthcare sector is showing clear signs of recovery after a 5 week downtrend.

Stocks

Below are stocks that are setting up for a reversal in the coming weeks. The closest ones to putting in an official reversal are the stocks that have the closest EMA Diff % to 0.00%. This means the 10-week EMA is on the brink of crossing back over the 21-week EMA. Three stocks to pay close attention to is KDP, PM, and SNPS. One key detail that is showing from these three stocks is price is currently below both moving averages. Even if the EMA crossover form bearish to bullish occurs, price needs a weekly close above the 21-week EMA. For stronger confirmation you will want price closing over both moving averages.

All three of these stocks will be added to the watchlist this week.

Now we will turn to stocks that are currently bullish but price has closed the week below both moving averages. From my personal trading, I cut stocks that put in a weekly close below the 21-week EMA but that doesn’t mean the uptrend is invalidated. This is a safety precaution to avoid any further selling below the moving averages. AMGN, GILD, HON, and REGN, all show signs of sellers being present. If price were to see a weekly close back over the 21-week EMA and the EMA stack remains positive, then another long signal will be validated.

Here’s the long list of stocks currently in a power uptrend that will eventually fall into the Nearing Support and Caution category. Only two stocks out of the 40 currently bullish are red and both of them are only down roughly 2%. You could literally throw a few darts to pick a few stocks out of the bunch and be sitting on strong gains. Most stick with day trading but everyone should also have a portion of the portfolio in longer dated trades.

Stocks like ASX and INTC are part of another strategy that’s like this one but has different parameters. This strategy shown here solely focuses on the largest companies in the market.

Takeaways:

• All four indexes are showing strong bullish momentum (SPY, QQQ, DIA, IWM).

• 8/11 sectors are bullish with three recovering to soon flip bullish (XLV, XLF, XLY).

• AMGN, GILD, HON, and REGN, all closing in on flipping to a bearish trend.

• JNJ and MRK are both at support which are trading at attractive prices for longs.

• KDP, ORLY, PM, and SNPS, all showing signs of recovery with the positive EMA crossover coming soon. Price has already posted a weekly close over both moving averages.

Now we will shift our focus to the Volume Profile on the S&P (ES).

S&P Levels

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Jumping right into the recap, we saw strong upside above one of the key levels sent yesterday. The 7182 VAL set the S&P up for a strong rally once above. Overnight we rallied above this level and hit the intraday target at 7209. After the open there was a quick fakeout of downside before breaking back above the long level and hitting our target for the end of the week (7250).

Near the end of the session we also called on a long setup that was sent out in chat. We had our eye on this at the beginning of the week which now makes four long setups posted this week alone. Three separate sectors to capture upside momentum.

On top of this, we posted that all indices are currently bullish with SPY, QQQ, and DIA, all in a powertrend. Although IWM continues to be bullish and is on track to post the 44th week in a row of the 10-week EMA being above the 21-week EMA. Ever since posting on X that there’s a clear bullish recovery in play, we have rallied nearly 300 handles to the upside on the S&P. On the Nasdaq were up over 2,100 handles for +8%. Just to put that in perspective, this is already up half of the annual average in half a month.

Many times I said the tide will eventually shift and the EMA’s will guide us to the right direction. If you caught the bottom then congratulations but you will never do so when trend following. Our main focus relies on capturing the majority of major trends.

All of this seems jolly right now but not everything is currently bullish. Internals are currently slightly mixed but showing signs of overheating. The ADD is showing positive signs as the majority of stocks are currently also rallying with the S&P. Inflation is starting to be impacted from not only the lagging tariffs but also the higher prices of gas. Overall demand will ultimately slowdown but there isn’t a telling on the timing of this. Signals from the Fed are beginning to be mixed as anticipation of inflation going up is increased. Cuts are far out the window as of right now and some members are leaning towards hiking. The Fed balance sheet is on the decline while funds parked in RRP are on the rise. Money is also being drained from the Treasury which tends to come once tax season wraps up, like clockwork. Overall this is not a good sign in terms of liquidity for the market. All of this put together poses a clear tailwind that’s building up.

Look, the EMA’s on the indices and even plenty of stocks are looking phenomenal. When we have these warnings we need to simply look for potential areas of support where you know you want to be a buyer. I expect this uptrend to remain valid into 2027 but that’s not to say we will not see any selling at all. Any sells into the 10-week and 21-week EMA are gifts in uptrends. The market is giving you an opportunity to get long or just build into a larger position.

If your currently long on a swing timeframe then you will more than likely be fine. Caution needs to be sent to the ones who are buying short term contracts or looking for quick moves. In terms of sectors that typically outperform in this environment, you want to be focused on Energy, Materials, and Industrials. Real Estate, Utilities, and high multiple tech tend to be hit much harder.

Outside of all this, whether the sell comes or not, guidance will be posted right here in the substack.

Now let’s cover the stock that was sent out in chat today.

JPM - JP Morgan Chase

Here’s what we sent out in yesterdays post:

This should be an overall strong stock leading into the rest of the year. Bank of America is also on the radar but this is the clear leader in terms of strength so we will stick with JPM. As long as the stock holds within the current range for the week, a Positive EMA Stack will occur. Within the next couple months this will open the doors to a rally to new highs. LEAPS will do great with this stock especially if the momentum on this begins to increase. Contracts for this will be sent on Friday as long as this holds.

Just as we called on, JPM saw a strong rally and will very likely close the week green. This will fire off a valid uptrend on the stock and now paves the way for new highs.

We posted contracts for this inside chat:

This will be included in the letter being sent out later tonight. Looking forward to a medium term uptrend from here to send the stock above 350. Longer dated contracts can also work great if the trend remains valid for longer.

JPM 315 Calls @ 22.75 - 169DTE (10/16/2026)

Now let’s move on to the levels for today’s session.

S&P Levels

Crystal clear trend type move today with the S&P closing at session highs. Price soared the moment we crossed above the 7209 VAH. Since the market is at a current ATH we will pay close attention to the volume above that VAH. As you can see, we really never saw strong volume come in until we traded around 7230s. Above this we began to build up a high volume node (HVN) which is a sign of acceptance. You want price to remain inside this node and then continue higher to keep this strong buying intact.

At the time of writing this post, we are currently trading at 7250 which is in the upper end of this HVN. For a key support level we will use 7238 which is the bottom end of this node. Buyers previously held the market up into the close and I expect they will continue to do so into today. As long as we remain above this level, price can continue to rally up to 7300.

On the contrary, breaks below 7230 give signs of this rally being a trap. This will likely lead to a sell right back down to the value area just below. The main target for downside will be the POC at 7193.

That’s all from me, if you found value in this post then feel free to drop a like and share!

-Flint

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To kick off this letter I will briefly cover what we wrote last week inside We All Bought, Now What?

All four major indices have shown a clear power trend in the last two weeks. Every single one has the 10-week EMA above the 21-week EMA. IWM is the strongest which makes sense as this uptrend has held for 43 weeks and counting. Even with all the selling seen in the last two months, this index has held up tremendously well.

Something crystal clear about this rally is the fact the QQQ is rallying to new highs. Tech sector is robust and very likely to continue in the weeks to months to come. Anytime the market is rallying, you want to see tech not only strong but leading the way.

One way we can see which sectors are strong or weak is using the EMA difference percentage. This measures how far the 10-week EMA is relative to the 21-week EMA. Technology, Energy, and Materials are currently leading but we must note that the strength in energy could bring tailwinds to this overall rally. Oil has a positive stack and just closed back above the 10-week EMA, not something you want to see right now. Overall strength in stocks outweighs oil as of right now since the war is at a ceasefire standstill.

Now that we have broken down the key components of this rally, let’s cover stocks that are primed for large upside moves.

So far there’s plenty of top market cap stocks that have already posted a positive EMA stack. Our job is to now wait for them to come back down to key support. This support comes in at the 10-week EMA and 21-week EMA. Take a look at what is already positive and then we will cover what’s setting up for some long setups.

First and foremost, the list of stocks in here is quite long. Look at this simply as a watchlist as we will be breaking down each setup as they form. The stocks already in a power trend we want to see the 10W EMA % to be green. This means the stock is coming up on support and begin opens the door to add or get long. Ideally these stocks aren’t over 10 weeks into a current uptrend so once we dive into the charts we can see.

Only three stocks are near support and those are KO, MNST, and COST.

KO has consolidated near highs after a sharp rally into the 80 handle. The last two weeks price has remained supported off the 21-week EMA. Previous week got the close back over the 10-week EMA which is overall a positive sign for continued upside back to 80s. As long as this holds above the 21-week EMA, we can use this area between the two averages as a robust support.

KO 80 Calls @ 3 - 208 DTE (11/20/2026)

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Plenty has happened since the last post, but we navigated quite well through the software selloff and the Iran War selloff. Now, the market has returned to all-time highs, and the negative sentiment, for the most part, has been wiped away. The war has yet to officially conclude, but everything going on points toward it. Iran has yet to come to terms with the US, while neither side wants to continue bombing. Both sides very well could, but this would only make the situation for Iran far worse. Knowing this, President Trump placed a blockade at the end of the strait and is requiring all ships passing through to report to the US. You see many claims online that this war has been an utter failure, but I don’t think so.

My goal is not to debate the rights and wrongs of either side, but solely to focus on the current state of the war. A ceasefire extension was announced earlier this week, which actually benefits the US and not Iran. The reason being that the blockade has forced Iran to sit on a stockpile of oil. A large portion of the revenue Iran makes relies on exporting oil. With this now blocked off, there is little to no revenue being generated. It doesn’t matter when you think Iran will make a deal; the fact that they are now cut off from generating income is devastating. This will lead to a breaking point where a deal must be made in order for Iran to avoid spiraling into an uncontrollable economic crisis.

Back when the US pulled out of the JCPOA, we put sanctions on Iran. A blockade, however, is far worse, as there is no means to import or export any goods. They have been nearly completely shut out from the entire world. Not only will unemployment skyrocket, but they could also be forced to raise prices at the pump, making gas unaffordable for most. Inflation will undoubtedly soar and leave Iran in an extremely tough spot. There is only so much pain a country can go through before the people start to turn against those in power. Just look at the US: current prices at the pump are over $4/gal across the country, and everyone blames Trump. Support for the current president will dwindle over time.

This alone will lead to a deal very soon, and it is the reason I think this war concluded even before the blockade was announced.

Add in the fact that countries are actually making deals with the US to purchase oil, and it becomes clear who is winning. As we discussed weeks ago, Iran is not a country that will bend the knee easily. They are willing to die for what they believe in far more than nearly any other country out there.

Militarily, I think the president is being very honest about the strikes made on Iran. They obliterated Iran’s Air Force and Navy, and many of the missiles they had are now spent. There really isn’t any telling how many missiles are left, but I think it’s safe to assume that well over 60-70% were used. If this wasn’t the case, then don’t you think the blockade would be considered a breach of the ceasefire?

The fact that Iran hasn’t called this a breach of the agreement just shows they want to avoid continuing the war. All they have against us is using the media to try to turn countries against the US, which is only working to some extent.

When we turn to the stock market, we can clearly see that large funds are agreeing with this and do believe the war is over. Trump commented on having zero knowledge of whether there are mines in the strait, yet oil rallied, and the S&P continued to hold. Selling stepped in yesterday on the news of Iran’s negotiator resigning, but this was a lackluster headline. None of that truly matters, as one person doesn’t solidify a deal being made. Iran goes into negotiations prepared ahead of time, knowing what will and will not be acceptable. The market took this news and quickly rallied right back up.

Taking all of this in, we will now look into the indexes and see where we currently stand.

Two weeks ago, I called out LEAPS on NVDA and TSLA. If you’re paying attention, then you have seen NVDA back above 200, while TSLA just sold off post-earnings. The long setup on NVDA remains robust, but TSLA will need more time. I don’t like the stock here after the recent report.

Soon, if selling starts to come in on the S&P, I will have a level to purchase calls with multi-month expirations to capitalize on the grind higher to 7500. At current levels, these contracts aren’t trading at attractive prices from a risk-to-reward perspective.

Let’s now break down where support levels are and where money is flowing.

Indexes (SPY, QQQ, IWM, DIA)

All four are firing off fresh long signals based on last week’s closing price. We need to take this with a grain of salt because this is one of the strongest 3-week periods we have seen in the market in a long time. Fair warning to anyone trying to buy at the highs, as the SPY and QQQ are quite far from the 10-week EMA.

We will use the 10-week EMA as a key support level to show us week-to-week trend health. The 21-week EMA below is a stronger support level, but it is hit much less frequently. My expectation over the next three weeks is to see selling back down toward the 10-week EMA to digest this large move we have seen. Very rarely will you get a strong rally like this and not see any selling to set a floor of support.

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I hope you all had a great week, both in and out of the markets. Last week brought the S&P right back down to the key Value Area Low (VAL), which has now held twice and prevented us from pushing lower. This level sits at 6613 and marked the low during the overnight session on Sunday.

Before diving into the levels for the week, we will look at the economic calendar and then the overall trend for both the S&P and Nasdaq.

Economic Calendar

• Monday: None.

• Tuesday: None.

• Wednesday: Interest Rate Decision.

• Thursday: None.

• Friday: None.

Overall, all eyes are on the Fed this week regarding their expectations for the conflict with Iran. They will likely remain cautious, pointing to the rise in oil prices that could trigger a sharp increase in inflation. Whether this is a prolonged or temporary issue will likely depend on the President. Interest rates are expected to remain unchanged, a trend that will likely continue for most of the year. Little weight will be put into these upcoming meetings, as the Fed may wait for more clarity from the administration. It is a difficult environment to navigate, as Trump pushes for lower rates while the economic data provides justification to keep them elevated.

SPY & QQQ Trends

SPY

Price has now seen a weekly close below both the 10-week EMA and the 21-week EMA. These indicators are on the brink of a bearish crossover, which could trigger steeper selling. The 21-week EMA at 674.90 will be a key resistance level this week and represents one of the most attractive levels to initiate shorts. Whenever we see a weekly close below the 21-week EMA, it is likely that new lows will be hit in the coming weeks. We will pay close attention to this average as long as price remains below it.

QQQ

The Nasdaq has posted its second consecutive weekly close below the 21-week EMA. This setup is now identical to the S&P, which is a notable shift since the initial selling was led primarily by software stocks. A broader sell-off developed once the conflict began. For now, we are using the 21-week EMA at 604.46 as key resistance. Closes below this level will continue to put pressure on the markets and lead to further selling toward new swing lows.

Both indexes remain in “sell the rally” territory, even as the President suggests otherwise. We continue to hear that this sell-off will be short-lived, but current data says otherwise. Ultimately, the priority is whether we can get a weekly close back above the 21-week EMA on both the S&P and Nasdaq; everything else is secondary.

S&P Levels

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I hope you all had a great week, both in and out of the markets. This post will dive right into S&P levels as we observe a sharp move lower. Any data released in the coming month is completely irrelevant; this weekly plan aligns not only with the ES (including SPY/SPX) but also with the overall markets. By using swing levels, we will be able to capture large moves across a significant number of stocks. There will be clear signs when the market is ready to rebound, so you will not have to worry about picking a bottom. As I previously mentioned, waiting for strength provides far greater odds of being right than attempting to buy a low. We know sellers are clearly in control, so we need to see buyers flip the script and reclaim a key level that sellers are currently defending. Let’s dive into the volume profile structure of the S&P and determine where buyers and sellers are active.

S&P Levels

First, we need to look at the big-picture view, which shows the swing-high to swing-low trend and the bounce in price action we have seen in recent months. Looking back, we established a range just below 6600. At the time of writing, we are actually trading below those lows. This is a great example of how to navigate prices when the volume profile is less effective. A basic but successful approach is to use large psychological numbers for targets. For the downside, this means using 6550, 6500, 6450, and 6400 as key levels so long as the move lower continues.

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The unfolding of the geopolitical tension between the US and Iran is underway. Based on the recent weekly close on the S&P and Nasdaq we had anticipated an escalation of this over the weekend or next week. Within 24 hours the US under went strikes on Iran taking out the supreme leader. While we can’t predict what the US or Iran will do next, we can have an idea of what has already happened and what sectors are going to see changes.

The escalation of conflict between the US and Iran represents the most potent source of market volatility this week due to its immediate and profound impact on global energy supply chains. Because the global economy is still sensitive to inflationary pressures, any threat to the free flow of oil through the Middle East sends shockwaves through the futures markets. This specifically centers on the Strait of Hormuz, a narrow chokepoint through which approximately one-fifth of the world’s liquid petroleum passes daily. Even the threat of a blockade or military skirmishes in this region adds a significant geopolitical risk premium to crude prices, which in turn raises input costs for almost every other sector of the economy.

When energy prices spike unexpectedly, it creates a “twin-threat” for equity markets. First, it acts as a tax on the consumer, reducing discretionary spending power as gasoline and heating costs rise. Second, it complicates the mission of the Federal Reserve; if high energy costs keep inflation metrics above target, the Fed may be forced to keep interest rates higher for longer, even if the broader economy begins to slow. This fear of “stagflation”—stagnant growth combined with high inflation—is exactly what causes institutional investors to pull back from stocks and move toward defensive positions.

Beyond the direct economic impact, this conflict triggers a psychological shift in the market known as a “flight to quality.” During periods of high-intensity military tension, the standard correlation between assets often breaks down. Investors reflexively sell “risk-on” assets, such as technology stocks and high-yield corporate bonds, and pivot into “safe havens” like gold, the US Dollar, and Treasury bonds. This rotation happens rapidly and can lead to sharp, intraday drops in the S&P 500 and Nasdaq.

Now this is all of the knowns as of right now so now we will shift our focus to the unknown.

The potential future paths of this tension could play out as follows:

The most immediate path involves a transition from targeted air strikes to a full-scale maritime blockade. While the Strait of Hormuz is technically an international waterway, Iran could utilize “gray zone” tactics—such as sea mines, drone swarms, or fast-attack craft—to make the passage uninsurable. If major insurance providers continue to pull coverage, as seen in the last 24 hours, the strait becomes closed for all practical purposes. This would force the US to initiate large-scale naval escort operations, a move that historically leads to direct, high-intensity naval skirmishes.

A second path involves the “Axis of Resistance” proxies expanding the theater of war. If the Iranian leadership feels cornered, they may activate sleeper cells or proxy groups like Hezbollah and the Houthis to launch synchronized attacks on US bases in Qatar, Bahrain, and Kuwait. Such an expansion would turn a localized conflict into a regional one, forcing the US to choose between de-escalation or a broader campaign that includes ground-level targets across multiple borders. This scenario creates the “prolonged uncertainty” that markets fear most.

Lastly, there is the risk of a domestic command-and-control collapse within Iran. With reports of significant hits on Iranian leadership infrastructure, there is a distinct possibility of “rogue” commanders acting without central authority. In this “use it or lose it” scenario, localized military units might launch ballistic missile barrages simply because they have lost contact with a central command. This unpredictability makes it nearly impossible for global markets to price in a “ceiling” for the conflict, as there is no single entity to negotiate an off-ramp with.

The fallout from these escalation paths is not distributed evenly. While the overall market may see a broad sell-off, these specific sectors are in the direct line of fire:

• Airlines and Tourism: This sector is facing a dual crisis. The closure of Middle Eastern airspace—particularly the hubs in Dubai, Abu Dhabi, and Doha—has already led to thousands of cancellations. Rising jet fuel prices, which are gapping higher this morning, will immediately crush the profit margins of global carriers like United, Delta, and Lufthansa.

• Automotive and Manufacturing: Modern car production relies on “just-in-time” supply chains. With the Strait of Hormuz effectively blocked, the delivery of specialized plastics, rubber, and petrochemical feedstocks is being halted. Analysts estimate that a sustained disruption could increase vehicle production costs by 15% to 25% due to the surge in raw material prices.

• Technology and Growth: This sector is highly sensitive to interest rates. If energy-driven inflation remains “sticky,” the Fed will be unable to cut rates as planned. This puts immense pressure on high-valuation tech stocks, which are already reeling from the broader “risk-off” sentiment.

• Consumer Discretionary: As oil prices head toward $100 per barrel, it acts as a global tax on consumers. Retailers like Target, Best Buy, and Nike will likely see a sharp drop in demand as households redirect their spending toward essential energy and food costs.

Heading into March, we are in a tough spot as the broader market rallies while tech has seen the most selling. With tech in a risk-off phase and the rest of the market now approaching that territory, we are setting up for a sharper move to the downside. The companies that have outperformed are now on the radar to feel the impact of inflationary pressures. As we all know, any increase in prices will, without a doubt, be passed on to consumers. Furthermore, the Fed will likely be stuck holding rates until Iran backs down.

The remarkable part of all this is that you would be on the right side of the move if you simply followed the moving averages. For weeks, we have called for further selling, and it now appears we are over 200 handles off the highs on the S&P and 2,000 handles on the Nasdaq.

In addition to this warning, we called for broader weakness in the tech sector as the implications of AI become clearer. The time will come when we flip back to being overall bullish, but that time is not now.

We will now pivot to the Economic Calendar for the week.

Economic Calendar

Monday: Manufacturing PMI

Tuesday: None.

Wednesday: Services PMI

Thursday: None.

Friday: Unemployment Rate

While we usually pay close attention to any changes in this data, the recent catalyst involving the US and Iran carries far more weight. Investors will now pay attention to the impacts of this data after the fact, rather than before. Inflation is setting up to move back up, so these data points are going to see complete shifts compared to what we will see this week.

S&P and Nasdaq Trends

SPY

The SPY is once again in a position where I will be prepared for a rejection at the 10-week moving average, with plenty of room to move down toward the 21-week EMA. Every single time we have broken below this 10-week moving average, we have seen a sharp retracement toward the 21-week EMA.

Therefore, heading into this next week, we want to see another retracement down to the 21-week EMA, which currently sits at 676.53. I anticipate further selling will break below the 21-week EMA and continue toward new lows. We could expect a target down to 649.32, which was the swing low set during the week of November 17, 2025.

QQQ

Last week we saw a shocking turn as the NASDAQ was holding well below both the 21-week EMA and the 10-week EMA. The interesting part was the sharp rebound at the end of the week, which actually closed the price just above the 21-week EMA.

Heading into this next week, given the recent news regarding the US and Iran, I expect we could see resistance form at this 21-week EMA, which is currently at 606.11. From there, we could expect a strong sell-off toward the recent lows of 580.39, set on November 17, 2025.

This concludes the breakdown of both the S&P and NASDAQ recent trends, as we maintain an overall bearish outlook heading into the week. We will now shift our focus to the S&P levels for the weekly and daily timeframes using the volume profile.

S&P Levels

With the recent gap down into the Sunday session, we saw a move right down to the value area low at 6802.

This level is a key support for the week, as it represents the value area low (VAL) of the largest value area from the last few months. The market has remained relatively supported above this level during the last four major dips. If you are looking for a place to hold longs this week, you ideally want price to remain above this 6802 level. As long as we hold here, I expect a retrace back up to the 6889 point of control (POC), with a continuation higher toward the 6968 value area high (VAH). If we fail to break below this major VAL, we could very well see a medium-term low form as the market moves back toward all-time highs.

This makes the 6802 value area low a pivotal point for the remainder of the week.

Now that we have a prime catalyst for potential volatility, we can spread our targets out to other major levels. Let’s be blunt about the cases for bullish and bearish momentum. If price is able to remain above the value area low, we should expect a move back toward the 7000 psychological level. However, I believe we will once again see sellers step in to move price back down to that 6889 point of control.

For the downside, I strongly believe that further escalation between the US and Iran could send this market into the low 6600s. There are three levels to watch for downside: the high-volume node (HVN) at 6782, the point of control inside the lower value area at 6729, and the value area low at 6613. The most logical path for bears is to target that 6729 POC before seeing any type of relief. If the conflict continues to escalate, we could move right back down to that 6613 value area low. We must pay close attention to all incoming news revolving around the US-Iran conflict.

On a daily basis, we are leaning on the 6802 VAL as key support for moves back to the 6889 point of control. If the market bounces off 6802 and spikes to 6889, we want to see price hold that level as support for a break toward the VAH. For example, if we open Monday and spike to 6889, we will likely use that POC as support for continued upside in the next session.

You must approach the market with a risk-to-reward perspective. The most attractive level for longs is right around that value area low. If the market opens at 6870—just below the POC but well above the VAL—there really is no room for a position. I would rather focus on a potential sell-side move back to the VAL before attempting a long. For the downside, it is different; you want to play the break. Once we break below the 6802 VAL, you want to be short to capture the move toward 6729 and 6613.

Each session, I will deep dive into these levels and provide more context. This leads us into our daily scenarios.

Daily Scenarios

Scenario A: If price is able to remain above 6802, I expect a strong rally back up to the 6889 point of control.

Scenario B: For the downside, we want to give the 6802 level some room. We will use the key low-volume node at 6794 as the trigger to activate shorts. Once below this level, I expect a swift move down to the 6729 point of control.

That is all for me. I hope you all have a great week.

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There has been a significant development following the Supreme Court’s ruling that President Trump’s tariffs were unlawful. The President quickly shifted to pushing new temporary 10-15% flat global tariffs that will take effect this Tuesday. Over Sunday night, we have seen a broadening sell-off across the indices in response to this news. You need to consider not only the measures the United States has placed but also the possibility of retaliatory actions. No country will welcome these tariffs, and many will likely threaten counter-tariffs on the US during the week. I expect the President will address this new wave of tariffs during the State of the Union speech this Tuesday.

We could see a slower session on Tuesday as the speech isn’t until 9pm EST. The market is likely to slide lower during the speech and continue that trend into the next day. There is plenty of data to suggest a strong economy, but he has preached this since the beginning of the year, so it will be nothing new. The real problem will arise when he discusses the tariffs and his intention to take whatever measures possible to keep them in place. A deeper sell-off may occur, similar to when tariffs were first introduced under President Trump. The market often reacts with fear upon the initial release, followed by a period of stability before retaliation remarks from other countries emerge. Eventually, tariffs are usually eased or lifted, and the market drifts back up.

What makes this situation tricky is the recent weakness in tech. With the Nasdaq remaining in a downtrend, this news could snowball into a larger move to the downside. I want to emphasize the word “could,” as we truly have no idea what the President will say. All that matters is what price action shows and whether it validates or invalidates the current downtrend.

Historically, the market moves less than 1%—either up or down—the day following the State of the Union. On average, the market shows a slight positive reaction in the week following the speech. Overall, history suggests there is no real edge in predicting this event. However, I believe we will likely see a move of over 1% to the downside. What we really need to find out from the President is whether these tariffs will be capped at a 15% flat rate or if there are guidelines that could lead to further increases. This is crucial, as we could see a broader escalation if other countries do not agree with the reasoning behind them.

Given these factors, it is unwise to swing positions over the weekend or into the next session if you are using short-dated contracts. For instance, we might receive bullish news during a session that causes the market to finish higher, only for the narrative to flip overnight due to a bearish update from the President or retaliatory remarks from another country. There is no telling when or what will be said, or how other nations will manage these remarks. I think it’s best to take this on a day-to-day basis; conditions can change on a dime, leaving us bullish one day and bearish the next.

Weekly Earnings Outlook

Next, we turn to the earnings side of the week. Tuesday and Wednesday are the primary days to watch. On Tuesday, Home Depot and Lowe’s report, which will provide key insights into the construction sector. While I do not typically take positions in these companies, their results will offer valuable data regarding the building stocks we have previously discussed. Just as we analyzed building data last week, we will do the same with these reports. If earnings and future projections come out strong, we can expect a significant leg higher for those building stocks.

On Wednesday, we get a deeper look into the health of the AI sector. With semiconductor giant NVIDIA reporting, we will gain clear insights into recent performance, future projections, and deals currently in the works. The key will be NVIDIA’s level of confidence in the future of AI and whether new deals are still being secured.

For reference of how high expectations are, look at the consensus for the report:

Currently, the main drivers of AI appear to be the big tech giants that are beginning to consume their competitors. These companies have the funds to withstand downturns, whether caused by high AI operational costs or underperforming subscription revenue. In contrast, companies that took large risks with AI as their sole driver are currently being slammed—and rightfully so. Many went all-in on AI but are simply not meeting expectations.

The tech giants are built to endure this. Look at Meta, for instance, which shifted its focus heavily toward VR. They spent enormous sums on the metaverse only to see little to no revenue. The metaverse was a hypothetical dream where Zuckerberg expected retail consumers to buy headsets and live in a separate reality; in truth, nobody asked for or wanted that.

While there are similarities between AI and the metaverse, the differences are clear. We know AI has plenty of use cases, but the primary problems are rapidly rising competition and the speed of improvement. As models become stronger and more efficient, it becomes harder for a company to remain dominant because competitors can easily shift their models to offer what was once an exclusive service.

Adobe vs. Apple

A prime example of this shift is the competition between Adobe and Apple. Adobe’s primary issue arose when they shifted to a subscription model costing between $50 and $70 a month for Adobe Firefly, accessible via PC or Mac. Meanwhile, Apple is offering Apple Creator Studio for just $13 a month, providing photo and video tools powered by Apple Intelligence.

Crucially, Apple’s tools are available on iPads and iPhones. The largest group of users editing photos today are on mobile devices; they don’t want to switch to a computer to get work done. On apps like Instagram, hundreds of millions of users want a cheap, accessible way to enhance photos and videos directly from their phones. What was once Adobe’s dominant territory is now being offered cheaper and more conveniently.

This is the central problem for AI companies right now. A larger competitor can simply replicate your business model for less. Companies like Apple have the capital to invest, undercut prices, and drain your customer base. This explains why we are seeing the highest capital expenditure in history from big tech regarding AI. They know the value is there and are determined to remain dominant.

Currently, funds are dumping smaller AI-specific companies. No one knows for sure who the ultimate winner will be, but a good indicator is looking at who already has the customer base and the capital to survive periods of uncertainty. Microsoft, Google, Meta, and Apple are the likely dominant winners of the next decade. Interestingly, Apple has spent relatively little on AI compared to its peers, yet they have essentially dethroned Adobe in its own niche.

Over the next one to three years, I expect many companies to unravel as competition forces them to adapt on a weekly basis. This volatility destroys the stability these companies once enjoyed. If you want to invest in AI, it is safer to stick with the main tech stocks. You might miss a few massive rallies from obscure startups, but the majority of those companies will eventually disappear. In every cycle, money pours into a sector and startups flourish, but 10 out of 10 times, only the dominant players remain.

AI is here to stay, but the sector may see a slowdown in the immediate future. Now that we have covered the news, earnings, and AI concerns, let’s shift our focus to the weekly setups for the S&P 500 and the NASDAQ.

Now that we have covered the news, earnings, and recent concerns in AI, we can shift our focus to the weekly setups for the S&P 500 and the NASDAQ.

SPY & QQQ

Once again, we saw a strong weekly close on the SPY, featuring a sharp bounce directly off the 21-week EMA. This led to a strong rally, allowing the price to close back above the 10-week EMA. The key takeaway for the S&P 500 is its continued resilience; we have only seen two weeks where it closed below the 10-week EMA, both of which resulted in an instant bounce off the 21-week EMA. From there, the index maintained a steady grind toward new highs.

While this bullish case remains intact for the S&P, we must look deeper into the NASDAQ to determine the broader market’s trajectory. We need to see if we are positioned for a breakout through previous highs or if we are merely retesting all-time highs only for sellers to step in again. As it stands, the S&P looks healthy, with price action holding above both the 10-week and 21-week EMAs.

The NASDAQ tells a different story. The week opened below the 21-week EMA, following a prior weekly close below that same level. Seeing the price reclaim a close back above the 21-week EMA is a positive sign, but I want to be clear: to be truly bullish on tech, we need to see a close above the 10-week EMA. Every sustained move to the upside originates above the 10-week EMA, not below it.

Rather than chasing a single-week bounce, I prefer to focus on catching the start of a new trend and riding it until invalidation. For example, back in May 2025, the 10-week EMA crossed above the 21-week EMA. We received a weekly close over both averages that same month, which fueled a rally from 500 all the way to 630. Every single week during that run closed above the 10-week EMA. However, since the moment we saw a weekly close below the 10-week EMA, we have not seen a new all-time high in 13 weeks. In contrast, the SPY has maintained closes above its 10-week EMA and has successfully broken out to new highs.

As I have noted previously: if you are bullish, focus on the SPY; if you are bearish, focus on the QQQ. For me to flip bullish on the QQQ, we must see a weekly close over the 10-week EMA, which currently sits at 612.97. Until then, the trend remains down, and we should expect a continuation toward new lows.

The primary downside level of interest is 579.92, a low last seen in November 2025. It is vital that we hold this level if we hope to see new highs in the coming months. This November low also aligns closely with the 200-day EMA at 583. If you are a dip buyer, you should look for a move into this zone for a potential rebound back toward the 21-week EMA, currently at 606.

In summary, the best approach is to look for shorts on the NASDAQ and longs on the S&P. If you are bullish, I actually recommend focusing on the RSP (the equal-weight S&P 500 index), which has been consistently hitting new highs. There is clear broad strength in the S&P, while tech continues to weigh down the upside. The RSP has held above its 10-week EMA since November 2025, yielding over 7% upside in just four months.

We will now shift our focus to specific stocks setting up for large moves this week, followed by a breakdown of S&P levels for the week and today’s session.

Stocks

META: Meta recently reached a swing high toward the 750s, an area where we saw clear selling pressure in both February and August of 2025. I do not expect the stock to reach new highs in the near term; instead, we are likely due for more selling back toward the mid-500s. While the company continues to report robust numbers—especially with a steady increase in active users—the recent failed attempt to hold gains after earnings suggests that selling will continue. I expect an attempt to break below 600 this week.

Read more

First, I want to cover some details on the recent developments in the AI mania. Warning signs appeared a while ago when companies started pushing absurd spending followed by highly ambitious goals.

What the Surge in AI Spending Has Taught Us

The recent wave of earnings reports has highlighted a glaring issue: the massive capital expenditures poured into AI are not yet matching the promised returns. Big Tech is spending at a historic rate, with AI-related CapEx estimated to have breached 7 percent of US GDP. To put that into perspective, this surpasses the peak tech spending seen during the height of the dot-com bubble.

While artificial intelligence is undeniably a generational technological shift, history is filled with examples of infrastructure booms that devastated early investors because the spending ran too far ahead of actual commercial monetization.

The Telecom Fiber Overbuild (Late 1990s): During the dot-com era, telecommunications companies spent aggressively to lay millions of miles of fiber-optic cables, banking on an immediate, insatiable demand for internet bandwidth. The demand eventually arrived, but not before severe overcapacity and massive debt loads led to historic bankruptcies, such as WorldCom and Global Crossing. The infrastructure changed the world, but the original investors absorbed massive losses.

Circular Financing Deals: Today, we are seeing complex arrangements where mega-cap tech companies invest billions into private AI startups, which then turn around and use that exact capital to buy chips or rent cloud computing power from those same mega-caps. This closely mirrors the vendor financing practices of late-90s telecom equipment companies like Lucent Technologies, which artificially inflated short-term revenues while masking true, organic demand.

The Railroad Booms (1800s): We can look even further back to the railroad buildouts. Laying the tracks revolutionized global logistics and the broader economy, but the immense, upfront capital required led to severe overinvestment, brutal price wars, and eventual economic panics. The societal benefit was massive, but the initial builders often went bankrupt.

The core lesson for traders and investors is to separate the technological promise from the immediate investment reality. As current earnings calls are proving, Wall Street’s patience is wearing thin. Companies are being punished for building the infrastructure without a clear, near-term path to profitability, triggering the exact unwinding we are seeing in the markets today. The clear winners are the semiconductor producers, while the companies purchasing them will be the ones taking the hit.

We can relate this to the next big thing that may come. All manias will end up looking quite similar, and we can use historical ones as a reference. To be clear, this is not to say you will perfectly time the top, but you can closely monitor the unraveling of one. The script could flip back in favor of AI if companies start producing strong revenues from their investments. However, even if a company posts strong revenues, it could still fall below the sky-high expectations set when the mania started, causing the stock to sell off anyway.

For instance, if a company making $5 billion in revenue per quarter gets on an earnings call and promises revenues will triple within the next year, a subsequent quarter of $6 billion might be historically strong. But because the stock moved exponentially higher based on the previous promise, that $6 billion will be seen as a disappointment. Look at Oracle: they made massive promises of future revenues, yet the stock got absolutely crushed. They didn’t see terrible revenues, but it shows how aggressive the selling can be when expectations aren’t met.

When looking at earnings, you need a great idea of what the company previously promised and whether those promises are being met. You may see a double beat that seems solid, but under the hood, they could be way off their projections. Stock prices are based entirely on the future performance of a company. There are many similarities we can draw from the historical manias of the past.

Let’s move on to stocks that are setting up for some strong moves.

Stocks

Costco (COST) is setting up for a break through all-time highs. If we can get a close over 1040, this will confirm a breakout for a strong move higher. This seems to be next up, just like the move we called on Walmart. It could see a straight-line move higher up to 1200. Even with market downside, this could be used as a hedge against the overall indices. Over the last few weeks, we have seen indices moving up and down while this stock has rebounded sharply back to highs. It is looking good for the break higher, with confirmation being a weekly close over 1040. An update will come once this long setup is validated.

This is the only new setup I really have my eyes on going into this week. We have plenty of long setups already working, along with some shorts as well.

Let’s dive into how the indexes finished last week before moving on to the Economic Calendar and S&P levels for today’s session.

Index Trends

(SPY) We saw the first weekly close below the 10-week EMA in 12 weeks. The last time this happened, price bounced off the 21-week EMA. Over the last week, we saw price come close to the 21-week before seeing some relief. In the near term, we can expect further selling down to the 21-week EMA, which is now a must-hold for bulls. The 21 tends to be a key support level when we are in a medium-to-long-term uptrend. Watch closely where we close this weekly candle—whether it is above the 10 or below the 21. Anytime we see breaks below the 10, expect downside to the 21; below the 21, we can start to see strong selling step in. Two recent examples of this are March 2025 and August 2024. In August, we saw a swift 3% gap down heading into the week, and in March, we dropped 16% in the following five weeks.

(QQQ)The Nasdaq shows quite a different story, as price has seen a weekly close below the 21-week EMA. What we need to pay close attention to is if the SPY follows through and also breaks below the 21. Back in September 2021, we had the exact same scenario. Price on the QQQ closed the week below the 21, while the SPY held above. The following week, we saw a sharp bounce on both indexes that reclaimed the 10-week EMA. Given the overall weakness in tech, we really need to see the SPY follow with further downside to confirm a broader market slide. Ideally, we bounce back and stocks continue to push higher, but we must watch closely to see if this market is ready to slide lower.

Economic Calendar

Tuesday: None.

Wednesday: Building Permits/Starts & FOMC Minutes

Building data will be important for our building stocks: AGX, BLD, and IBP. We want to see an increase in building starts along with permits. Growth in this data, especially with these stocks near all-time highs, can really spark a leg higher this week. The FOMC Minutes show the majority supporting holding interest rates, with two members voting for a 25 bps cut. Powell reassured everyone at the last press conference that we have started the year strong in terms of economic data.

Thursday: None.

Friday: Core PCE and GDP

Both of these releases will be important in guiding the Fed forward regarding interest rate cuts. For the last nine months, Core PCE has remained consistent, moving higher only around the 0.20% range, which is the average for the last two years. Another stable release here will support markets and potentially prevent further downside to finish the week. GDP, on the other hand, is moving higher at a rapid rate, with the latest release at 4.4%. Excluding the COVID anomaly, we have not seen GDP push this far above 4% in the last ten years. If we can get a lower Core PCE and a higher GDP, we have a recipe for a strong index rally. This will set the tone for the following week of trading.

S&P Levels

Read more

Once again, we look to be heading into another volatile week. The S&P and Nasdaq have been in an interesting spot for the last couple of months. We have seen many failed attempts to break to new highs, resulting in sharp sell-offs back down to the 21-week EMA.

The two indices continue to show a divergence on the weekly timeframe. The S&P has closed above the 10-week EMA for 11 weeks straight, while the Nasdaq closed below the 10-week EMA for the first time in 10 weeks. The reason is quite obvious: tech has taken a beating in the last week, while the RSP (the equal-weighted S&P 500) has continued to break to new all-time highs.

A few weeks back, I warned that the Nasdaq was showing signs of tech weakness, though for the most part, we avoided the worst of the selling. Our main tech stock is Apple, which is heading right back up to all-time highs. This week will be very important, with the main focus being where the Nasdaq closes. If we get another close below the 10-week EMA, I expect we will soon see an attempt to break below the 21-week EMA. A larger sell-off will likely develop and broaden to the rest of the market. To be clear, inside the Flow State series, we primarily look at the higher timeframe perspective so we can prepare for the week ahead.

Here’s a checklist everyone should be using:

Uptrend

Uptrend: 10-Week EMA above 21-Week EMA with price having a weekly close above the 10-Week EMA.

First Signal of Trend Possibly Breaking: Price closes below the 10-Week EMA on a weekly timeframe.

Confirmation Trend is Broken: Price closes below the 21-Week EMA on a weekly timeframe.

Downtrend

Downtrend: 10-Week EMA below 21-Week EMA with price having a weekly close below the 10-Week EMA.

First Signal of Trend Possibly Breaking: Price closes below the 10-Week EMA on a weekly timeframe.

Confirmation Trend is Broken: Price closes below the 21-Week EMA on a weekly timeframe.

Let’s now dive into the charts of both the SPY and the QQQ.

SPY

After last week, we can see that once we sold off below the 10-week EMA, we got a swift move right down to the 21-week EMA. Friday’s bounce brought a sharp recovery to reclaim back above the 10-week. As we noted in the previous post, any sell below the 10-week will target the 21-week. The sell-off reached our target, which was exactly where the market rebounded. This looks quite bullish when looking at this chart alone, but the QQQ tells a different story.

QQQ

The main problem with the Nasdaq is that we have put in a double top and closed below the 10-week EMA. I don’t put as much weight into the double top as I do the moving averages, but it is notable. We also broke the weekly structure of higher lows. Almost everything on this chart is signaling that further selling is coming. As long as we remain below the 10-week EMA, I expect new lows to be hit below the 580s.

The current structure of the overall market is really the same as the previous week: rallies are likely to be sold into for a move back to the lows. If you are going to focus on shorting, tech would be the best option. Remember, tech is the main sector getting hit the hardest.

Going into each week, we use a simple process to show the current trend, and then we dive into deep analysis using Volume Profile. That is where the true value is found, as we can pinpoint where buyers and sellers are most active. Before moving onto that, we need to go over the economic calendar for the week.

Economic Calendar

Monday: None

Tuesday: None

Wednesday: Unemployment Rate

Thursday: None

Friday: CPI (Inflation)

We will now move into the Volume Profile analysis on the S&P.

S&P Levels

We once again finished the previous week inside the large value area ranging from 6808 to 6968. Price reclaimed back above the 6932 point of control (POC), which was the key pivot we used. For this week, I want to lean on the low-volume node (LVN) between the current value area and the one above.

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All newsletters, whether daily or weekly, are written the night prior. Drastic changes can occur in the overnight session that may alter the levels we use during the actual session. Currently, the market is sliding lower and attempting to hit a new low. By morning, we could see a larger gap down or even a sharp bounce back to the upside. If the levels need updating, I will send out a chat update during the session.

Now, let’s cover some stocks from the watchlist. Last week, we saw very strong moves to the downside in the broader market. Despite strong earnings reports and bullish news catalysts, the market simply cannot hold its ground. Furthermore, even crypto and metals are seeing strong selling, with silver posting its largest down day in history.

We are witnessing quite the unraveling; sectors that led all last year are now seeing pressure, while other industries, such as Industrials, Consumer Defensive, Energy, and Basic Materials have outperformed YTD. There is a clear shift of funds moving from last year’s “hot” sectors into “safe-haven” companies.

Stock Watchlist Updates

Amazon: We called for a long at the lower end of a pennant around 227. Price bounced directly off this level and saw a sharp move to the upper end of the pennant at 247. We are now seeing sellers step in, taking price to the middle ground between the boundaries. Interestingly, Jim Cramer posted a bearish thesis right before Amazon put in that low. Not only were we already bullish, but we also know the value of not following that history. Everything pointed toward the stock heading higher. As long as Amazon remains inside this technical setup, I believe we will see a move toward 300. This is a very clean setup: you long at the lower boundary with a “line in the sand” stop on a daily close below the pennant.

GameStop: This stock saw strong upside after breaking out of a downtrend dating back to May. There has been plenty of news circulating, especially regarding the CEO’s comments about shifting to a “Warren Buffett” style of management—using company funds to buy shares in other profitable companies. While this is the Berkshire Hathaway blueprint, it currently feels like hype-building. I don’t know if he can achieve those goals, and frankly, I don’t care. All that matters is if price remains above the breakout for a move toward 30. Don’t fall for the “Goldilocks” story; focus on the facts. Look at Oracle: they promised a 70% revenue increase and instead lost money and slashed projections, leading the stock to shave 30% off its highs. It always comes down to whether a company is making money and meeting its promises.

The Importance of Validated Signals

I want to reflect on the importance of valid versus invalid signals. I focus on daily and weekly charts for stocks. Whenever you have a setup, you must look for a daily or weekly close to validate the move. If you expect a breakout, you need a close above that level—the same applies to support.

Palantir is a perfect example. We expected a bounce off the lower end of a daily pennant, but price simply closed below support and has continued to slide. By accepting the signal that the setup was invalidated and closing the position, you would have walked away with a small loss. Instead, the stock is now down nearly 15% below that breakdown level.

There is zero room for error. You must avoid focusing on your emotions or picturing “fake-out” scenarios to justify holding a losing trade. If your plan says to exit on a close below a certain level, follow it. Avoiding the transition from “trader” to “unintentional investor” is key to survival. Make a plan, trade the plan.

Economic Calendar

Monday: ISM Manufacturing PMI

Tuesday: JOLTs Job Openings

Wednesday: ISM Services PMI

Thursday: None.

Friday: NFP & Unemployment Rate

S&P Levels

We have another interesting week ahead as price finished last week back inside the massive value area. Volume continues to build above the 6900 handle, but many breakout attempts over 7000 have failed. Even with strong earnings, the market continues to slide.

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Starting to feel like every single weekend we get some sort of news, whether positive or negative, that gets avoided during the week. Two weekends in a row we got news on Trump making a deal with Greenland and then this weekend we got confirmation that Canada has no plans to have a free trade agreement with China. This leaves the markets in quite a tough spot where you don’t want to carry risk over the weekend, especially if you’re in shorter term positions. It takes one tweet for Trump to simply shift the markets from being quite positive to a large gap down or vice versa from a weak market bouncing right back.

Now diving in to this weekend’s news which was the fact that Canada will not seek a free trade deal with China. There seems to be some misconception about why the market is gapping down. Many folks are assuming that the market is simply pricing in the fact that a government shutdown is on the horizon. Now that on paper sounds right but if you just dive deeper into the most recent government shutdown which was prolonged, we actually saw the S&P 500 climb nearly 2% in that time period. Not only that, the only selling that we saw was based on tariffs. So to think that this market was gapping down solely on the fact of a government shutdown I believe is completely false.

Just look at the timing over the weekend: the market only started sliding down once the news of Trump to potentially place 100% tariffs on all goods and products from Canada broke. The moment Canada backed down, it took out the possibility of any tariffs that the US would place on Canada. From there the market started climbing and continues to do so through the night. If this sell was based on a government shutdown then we would not be seeing a large bounce back here; we more than likely would see some selling and then price bounces a little bit and sees some sort of balance. I do also want to point out the numbers that are provided over the weekend from Weekend Wall Street has to be taken with a grain of salt. Large funds are not flowing in and out of the futures market, but overall the moves we see over the weekend that are reflected on Weekend Wall Street tend to be very accurate. Now we can shift our focus to the upcoming week with key earnings being reported along with many setups posted over on X that are forming.

As I previously spoke on, all the best setups that were posted on X will be covered inside this newsletter along with ways to structure the trades. Now there is a very broad area of how you can structure a trade so my focus will simply be medium to long term option contracts or simply Commons. By using Commons and taking positions based on the stocks posted inside the watchlist, allocating 5% of funds to each position, you would be sitting at a 17% unrealized gain on the year. If using LEAP option contracts or the furthest expiration date below one year, you could be sitting on a 40% to 60% gain. Just note that many cannot handle the higher volatility in the portfolio; while you do see far more returns, your drawdowns can get quite a bit more ugly if the market was to shift in the opposite direction that your portfolio is currently allocated for.

There are a couple options to drop the risk level on any portfolio with the main two being stocks with a low beta and hedging the portfolio. Hedging can be put on simply by the SPY or the QQQ breaking down below a certain moving average. This can simply be a 21-day or 50-day moving average on the overall index that can just prepare for overall downside that could start building up. As of right now we see clear skies with the indices holding over most of the major moving averages. I will not be mostly focusing on the beta of stocks and be more geared towards hedging by using put contracts on the S&P or NASDAQ. When the time comes I will address it.

Stock Coverage

Rocket Lab (RKLB) The stock has seen a tremendous move in the last couple years with price surging from the low $3 range all the way up to 100. Looking back to the end of 2024, the stock put in a swing high around the 30s before selling all the way down to the 15 handle. From there we saw higher highs and higher lows, but the interesting part is this stock has formed a solid channel where there’s a clear short setup currently at the highs. I would like to see this stock sell back down into the $50 range from here. The January 15th 2027 75 puts are currently at 19.70 which offer plenty of time until expiration and leaves plenty of room between the strike price and the target price for the stock. These can be acquired a bit cheaper if we start to see a rebound up into the low 90s.

Read more

We had a phenomenal week looking back at Flow State #97. The main thesis was that if price remained above the 6978 volume shelf, we could expect a bounce back to 7025. Monday’s session opened by spiking through 6978 and rallying exactly to our 7025 target—setting the high of the week before rotating back down.

By Wednesday, we saw price break below the 6968 short level (the VAH for the large value area). After some chop, we sold down to the 6932 Point of Control (POC), which is the most significant level in any value area as it holds the highest volume. We effectively called both the high and the low of the week.

Following President Trump’s tariff news regarding Greenland over the weekend, we saw a gap down into the Monday session. Price sold off to the 6889 High Volume Node (HVN) before putting in a solid low. We are currently seeing support at this level. Because volume is respecting these high-timeframe value areas so well, our core levels remain relatively unchanged for the week ahead.

I want to point out that there will be a shift to the structure of my posts on X. Expect more frequent charts and analysis on developing setups ranging from low-float stocks to blue chips. Successful setups will remain exclusive inside the Watchlist with full long/mid-term theses. A prime example of this will be as follows:

BNPL vs. Credit Card Caps: I recently posted a thread on the implications of the proposed 10% credit card interest rate cap. While this is a headwind for traditional banks, it is a massive tailwind for Buy Now, Pay Later (BNPL) structures.

Banks have already suggested they may stop issuing cards to those without perfect credit, reduce limits for riskier borrowers, and slash rewards/cash-back programs. Companies like PayPal (PYPL), Affirm, Block, and Shopify (SHOP) will pick up the slack.

Here’ s a link to a short thread on this topic: Credit Cards Caps and BNPL

Shopify is showing clear strength near all-time highs, but my primary focus is PayPal. PYPL is heavily shorted and beaten down to the 50 range. From a risk/reward perspective, the downside is limited while the upside—if the 10% cap is approved—is massive.

Then another example of this is AGX. Similar to IBP and BLD, AGX is a play on lower interest rates boosting building contracts. It is currently on the brink of breaking all-time highs with a target of 500.

Now we will shift our focus to the overall trend on both the SPY and QQQ.

The Big Picture (Macro)

The S&P is set to open just above the 10-week EMA (683.04). The conflict here is that while SPY attempts to hold, the NASDAQ is already selling off. If we see a daily close below the 10-week EMA, expect a move down to the 21-week EMA at 669.39.

The NASDAQ looks significantly weaker. We have a gap down below the 10-week EMA (616.40) and a break below the multi-week trendline. We are targeting the 21-week EMA at 602.96. This bearish outlook is only invalidated by a daily close back above the 10-week EMA.

Economic Calendar

• Monday – Wednesday: None.

• Thursday:

  GDP (Q3) - A "Good" number for the economy is anything above 2%. It proves the US is sidestepping a recession. However, if this comes in too hot (near 4%), the market might fear the Fed will pause rate cuts.

  

  Core PCE (Inflation) - This is the Fed's preferred inflation gauge. We want to see this trending toward 2% YoY. Bad data would be a print above 0.20%, as it suggests that recent tariffs are starting to leak into consumer prices, revealing a heating inflation. I expect this data to come in around 0.20% and the indices to take this data well.

  

  Personal Spending - Little weight is being put into this release but in the near future this will be important.

  

• Friday: None.

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  The Weekly Map (Paid)

  Major Weekly Levels:

  • Upper Value Area: 7018–6975 (POC 6984)

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We have a phenomenal week to recap. As we posted on Sunday, our primary objective was to be long at the 6854 Value Area Low. Early in the week, we saw a gap up going into Monday’s session that sparked a massive 100-handle rally all the way up to the 7000 milestone. By Wednesday, reflecting on the current trend and how far the market had pulled away from the 10-week moving average, we looked for a sell-off back toward that mean for those looking to deploy new longs—resulting in a precise 65-handle drop.

Going into Thursday, we marked 6966 as the Value Area High (VAH) for the week. The market failed to budge higher, providing seven distinct selling opportunities of 10-15 handles each time sellers hit the bid. Finally, for Friday’s session, we correctly called for lower unemployment data. When it arrived, we saw the break over 7000 to hit new weekly highs.

Here’s screenshots right out of the Daily Plans from last week:

Here’s a chart of last week for reference:

Beyond the index, we called support at 420 on Tesla, which saw a weekly low of 425 before a sharp 25-handle bounce back toward 450. While some played this with commons, I posted an exclusive call for subscribers on the Feb 6th 470 Calls. The goal was to snag these in the $12.00–$15.00 range as price hit support; they dipped below 12 before recovering back over 15. We expect continuation for both the market and TSLA this week.

Last week solidified the importance of Volume Profile and high-timeframe trend levels, like moving averages and value areas. While the S&P 500 hit all-time highs, the NASDAQ showed to be clearly weaker, failing to reach its own record. This is due to tech revenue concerns as companies pour CapEx into AI without immediate returns. We are seeing a healthy shift out of AI and into a broader market, which is reflected in our watchlist outperforming by a massive margin.

A vital lesson for amateur traders: stop “averaging down” on losers. Many traders buy one block and then add as the stock drops, turning small losses into account-killers. In our watchlist, your portfolio could be up 15.22% just by allocating 5% to each position. Out of 12 stocks, only one (FRO) hit a stop. Our biggest gainer, CBLL, is up 94.09%. By pyramiding (adding to winners) rather than losers, you can turn a 15% gain into a 30-50% gain while keeping your risk lower than when you started.

To dig deeper into this concept, make sure to check ou the educational post sent out yesterday:

How to Size for Winners and Losers

Now let’s dive into this weeks analysis.

The Big Picture (Macro)

The broader trend for the S&P 500 (SPY) remains firmly bullish. We are holding weekly closes above both the 10-week and 21-week EMAs. As long as the 10-week EMA (currently 681.12) holds on a closing basis, the path of least resistance is up. If we were to lose that level, I’d expect a swift 115-handle move down to the 21-week EMA at 667.17.

The NASDAQ (QQQ) mirrors this setup but with slightly more volatility. It is also holding above its 10-week EMA (615.32) and 21-week EMA (601.13). Tech remains in an uptrend, but be aware that a weekly close below the 10-week EMA would open the door for a much sharper correction—potentially 460 handles—down to the 21-week EMA. For now, the “buy the dip” regime is still in effect.

The Economic Calendar

• Monday: None.

• Tuesday: Inflation Rate (CPI) — This will dictate interest rates for the rest of the fiscal year.

• Wednesday: Producer Price Index (PPI) — Secondary confirmation on inflation trends.

• Thursday: None.

• Friday: None.

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The Weekly Map (Paid)

Major Weekly Levels:

Read more

The Week in Review

The performance over the holidays was exceptional. Our prior levels held the line, with the S&P 500 selling off from the 6965 Value Area High (VAH) for a clean 100-handle drop. In our Friday update, we specifically targeted a sell from the 6931 Point of Control (POC) down to 6889. That move delivered 32 handles of downside, followed by a bounce from our long level at 6889. Despite some late-week pressure, the index closed the week 11 handles higher than that volume shelf.

Outside of the futures market, our watchlist is delivering significant alpha. ASX has nearly cleared the 17 handle, marking a 41% gain since our entry at 12. CBLL is maintaining its strength at highs, holding onto a 100% gain from our initial long signal. One standout to watch this week is SHEL. After calling out the influx of Oil and Energy stocks hitting our scanners, SHEL is set to open at fresh all-time highs. This could be the spark for a multi-week rally across the entire sector.

Big Picture (Macro)

The broader trend for the S&P 500 (SPY) remains firmly bullish. We are holding weekly closes above both the 10-week and 21-week EMAs. As long as the 10-week EMA (currently 678.24) holds on a closing basis, the path of least resistance is up. If we were to lose that level, I’d expect a swift 100-handle move down to the 21-week EMA at 664.48.

The NASDAQ (QQQ) mirrors this setup but with slightly more volatility. It is also holding above its 10-week EMA (612.18) and 21-week EMA (598.57). Tech remains in an uptrend, but be aware that a weekly close below the 10-week EMA would open the door for a much sharper correction—potentially 440 handles—down to the 21-week EMA. For now, the “buy the dip” regime is still in effect.

Economic Calendar

This is the first “real” week of 2026, and the data calendar is packed. We move from manufacturing sentiment early in the week to the heavy-hitting labor data by Friday.

• Monday: Manufacturing PMI

• Tuesday: Quiet / No major data.

• Wednesday: Services PMI and JOLTs Job Openings

• Thursday: Initial Jobless Claims

• Friday: Non-Farm Payrolls (NFP) and Unemployment Rate

Friday is the main event. Unemployment will set the tone for how the Fed views the labor market in this new year, so expect heightened volatility heading into the weekend.

The Weekly Map (Paid)

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The market has a way of testing even the most established roadmaps, but as we move into the final stretch of the year, the structural integrity of our analysis remains the anchor. This week was a masterclass in why we prioritize custom Volume Profile zones over generic indicators. Despite the noise of contract rollovers and shifting liquidity, the levels did exactly what they were designed to do: provide a clear map of where the real players were positioned.

Navigating this past week was slightly more nuanced than usual as we finalized our roll into the March 2026 contracts. While the previous contract expirations provided the initial foundation, we quickly updated our levels in the daily plans to reflect the new March data. The accuracy of these adjustments was immediate.

Heading into Monday, we anticipated that price remaining above the 6854 Value Area Low (VAL) would spark a rally toward the 6939 High-Volume Node (HVN) High. We saw a gap up to that 6939 level, where sellers—as expected—remained active and hammered price back down to the 6854 VAL. As the sessions progressed, we tracked a break below the lower Value Area High (VAH), leading to a sell-off into our 6826 Point of Control (POC). This POC acted as a magnet and a vital target for our short thesis.

The most stunning moment of the week, however, came at the 6798 VAL. We identified this area as the primary zone for buyers to step in. After a bounce from the POC back to the VAH (our designated short level), price sold off one last time to tap the VAL, marking the near-bottom of the weekly range. Our call to buy this dip preceded a massive 100-handle rally into the weekend. It was a perfect execution where the upper bound of the long thesis set the high and the lower bound of the short thesis captured the low.

The Big Picture

When we zoom out to the weekly and monthly views, the S&P 500 (SPY) continues to show remarkable resilience. Currently, the index is trading comfortably above both the 10-week and 21-week Exponential Moving Averages (EMA). For the bulls to maintain control heading into 2026, we need to see weekly closes sustained above these levels. While we saw an intraday attempt to break the 10-week EMA this week, it failed rapidly, resulting in a 6-handle recovery on the SPY. As long as we hold these averages on a closing basis, the trend remains healthy.

The NASDAQ (QQQ) is telling a similar story, albeit with more “AI-flavor” volatility. Between the Oracle headlines and shifting Fed inflation worries, the tech sector took some hits, but the Nasdaq managed to hold its 10-week and 21-week EMAs just like the S&P. The “AI trade” isn’t dead; it’s just catching its breath. All signs currently point to a continued push higher as we approach the end of the year.

Economic Calendar

• Monday: Quiet session with no major releases.

• Tuesday: GDP Data. This will be a key mover for sentiment regarding the “soft landing” narrative.

• Wednesday: Initial Jobless Claims. Expect some pre-holiday volatility here as the market gauges labor market strength.

• Thursday & Friday: Nothing scheduled. Expect liquidity to thin out significantly as we approach Christmas.

These catalysts are the primary reason why tomorrow’s levels are so critical. In a low-liquidity environment, news-driven moves can be amplified, making it even more important to have a precise guidance.

Weekly Roadmap

Read more

To initiate this weekly edition of the Flow State series, we will review the past week and compare the posted observations with the results of the S&P.

Two major levels were significant last week: the 6797 Value Area Low (VAL) and the 6908 Value Area High (VAH). Both of these levels precipitated substantial moves, ultimately defining the weekly high and low. Another key level was the developing Point of Control (POC), which served as the primary target area for both long and short positions. As a reminder, the POC represents the price level with the highest traded volume, often acting as a magnet for price. A move away from either the VAL or VAH typically tends to gravitate back toward the POC.

In every instance, when the price surged to the 6908 VAH or sold off to the 6797 VAL, it subsequently reverted directly to the POC. Furthermore, we even observed price movements spanning from one side of the value area all the way to the other. For Volume Profile traders, this pattern represents a textbook trade setup.

The market typically balances for 70% to 80% of every session, meaning that utilizing Volume Profile will clearly delineate where these areas of balance are likely to form. Once a breakout or breakdown occurs, one can then integrate my established approach for trending markets. I have previously published a detailed thread on this topic on X, which you can find here: Volume Profile Thread

Back to my thoughts from the previous week.

Every Weekly and Daily Plan will always outline two scenarios. Clearly marking the areas where buyers are in control and the area where shorts are. In the previous week, we anticipated balance, as the size of the value area exceeded 100 handles. For a breakout or breakdown, we were more favorable towards a sell below the Value Area Low (VAL), a scenario which did not materialize. However, the weekly close occurred at the lower extreme of the value area. Take a look at the two scenarios that were presented in last week’s edition:

Initially, I had anticipated a dip into the Value Area Low (VAL) leading up to the interest rate decision, but the price remained contained within the large High Volume Node (HVN) for nearly three sessions. Once the decision was released, we saw a move upward to the 6908 Value Area High (VAH), which established the high of the day. The price then subsequently sold off by 92 handles, nearly reaching the VAL. Following this decline, a sharp bounce occurred, returning the price directly back up to the 6908 VAH.

During Friday’s session, we once again witnessed a strong sell-off from the 6908 VAH, which set a new weekly low with a total sell of 103 handles. The 6797 VAL represents a critical support level for buyers; a break below the current value area, which has been held for the past two weeks, is the undesirable outcome for bullish momentum. From this point, the price rebounded directly to the 6856 Point of Control (POC), bringing in a gain of 51 handles.

Here’s last weeks chart:

Before moving into my thoughts for this week, I do want to cover some thoughts for all the new catalysts.

The Good:

The biggest thing that happened was the Fed meeting. Everyone expected it, and they delivered: another interest rate cut, the third one in a row, settling the main rate between $3.50% and $3.75%.

Stocks loved it. The S&P 500 and the Dow briefly shot up to new records. The sectors that thrive on cheaper money, like banks (Financials) and smaller companies (Small-Caps), really benefited.

The Bad:

Right after the Fed, the reality of the AI spending frenzy hit. This is what we were talking about before—companies spending billions on AI infrastructure but not showing the profits yet.

The big drops came from Oracle and Broadcom. Oracle essentially told everyone, “We’re spending a crazy amount of money (Capex) on AI,” but their revenue wasn’t exciting enough to back it up. Broadcom, even though their AI chip sales were good, couldn’t keep the momentum because the market is suddenly questioning the timeline for these massive investments to actually pay off.

This caused panic selling in the tech giants—the Nasdaq got hammered. Money rotated out of expensive AI stocks and into more stable parts of the market like Industrials and certain Financials, causing the overall S&P 500 to give back most of its early gains.

So, in short, The Fed gave the market a boost, but a serious problem on AI spending ended up leaving S&P a bit flat by Friday.

For perspective, the S&P closed the week down -0.8% while the Nasdaq finished -2.2%.

Heading into the week ahead, several key economic data points are scheduled for release. On Tuesday, we anticipate the highly awaited Unemployment Rate report. Furthermore, on Thursday, we will receive the latest Inflation data, which is currently projected to show a 3.2% year-over-year reading.

Before proceeding to the technical levels for the upcoming week, I want to point out that no new stocks presented robust setups for my watchlist. The stocks previously posted are performing great, and I will continue to update those accordingly. At this time, there is no reason to issue a update to the watchlist. Should the market offer another stock, an updated analysis will be sentnext week.

Now let’s dive into the current market structure.

For the most part, the key levels from last week remain consistent, although slight adjustments have been made to the Value Area Highs and Lows.

We will focus on the following three Value Areas for the month. Please note that these levels are subject to weekly review and change:

VAL 6797 - VAH 6908

VAL 6734 - VAH 6790

VAL 6608 - VAH 6730

Price is currently positioned within the upper value area and is contained by the large High Volume Node (HVN) spanning from 6827 to 6880. With high certainty, we can anticipate a choppy week as long as the price remains confined within this node.

The optimal scenario for long positions would be a rebound off the 6797 Value Area Low (VAL) or a decisive breakout above the 6908 Value Area High (VAH). For a lower-probability setup, initiating long positions near the lower boundary of this HVN at 6827 could bring a bounce up toward the 6856 Point of Control (POC). The inverse logic applies to short positions: a setup near the upper boundary of the High Volume Node at 6880 could lead to a retracement back down to the 6856 POC.

Numerous scenarios could unfold during the week, but the primary level of focus will once again be the 6797 VAL. While the price remains above this level, we should anticipate rallies up to 6880.

For a downside scenario, our attention shifts to the second value area, which is 6734 to 6790, with its POC situated at 6758. The main target for a bearish move will be the 6758 POC, with the potential for continuation down to the 6734 VAL.

My expectations for the week:

As long as price remains above 6797, then we can expect a rally up to 6880.

Downside risk comes once below the 6793 LVN. On a break through this we should see a sell to the 6758 POC. If price continues down to the 6734 VAL then this is an attractive area for a bounce back up to the 6790 VAH.

That’s all for my thoughts on the week ahead. If you enjoyed this post then feel free to drop a like and comment.

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For new readers, balance is simply a directionless market in which price moves between a defined range. In this case, we look at the high volume node inside the value area. Below will be a chart showing exactly what I’m referring to. In a perfect world, we will always get a normal distribution curve where extremes are rarely traded as price stays between the value area high and the value area low. Most volume is traded at the Point Of Control (POC), which I consistently call a magnet. POC is the most fair price relative to the current sentiment of the market. This level constantly changes, especially when using my approach to volume profile.

Combining trend and volume profile will reveal why I take this stance. If you want to read up more on this, then take a look at this thread posted over on X:

Trend + Volume Profile

Now let’s dive into the current market structure of the S&P500.

The current value area is highlighted in a brighter background, with the VAH being 6908 and the VAL being 6797. Most, and nearly all, the volume sits inside the large high volume node, covering 6819–6892. When referring to balance, this is where you can expect balance. While longing the VAL and shorting the VAH are the best levels for positions, this HVN shows a clear example that those aren’t the only levels you can use. Notice how nearly all the closes in the last week, including today, were at the 6842 POC. The market is not ready to push higher nor push lower, as we are currently at a fair price relative to sentiment. Even with the NVDA catalyst of H200 availability to China, the rally was sold into.

To make this more interesting, my latest tweet on ES was that we have put in a swing high.

Did price break to a new high after? Yes. Did price close at a new swing high? No.

As of right now, the bear case remains valid. No need to complicate the market here. We know price attempted to break higher today and failed right at the Value Area High. Until we see a close over the swing high at 6876, the downtrend remains valid. From a risk-to-reward perspective, the line of least resistance is lower, and I wouldn’t be surprised to see 100–200 handles shaved here. Relief is expected, but I think we have seen a low put in at the 6500s. The key levels for downside this week will be the current VAL at 6797, then the 6763 POC inside the value area just below the current price. If the FED keeps the interest rate unchanged, then a deeper sell will open up down to the POC of the bottom value area at 6676.

Putting all of this together…

Further selling remains likely heading into the FED meeting on Wednesday. Dips into 6797 need to hold for this market to head higher. Once rates are cut by 25 bps, then we will make way to new highs. As long as we remain above 6797, then a rally back to the 6908 VAH is likely.

If we get a daily close below 6797, whether with no rate cut or with a cut, then we will see deeper selling into the end of the week. Targets on the downside for the week will be as noted above: 6762 and potentially lower down to 6676.

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