The indices posted a significant follow-through week following news of a potential ceasefire in the Iran conflict.
The S&P 500 reclaimed all major moving averages, with a strong follow-through move on Wednesday that was largely held into the end of the week. Price is now somewhat extended from the 10 and 21-day moving averages and is currently testing the 100-day. Notably, the index has also reclaimed prior support from the earlier trading channel, which may now act as a key reference level.
The Nasdaq (QQQ) showed similar strength, gapping higher on Wednesday and maintaining those gains throughout the remainder of the week — a constructive sign of sustained demand.
The Russell 2000 (IWM) also saw a strong gap and hold. Given its relative outperformance during the prior decline, this move has already brought it close to testing all-time highs.
Themes in Play
SMH – Gapped into all-time highs with strong follow-through. A number of leading names are driving this move. While extended in the short term, this remains a key area to monitor for pullbacks.
UFO – Continued momentum early in the week following last week’s breakout, now seeing a constructive pullback. Several strong names within the theme.
LIT – Strong breakout alongside the broader market with a solid close to the week. Price action remains tight and constructive. Notably, LIT showed relative strength ahead of this move, reclaiming the 50-day while the broader market was still declining.
REMX – Gapped higher with the market and held gains. Now approaching potential resistance near prior highs — watching for a breakout.
IBLC – Price continues to tighten near the upper end of its multi-month range. Select names (e.g. WULF, RIOT) have already begun to move, potentially signalling a broader breakout. Given the nature of the space, a range break could lead to sharp expansion.
GOLD – Has been trending higher over the past two weeks and is now consolidating tightly around the 10, 21, and 100-day moving averages.
Leading Themes & Stocks
As this rally attempt develops, tracking early leaders is critical. Historically, the strongest stocks coming out of corrections tend to drive the next leg higher.
Two standout areas this week:
Semiconductors / AI Infrastructure
A large portion of stocks making new highs are concentrated in this space, suggesting strong institutional participation. While extended in the short term, this theme is a strong candidate for leadership in the current move.
Notable names include:
- SNDK – Gap-and-go move into all-time highs
- MUU – Strong gap with follow-through
- AAOI – Clean breakout through highs with strong continuation; watching for pullbacks
- LWLG – Gapped up prior to broader market and ended week with a huge breakout
- AEHR – Explosive move into highs with strong close
- LITE, FORM, VRT, TER, WDC, STX – All showing similar gap-and-hold strength
- DELL – Gapped above highs but pulled back toward the 10-day
A key observation here is that some names (e.g. STX) were already moving into highs prior to the broader follow-through day — a clear sign of relative strength.
Satellite / Space & Communications
Another emerging theme showing strong participation, likely driven by ongoing innovation and long-term growth narratives.
Names to watch:
- SATL – Pulling back after a large volume-driven move
- GSAT – Tight consolidation around the 10-day following breakout
- ASTS – Consolidating within a tight range; watching for expansion
- VSAT – Building a range after a strong move
- SATS – Still within a broader base; watching for breakout
- LUNR – Constructive pullback to the 10-day after breakout
- VIAV, CIEN – Strong relative performers, currently extended
- SKM – Not a pure-play, but displaying similar price behaviour
Key Observations
This week delivered a clear follow-through move, with indices gapping higher and, importantly, holding those gains into the close of the week. The reclaim of key moving averages and prior support levels suggests a meaningful increase in buyer conviction.
While the move has been somewhat gap-driven, the ability of the market to absorb those gains without immediate reversal is a constructive signal.
That said, geopolitical and macro uncertainty — particularly surrounding the Iran situation — remains a key variable. While price action is currently supportive of a potential bullish phase, it’s important to remain aware of these external factors.
Focus for the Week
The most constructive outcome from here would be consolidation at current levels, allowing moving averages to catch up.
A short-term pullback or gap fill would not be unexpected, particularly after such an extended move. The key will be how price behaves on any retracement:
- Constructive pullbacks into the 10/21/50-day moving averages would support continuation
- Sharp rejection and loss of key levels would raise the risk of a lower high forming
This week, my focus will be on:
- Monitoring how price reacts following this extended move
- Looking for pullback entries within leading themes:
- Semiconductors / AI infrastructure
- Space / satellite communications (UFO theme)
- Watching blockchain-related names for a potential breakout from their current range