S&P500 saw a convincing rebound on Tuesday with a strong close on hopes of an end to the Iran war, breaking 5 straight weeks of losses. Wednesday saw some follow through, and Thursday saw a gap down reversal, a solid sign of buyer interest. Price still sits shy of the 200 day moving average, however these are promising early signs of a possible market rally attempt.
Nasdaq (QQQ) saw similar price action, with a big early week bounce, some decent follow through and a gap down reversal to end the week. Price is also shy of the 200 day moving average but showing increasing signs of buyers interest.
Russell 2000 (IWM) remains an area of strength, managing to reclaim both 150 and 200 day moving averages this week, falling just shy of the 100 day.
Themes in Play
UFO – Strong breakout into the end of the week, suggesting renewed momentum within the theme.
HACK / CLOU – Potential higher low forming, with a strong move off recent lows indicating early signs of stabilisation.
SMH – Strong price action this week, reclaiming the 10, 21, and 100-day moving averages. Still below the 50-day, which remains a key level to watch.
LIT – Continues to show relative strength, reclaiming the 50-day moving average and now consolidating around the 10, 21, and 50-day cluster.
ITA – Ended its month-long pullback with a constructive rally off the 200-day moving average.
TAN – Strong start to the week, though momentum faded into the close. Still building within a constructive base.
Stocks Displaying Strength
PAYS – Pulling back after a strong move; watching for support around the 10 and 21-day moving averages.
CAR – Up nearly 100% over the past month, driven by increased demand linked to airport security disruptions. The move appears extended and potentially event-driven, but worth monitoring for pullback opportunities.
SATL – Broke out of a flag formation on Friday. Extended in the short term, but remains one to track for future setups.
LUNR – big breakout along with space sector. One to keep an eye on as the theme progresses.
PL – Strong move off the 10 and 21-day moving averages. Extended short term but showing constructive strength.
SEDG – Building a flag structure around the 10-day moving average. Watching for potential expansion.
LWLG & AAOI – Big continuation breakout, both showing strong trending behaviour.
Key Observations
This week we saw definitive signs of buyer interest in the market, evident in the strong bounce and gap down reversal to end the week, showing buyers stepping in to support price. We’re still yet to reclaim the 200 day moving average, which I feel will be a key level in gauging the strength of this rally attempt.
As it stands, its hard to be convinced of either direction. While this weeks price action would have me leaning slightly bullish, the current geopolitical climate makes it hard to have conviction. I feel this week will provide further insight as to buyer interest in the market. If we see price supported at this level or even push higher and reclaim of the 200 day moving average, then I feel a continued move will be the more likely scenario. If price struggles and the 200 day moving average begins to act as resistance, then at the least a further pullback, possibly a second leg lower is more likely.
Focus for the Week
This week, I will be:
- Monitoring how price reacts around the 200-day moving average
- Looking for pullback opportunities within relative strength names, particularly in the UFO theme
- Watching for continued strength and potential continuation setups in TAN and LIT