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MarketSurge powers the charts in this video.

There are more stocks breaking out from various industries – AI, cybersecurity, infrastructure, and aerospace. The Nasdaq 100 tested its 50 and 200-day moving averages and didn’t even blink. Last week, the market went up on both good and bad news. The negative GDP print earlier in the week led to a quick shakeout that was bought immediately. The better-than-expected employment report led to a rally. These are all signs of improving price action and sentiment. 

Does that mean that it makes sense to chase blindly with the indexes near potential resistance and so far extended from their 20-day moving average? Not in my book. It also doesn’t mean that one has to remain stubbornly bearish when the price action is saying we should be looking for long setups. 

META and MSFT crushed earnings estimates and broke out above their 200dma. It was a huge sentiment boost for the market as it proved that the death of Mag7 is likely exaggerated and there’s still plenty of demand for the strongest and biggest companies in the world economy. 

The trade war remains a viable headline risk. Maybe we will see its real effect in the second half of the year. The odds are that there will be other extreme spikes in volatility. In the meantime, plenty of underinvested money managers are praying for a pullback to get in. Dips are likely to get bought. Chasers are likely to be shaken out.

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MarketSurge powers the charts in this video.

There have been no trade deals made, and there aren’t even any negotiations with China. Despite that, stocks have been rising. Someone is bidding. When we see stocks go up on bad news, we have to assume that people with inside information know what’s coming and are buying ahead of it. 

There is a good chance this is just another bear market rally towards a declining 50 or 200dma. When the bear puts out honey, it’s usually a trap. And yet, Germany just closed at all-time highs. Some markets have recovered a lot faster than others:

Cybersecurity stocks showed notable relative strength during the March/April correction and were among the first ones to pop up above their 50-day moving average. Now, PLTR is only 10% away from its all-time high. CRWD is 7% away. ZS, OKTS, and RBRK are setting up for a potential breakout. 

Bitcoin is back above its VWAP since the presidential elections, and it has pulled higher crypto-related stocks like MSTR and HOOD.

European financials ETF, EUFN, is at all-time highs. Indian bank stocks like IBN are consolidating near their all-time highs. Argentine bank stocks GGAL and BBAR are working on a new base. Mexico ETF, EWW, is at new 6-month highs.

QQQ and SPY finished the week above their volume-weighted average price since their all-time highs. The last time they tested that level in March, they sold off violently. Not this time. This is a change in character. If they can spend a day or two above that level, they are likely to test their declining 50-day moving average: about 480 for QQQ and 560 for SPY.

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Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

The Nasdaq 100 (QQQ) tested its VWAP since its lows again near 438. It held it again. If it goes back under 438, we will likely see another leg lower. There is also a possibility of a higher low forming near 438. 

The silver lining from last week is that we are finally seeing the market trying to find the potential winners in the new macro environment. For example, we saw a big jump in rare earth metal stocks after China curbed its exports. Stocks like MP, USAR went up between 20% and 100%. There’s always a bull market somewhere; even in the midst of an overall bear market; even if those rallies don’t last long. 

Foreign financial stocks are showing notable relative strength. Indian banks broke out to new all-time highs – IBN; Argentine and European banks are back above their 50dma and setting up – GGAL, BBAR, EUFN, etc. 

The energy sector also woke up last week – the reason is not an expected economic growth, but a potential escalation with Iran and other oil-rich nations that could limit supply. 

Other than the above-mentioned, the industries that are currently showing relative strength have a mostly defensive nature – telecoms, consumer staples, and utilities. The market is pricing a potential slowdown in growth or even a recession.

In the meantime, the new earnings season has just begun, and so far, the market reaction has been mostly bearish. Companies are warning about missing estimates ahead of their reports. Even the ones that beat estimates are selling off or not following through because of lower guidance. At this point, the market seems more focused on tariffs and trade wars than earnings.

Try my subscription service which includes a private X feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.

You can find my trading books on Amazon here.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.