Choppy market conditions persist as market stays range bound. SP500 spend most of the week under the 50 day moving average before a rally attempt on Friday to finish just above. Selling pressure appears to be building as we spend more time around longer term moving averages, it appears dips are not being bought up.
QQQs continue to underperform and have seemingly put in a lower high double top as they struggle to reclaim 100day moving average, even with the rally attempt on Friday.
Small caps continue to outperform, consolidating nicely around 10 and 21 day moving averages.
Although there are strength in certain sectors, specifically in small cap names, without mega cap tech stocks participating in the rally, its hard to have conviction in a move, especially with mounting sell pressure.
Current themes
GLD/SLV – Both gold and silver attempted to rally into the end of the week, breaking out of a roughly three-week consolidation range. There are still constructive setups forming in precious metals and miners, and continued strength in the underlying commodities could support potential breakouts in the near term.
ITA – A constructive move off 10 and 21 day moving averages earlier in the week showed decent follow-through, particularly among sector leaders, although some selling pressure emerged on Friday. At this stage, I don’t see many setups in this sector and will be waiting to see how the move plays out and whether any buyable pullbacks form.
SMH – A notable bounce off the 10-day moving average on Friday with participation from leading names. The key focus this week will be whether this move can show meaningful follow-through and reclaim stronger momentum.
REMX – The sector ended the week relatively flat and showed limited participation during Friday’s broader strength. The base structure still appears constructive, though several leaders (e.g., UAMY, USAR) are testing longer-term moving averages, which slightly reduces confidence in the near-term strength of the theme. That said, historically this sector is capable of staging sharp moves once momentum returns.
NLR/URA -A solid move off the 50-day moving average allowed the sector to reclaim the 10, 21, and 50-day moving averages. The overall structure still appears constructive, with several individual names forming potential setups within a broader base.
LIT – Price action remained relatively flat, with progressively tightening movement around the 10 and 21-day moving averages. Volatility and volume have both contracted, which could indicate the potential for expansion if the base resolves with momentum.
IBLC – Has been consolidating in an orderly manner following an extended move lower and appears to be forming a potential bear flag. If broader market weakness resumes, this structure could offer favourable short-side opportunities.
Key Observations & Focus for the week
I feel price could test long term resistance area this week, meaning we could see some continuation to the long side. However I feel a breakout or any sustained move higher is unlikely given the amount of time price spent around longer term moving averages. Rather than attempting to predict direction, the focus should be on confirmation of a move through price and volume. In the current environment, maintaining situational awareness and a shorter-term mindset appears more appropriate, as conditions are still not fully conducive to sustained trending moves.
This week I will be closely monitoring:
- Continued strength in gold and silver, particularly for potential follow-through in smaller-cap miners
- Lithium, for a potential breakout from its tightening base structure
- Nuclear/uranium, which appears constructive but may benefit from an orderly pullback before any sustained move
SMH and ITA have already shown early strength, and it appears a lot of the leaders have already staged breakouts. If momentum persists, laggards within these sectors may present more favourable structures than chasing extended leaders.
Overall, the market remains range-bound, and until clearer trend confirmation emerges, a nimble and process-driven approach to market observation remains key.