SPY closed up another 1% on the day, marking a 9% rally off the lows in just nine trading sessions. At this pace, we could be back at all-time highs by Wednesday’s close, erasing the entire year’s drawdown in a little over a week. I don’t necessarily think it plays out that cleanly, but all-time highs are definitely back on the table.

SPY Daily Chart

From a positioning standpoint, I’ve started taking profits on names that have run hard and rotating into setups that look like they’re just getting started. On Friday I said I wanted to see confirmation from software names before getting long, and Monday’s candle delivered exactly that. I added to my MSFT trade and went long ORCL and ADBE.

While IGV gives you broad exposure to a massive amount of software names and is a decent option, I prefer picking the individual names where I see the most edge. These three are my favorites right now.

Microsoft

I’ve talked incessantly about MSFT for months and have been trading it fairly well. I’m now back in profitable territory. Monday’s candle was a strong continuation after it bounced, consolidated in a pennant, and broke higher. I trimmed some exposure last Wednesday after the gap up, just to manage risk in case we knifed lower. Instead, it held and we pushed back above the 200-week SMA, my major risk mitigation level for this name.

With a close back above that level, I think MSFT has a nice path higher into earnings, with a move back toward $400 and beyond very much in play. If this is a B-wave rally, a push toward the 100-week SMA (roughly a 50% retracement of the entire downtrend) isn’t out of the question. And if this turns out to be the bottom, then all-time highs become the bigger-picture target.

For those not long yet, I like buying a retest of the 200-week SMA if it happens, using Monday’s low as your stop or protection level. This chart shouldn’t break down from here. A close below the 200-week SMA and Monday’s low would likely send it toward $345.

MSFT Daily Chart

Adobe

I’ve featured Adobe before, and it’s finally delivering the setup I’ve been waiting for. Price held the 200-month SMA, with Monday’s candle closing back above that level while also reclaiming two prior bearish candles in the process. I initiated a position intraday on Monday and will look to add on any retest of the 200-month SMA or Monday’s range, while keeping my stop below Friday’s low.

One of the more compelling aspects of this setup is the overhead gap near $267, which should act as a magnet for price. That level sits roughly 14% above the 200-month SMA and offers an approximate 3:1 reward-to-risk profile on the trade.

ADBE Daily Chart

Oracle

Oracle has been an absolute dumpster fire lately, but the chart is starting to repair. After basing for nearly 70 days, we’re finally seeing strong bullish strength come in right off the 200-week SMA. Monday delivered a 13% rip higher, bouncing exactly off that key level.

The risk management here is straightforward and clean. Monday’s candle low, sitting right on the 200-week SMA, gives me a very firm level to work with. I’ll look to add on any retest of Monday’s range, with an initial target at the 100-week SMA — roughly 15% above Monday’s close.

ORCL Daily Chart

Last week was bonkers. I think we can all agree on that. Bulls are back in the game, and SPY and QQQ have pushed back into the distribution levels they’ve been consolidating within for the past six months.

The market feels more bifurcated than ever, and typically when key names aren’t all participating, it’s not the ideal environment for a sustained bull run. It’s usually more conducive to chop.

The bulls are pointing to SMH and saying the rest of the market will catch up and follow semis into another run toward the highs. The bears are pointing to IGV and arguing the market will follow software lower. I’m somewhere in the middle right now.

SMH Daily Chart

I can see a strong case that volatility isn’t over and that we could at least see a double bottom, with the April lows getting retested in the coming months. We are now testing the 78.6% retracement of the recent drop, which is the exact level many historical analogs hit before finding resistance and rolling back over.

At the same time, Tuesday’s gap provides solid historical evidence that we could still be headed to new all-time highs before everything is said and done. It’s possible we do both. Push to new highs in an extended flat B wave, get everyone fully bullish again, hedges removed, and capital chasing strength, only to then pull the rug and roll over into the next leg down. That would be the ultimate max pain scenario.

If this were Bitcoin, I’d say that’s exactly what happens. But SPY doesn’t always follow the cleanest max pain path the way crypto often does, so I’m still on the fence.

Because of this uncertainty and the lack of a clear edge in the broader market, I’m focusing on individual stocks with high-probability setups, defined risk, and strong risk/reward. As I’ve said many times, I’m leaning bullish as long as SPY and QQQ remain above the 200-day SMA, so I’ll stay in buy-the-dip mode while keeping shorts limited and tactical.

I do think the selloff in IGV and software, especially names like MSFT, is overdone, but I’m not stepping in front of that move yet. I want to see bullish momentum and some confirmation before trying to catch a bottom in those charts.

SPY Daily Chart

Palantir Technologies Inc

One chart that is quite interesting to me right now is PLTR.

The President tweeted about PLTR on Friday, which instantly halted its major selloff and sparked a strong bounce. Regardless of where you stand politically, it’s wild to see the financial impact his tweets are having on stocks right now, especially now that he’s targeting individual names!

But putting that aside, the real question is whether Friday’s hammer and the current support level can hold.

If PLTR breaks below Friday’s low, I think it likely moves quickly down toward the $108 area, where we have a key VWAP level lining up with the 100-week SMA. That would be a much more compelling long term buy zone. PLTR has never retested its 100-week SMA, so if it gets there, I will be quite interested and ready to click the buy button.

The risk/reward in the $110 to $90 zone is extremely attractive. A move back to prior all-time highs from that range would be roughly a 100% gain, and I’m confident I could structure the trade with less than 20% downside risk. That sets up a potential 5:1 risk/reward on a longer-term swing targeting the highs.

On the flip side, if Friday’s low holds, there’s a shorter-term opportunity. A move back into the $136 to $146 range is very possible, with a stop just below Friday’s low. That also offers a solid risk/reward setup for a quicker trade.

Either way, PLTR is setting up with clearly defined levels and creating multiple trading opportunities with quality risk/reward depending on how price reacts this week. Plus, we now know if it gets too bearish, the United States President will step in and fire off some tweets to pump it up.

PLTR Daily Chart

The strength continues in the market as SPY and QQQ closed higher once again on Thursday. Everyone seems to be assuming that CPI will drive the market lower, but even if that happens, I think dips will remain buyable for at least a few more weeks. From everything I’m seeing, this bullish move is not quite over.

Whether this is a B wave or the start of something larger and more sustained is hard to say, but that doesn’t really impact my April thesis, which is simple: stay bullish as long as SPY and QQQ are above the 200-day SMA, and look to buy weakness in the stronger names.

SPY Daily Chart

We’ve clearly seen the trend of weak getting weaker and strong getting stronger accelerate over the past couple of weeks. Strong names like MU, LITE, MRVL, SNDK, and AMAT have continued to hold up well, while weaker names like ADBE, NOW, ZS, and MSFT have remained under pressure and can’t seem to catch a bid.

While it’s true that the selling in software, especially MSFT, is likely overdone, that doesn’t mean the market has to change its opinion anytime soon. When you’re buying a stock in a downtrend after it has broken support repeatedly, you have to understand that any bullish trade will likely take time to play out. It usually requires a catalyst, whether that’s a capitulation gap down, a breakaway gap up, or a strong trend-changing candle.

The gap up on MSFT on Wednesday was aggressively sold into, sending it back below the 200-day SMA and creating a pretty bearish retest and rejection of the 200-week SMA scenario. For anything meaningful to happen on the upside, MSFT needs to reclaim that 200-week SMA and Wednesday’s candle. With earnings coming up in about 19 days, that could act as a catalyst, but for now, there’s nothing on the chart suggesting immediate upside.

MSFT Daily Chart

Since strong stocks are continuing to act well, that’s where the focus should be. Here are a few setups I’m watching:

VanEck Semiconductor ETF

Semis are ripping right now, and more specifically, the memory names are leading the charge. With the rest of the group stabilizing, SMH has pushed back to all-time highs. Many of these names look attractive as long as they hold their lower gap from Wednesday.

If a stock is in a bullish trend, has a strong gap, and begins to retest that Wednesday gap in a controlled way, it should create a solid risk/reward setup. SMH looks like it could see some kind of pullback, followed by at least one more push higher. As long as we don’t get a sharp bearish gap down through Wednesday’s candle, any controlled pullback should be buyable.

Best case scenario is a controlled dip over the next few days into the $405 area, followed by a move back to new highs and a potential push toward $450 into early May.

SMH Daily Chart

CoreWeave

This name isn’t showing massive relative strength, but it’s also not getting crushed like many high-beta and software names. What stood out was Thursday’s candle, which filled Wednesday’s gap and still managed to close bullish on very high volume.

It’s now back above the 100-day SMA and approaching the apex of a large triangle pattern. The last time I traded CRWV was after the December 19th candle, which showed similar bullish volume characteristics, and that trade worked well.

What makes this setup attractive is the clear invalidation level. If price breaks below Thursday’s candle and loses the 100-day SMA, the bullish thesis is broken. On the upside, there are multiple resistance levels, but the 200-day SMA and the gap above are reasonable targets.

CRWV Daily Chart

Eos Energy Enterprises

For the bottom feeders out there, this one looks interesting. EOSE printed a 29% gap-and-go candle, which is a strong reversal signal. This has the look of a potential bottom. If it pulls back and holds Thursday’s low, it could offer a solid risk/reward setup with upside toward the 100-day SMA.

As long as Thursday’s low holds, the bullish thesis remains intact. There is significant overhead resistance given that the stock is still down 77% from its highs, but a gap fill around $9.21, roughly 50% higher, stands out as a solid longer-term target.

EOSE Daily Chart

Nebius Group

I traded NBIS long after the March 11th gap and only had to hold for two days to hit my target. I forgot about this chart for a bit and came back this week to see it printing a bearish hammer on Wednesday, followed by a strong continuation on Thursday, closing at the highest level in its history.

This is the kind of chart where dips should be buyable. It’s showing strong relative strength and looks like it’s breaking out after a large consolidation period. A move toward the 1.618 extension of the recent correction would put it around the $182 level, giving it plenty of room to run.

With momentum names like this, there isn’t always a perfect stop level. I typically use a recent candle low or a shorter-term moving average like the 8, 10, 12, or 20 EMA. However, if the bullish thesis is going to hold, NBIS should not be closing below $109 any time soon.

NBIS Daily Chart

If you’re a regular reader of this newsletter, you already know I pivoted to a more bullish stance last Tuesday. That day delivered a powerful gap-and-go with massive volume and strong follow-through that closed near the highs.

Since then, I’ve stayed in cautiously bullish mode. While the dips weren’t deep, there were solid opportunities to add exposure at key levels last Thursday and this Tuesday. I added to positions in AMD, AMZN, GOOGL, MU, RDDT and the Tuesday Top Trade feature, HOOD on those days. Wednesday’s explosive gap was the big payoff.

I took profits on all my swing trades at the open. The gap was enormous, and it made sense to lock in gains. QQQ had just gapped directly into its 100-day SMA after a nearly 3% move above the 200-day SMA! I figured if I was in profit taking mode, other market participants might be as well.

QQQ Daily Chart

Now that we’ve seen a very strong bullish pop, the natural question is: where do we go from here?

As I always do after wild price action, I went back through the charts to study similar historical setups. I’m still operating under the assumption that this rally is a B-wave, likely to form a lower high or double top before sellers step back in and we see another period of volatility. That said, I’m open to that being wrong, and for my intermediate-term swing trades, it doesn’t really matter.

That B wave view is based on many factors including:

• Heavy resistance and distribution near the prior highs on QQQ, SPY, and leaders like NVDA

• Historical chart patterns

• Average drawdowns in midterm election years

• Elliot Wave Analysis

That said, B-waves can be extremely tricky. They can even extend as high as the 138.6% extension of our A wave (pushing into new all-time highs) and trap breakout buyers before the eventual C-wave decline. With that in mind, I’m willing to adapt my thesis and trade the levels right in front of us, regardless of the bigger picture.

My simple, time-tested framework remains: bullish above the 200-day SMA, bearish below it. Right now, that framework says be bullish, at least until the 200-day SMA is violated.

SPY Daily Chart

Historical Analogs

I studied every instance where SPY gapped up above its 200-day SMA. I paid special attention to setups where the 100-day SMA was still above the 200-day but beginning to curl lower. I also was looking for instances following a large bull market.

The most similar historical example occurred on October 28, 1999. The parallels are striking (I’ve discussed this analog before).

• In late 1998, we saw a ~20% drop followed by a powerful rally that gained 54% off the lows roughly a year later. In 2025 saw a similar ~20% drop, followed by a 45% rally that topped about a year later.

• In 1999 SPY corrected just over 13% after breaking the 200-day SMA. In 2026 the SPY corrected just under 10% after breaking the 200-day SMA.

• In 1999, SPY closed up ~3.5% on the gap day. Wednesday’s gap closed up 2.55%.

• Both featured a downward-sloping 100-day SMA sitting above a still-rising 200-day SMA.

Following that 1999 gap, the market continued higher for another 148 days before eventually forming a major top and entering the dot-com bust. The 1999 gap saw almost no retest, it opened, ran, and never looked back, making new all-time highs in under 20 days.

Across all historical gap-ups above the 200-day SMA, the general path has been higher. Out of 11 instances, 7 ended up being bullish, and in many cases, very bullish. While there were 4 gaps that fail to make new highs, this type of move has more often than not led to higher prices and new all-time highs.

SPY 1999 Analog

My plan moving forward:

• I will look to buy dips into gap fills with stops below Tuesday’s candle.

• As long as the 200-day SMA holds, I’ll maintain a bullish bias.

• A quick close back below the 200-day would be quite bearish and could lead to a retest of recent lows.

Yes, sometimes it really can be that straightforward: bullish above the 200-day SMA, bearish below. Check out the video below where I walk through the 11 similar gaps in SPY’s history and what they could mean for current price action.

Not much happened on Monday. The market closed slightly higher, and most of my watchlist was mixed with small gains and small losses across the board.

That said, both SPY and QQQ have now put in four consecutive bullish candles with declining volume each day. If we gap up or continue pushing higher into the 200-day SMA over the next day or two, I view that level as solid resistance. I’ll be watching for selling pressure to come in there, which could push us back down for a retest of Thursday’s and Tuesday’s large bullish candles.

If we start breaking below Thursday’s low, that’s an early warning sign. A break below Tuesday’s low would be more significant and would signal another flush lower. However, as long as those levels hold, which they should, the next pullback should be buyable with decent risk/reward. The target would be a move back above the 200-day SMA and potentially into the 100-day SMA, which is now curling lower and should act as another strong resistance level if we get there.

There are still some concerning bearish structures across key names like GOOGL, MU, NVDA, and AVGO. We’re seeing potential double tops and head and shoulders patterns, so if those recent pivot levels start breaking, we could see another round of meaningful selling.

That said, my stance hasn’t changed. I’m still looking for a bullish bounce during April and leaning net long while trading around key levels. That means staying quick and nimble each day, taking profits into resistance levels and looking to re-enter on dips.

As long as we remain below the 200-day, I remain cautious. But this still feels like the type of environment where we get a choppy, overlapping, frustrating B wave bounce.

SPY Daily Chart

Robinhood Markets Inc.

HOOD has fallen 58% from peak to trough after topping last September, well before most tech names put in their highs. It broke both the 100-day and 200-day SMAs early, giving clear warning signs of the weakness to come.

At the same time, it was up a massive 417% from its April lows, so a retest was more than warranted. That retest has now brought it back to a critical level, with confluence at the 100-week SMA, the prior all-time high, and the anchored VWAP from the November 2023 pivot.

The last time weekly RSI hit this level, it marked the absolute low on the stock. On top of that, we now have bullish divergence building on the daily RSI.

What I really love about HOOD right now is the clearly defined support level that should hold, and a very clear point where the bull thesis breaks down. Any sustained move below the $63.00 level is a major problem for the bulls. It’s also important to remember that just because a stock is down 58% doesn’t mean it can’t drop another 58%. We’ve seen that play out before, just look at Robinhood competitor Webull.

If HOOD can bounce here, the first major resistance sits around $85, with minor resistance near $75. A move to $85 would represent roughly a 30% gain from the 100-week SMA.

There’s also an unfilled gap at $98, which would be about 50% higher for those with strong holding power. For those who still believe in the long-term fundamentals, the Elliott Wave structure does suggest the potential for new highs.

That said, I don’t think HOOD makes a move to new highs without the broader market participating. I would need to see much more confirmation before leaning into that scenario.

HOOD Daily Chart

Check out the Tuesday Top Trades Video with Jerremy Newsome for an in-depth breakdown of the markets, along with detailed analysis of some of our favorite stocks and scan results. Don't miss the actionable insights!

Happy Easter! Christ is Risen. Can the Markets Follow Suit?

Despite Thursday’s sharp volatility, the major indices closed nearly flat compared to Wednesday. As long as we continue chopping in this high-volatility environment below the 200-day SMA, I’m prepared for anything.

Since Tuesday’s strong reversal candle on elevated volume, I’ve been watching for a relief bounce into April. However, most of the major downside setups remain intact. The QQQ still needs a decisive close above its 200-day SMA to negate the risk of a quick flush toward the $540 zone.

QQQ Daily Chart

Based on the key charts I follow, we appear close to putting in a bottom and starting the next wave higher. That said, this upcoming leg higher looks likely to be B-wave with a lower high after the significant destruction we’ve seen across the charts. History shows that a bounce like Tuesday’s is often just a short-term low, not the ultimate bottom, before a more punishing C-wave drop gets underway.

The tricky part? B-waves are among the most deceptive moves in technical analysis. By the time the rally gains traction, many will be celebrating a return to new all-time highs… right before the rug gets pulled for a violent five-wave decline that catches everyone offsides.

This market was simply too well-hedged and pre-positioned for a drop for the “real” crash to arrive immediately. Instead, we’ve seen a relatively controlled, stair-step decline, classic behavior for an A-wave.

SPY Daily Chart

Signs of Emerging Strength

Several key ETFs are showing tentative resilience:

• IWM held its 200-day SMA, yet is still stuck between its long term moving averages.

• DIA defended its prior all-time high, retested the 200-day SMA from below for the 4th time, and is holding.

• SMH reclaimed its 100-day SMA after only two days below it and pushed back into its point of control.

These are constructive developments and point to a potential bounce brewing. However, all three charts are now pushing into meaningful resistance zones, which should make next week particularly interesting and could mean more chop is heading our way.

ARKK remains in a well-defined downtrend channel and recently found support at the lower trend-line. A move higher, similar to February’s relief rally would make sense. It should find resistance near the $75-$80 level, where the upper channel line converges with longer-term moving averages.

ARKK Daily Chart

Sector Insights

We’re also seeing key supports hold across several major sectors:

• XLF (Financials), XLY (Consumer Discretionary), XLP (Consumer Staples), and XLV (Health Care) found footing near the 100-week SMA.

• XLI (Industrials) held the 200-day SMA.

These developments suggest some form of bounce could be developing now. That said, bulls shouldn’t get overly excited. Most of these sectors look likely to stall at lower highs before turning down again for another leg lower, adding further weight to the broader A-B-C analysis above.

XLY Daily Chart

Gold and Bitcoin

Gold is playing along nicely. It either put in its low or the next dip will be a buyable one before a solid push higher. The metal touched its 200-day SMA, bounced strongly, and has already reclaimed the 100-day SMA. This isn’t an environment for aggressive breakout buys, so I’d approach any new gold or IAU (the ETF I use) positions on limit orders.

XAUUSD Daily Chart

Bitcoin is as sideways as it gets and shows no clear signs of resuming an uptrend. It’s essentially a coin flip from here: resistance sits overhead near $74,000, with next support below around $59,000. I still expect another lower low before this bear market finally ends, and I don’t expect it to end for several more months. Once BTC works its way back down to the 200-week SMA and its realized price around $54,000, the long-term risk/reward becomes much more compelling.

Trade of the Day: ALAB

My favorite chart from Thursday was ALAB (Astera Labs). I sold puts on Wednesday, then sold more puts and bought shares Thursday morning. The green to red move with a strong bullish engulfing candle was impressive to say the least.

I would have preferred higher volume, but the price action is still quite compelling: it closed back above the 100-week SMA after retesting a major prior resistance level (now support) and filled the breakaway gap from last July, a level I’ve been watching for six months.

The stock also dropped about 17% below its trend channel, mirroring its behavior from last April. The similarities are striking. Now we’ll see if we get sustained bullish follow-through.

I plan to add more on a dip back to the 100-week SMA, with a final add at $92.49 if it gets there. I do not want to see a close below that level which is a major support and the point of control, as it would begin to invalidate the bullish setup.

ALAB Daily Chart

I last wrote on Monday afternoon when things looked bleak. Multiple key levels had been taken out, but after so many consecutive bear days, a relief bounce felt overdue.

We didn’t have to wait long. Tuesday delivered a strong gap up that not only filled the gap above but blew right through it. Wednesday followed with another gap higher and another solid green close. The market has now put in two very strong days.

The question on everyone’s mind is this: Is this just a dead cat bounce, or the start of something more bullish?

I don’t have a crystal ball, but I can lay out the key levels that matter most right now and what the bigger picture might be telling us.

Note: I’m writing this before Trump’s big April Fools speech this evening. I expect his comments will generally lean toward the idea that the war is winding down, which should be market-friendly in the short term. That said, in this environment, one tweet or sentence can override any chart or level.

SPY Daily Chart

The Bigger Picture on SPY and QQQ

If we zoom out, SPY and QQQ are still telling slightly conflicting stories.

SPY looks like it has begun a B-wave higher, while QQQ still has the potential for one final leg down. One of them is lying. And in this market, it has been difficult to tell which.

When the macro picture gets murky, I usually do one of two things. I wait for clarity, or I zoom into the candles and navigate the short-term mess as best I can. Lets zoom.

SPY gave us a very bullish candle on Tuesday accompanied by the highest volume of the year. That kind of candle should hold for several weeks to over a month at least. If it doesn’t, things get quite bearish. So this candle gives us a solid level to base risk management around.

That said, it is not the most ideal setup. Because of that, on any retest, I want to buy as deep as possible into Tuesday’s candle to improve my R:R. Chasers are getting punished hard on both sides right now. This is absolutely not a market to be chasing, especially when FOMO is running high.

What complicates things further is that we are still trading below the 200-day SMA, and we have not seen clear capitulation or hit any obvious major support. This bounce still fits the classic framework of a 200-day SMA retest before the next leg lower. We see this pattern repeatedly when SPY breaks below the key moving average.

My overall game plan is to sell into the 200-day SMA area. There is also a cluster of anchored VWAPs in that area creating a resistance zone roughly between $655 and $665 on SPY. I expect some selling pressure to develop there, which should bring price back down into Tuesday’s candle.

As we retrace, I will look to get long again, ideally deeper into that Tuesday range. I will hedge under Tuesday’s low if we reach it.

The violent buying over the last two days has largely been short covering. Now we will see whether real buyers step in to pick up the baton and push us nicely higher. If not, this large bounce, even while aided by news that the war may be winding down, could simply be a neckline retest or dead cat bounce.

QQQ Daily Chart

The Trillion Dollar Titans (Mixed Signals)

For any sustained rally to take hold, the Trillion Dollar Titans need to participate meaningfully. Right now, the signals remain mixed:

• NVDA is retesting the 200-day SMA, tracking close to the bearish path I outlined on Monday. Massive resistance sits at $179 to $183, but on the bullish perspective it has reclaimed $169, which now acts as support.

• AAPL looks poised for a quick push toward $260 to $265. It reclaimed the 200-day SMA in a single day, so I am not even counting that as a true break. It remains one of the strongest names in the group, though it lagged the broader bounce the last two days. This could offer upside opportunity if bulls take control.

• GOOGL did not quite reach my ideal buy zone and closed back above the key $295 level, though not by much. This can easily be read as a head-and-shoulders neckline retest, which would target the 200-day SMA again. I will still buy dips but likely will pyramid in rather than the ideal one large high R:R entry. A close above the 100-day SMA would be bullish and should target new all-time highs. Big resistance sits at $310.

• MSFT still looks vulnerable to another leg down toward $450 after coming close to a 200-week SMA retest. If it starts closing back above the 200-week SMA, I will shift my view. But until then, I expect at least one more low. Even if SPY, QQQ, and the stronger names make higher lows, MSFT could still print a lower low.

• AMZN could be forming a giant double bottom targeting the gaps at $224. The stock has been extremely choppy and will likely follow the broader market. Overall, I still think the overhead gaps get filled, possibly after one more quick dip toward $194.

• AVGO remained weak, never reaching its neckline and staying firmly below the 200-day SMA. I could see it pushing up toward $340, chopping around, then resuming lower. Not much edge here for now.

• META filled the gap from March 25th 2026 and April 30th 2025 in extremely volatile fashion, whipsawing both bulls and bears. It is still well below the 100-week SMA and has not yet closed above the March 26th candle. If it does that, it should press into the underside of the 100-week SMA, where I expect stiff resistance.

• TSM reclaimed the 100-day SMA in a day. If it can push through the anchored VWAP from the ATH, there is a high probability of filling the gap near $365. If not, expect chop around current levels before likely resolving back toward the 100-day and the gap below.

• TSLA is still firmly below the 200-day SMA and locked in a stair-step decline since its December 2025 high. Watch support near $339 and resistance at the 200-day SMA.

None of these names give a conclusive green light that the bounce will be sustained. Based purely on price action, the bulls still have significant work to do. The structures remain broken, and the bear thesis is very much alive.

That said, candles like the one we saw on Tuesday often mark at least a short-term bottom, sometimes lasting a month or more. With that in mind, it makes sense to carry some bullish exposure. Why not enjoy a strong April before the classic sell in May, even if that old adage has not worked particularly well in recent years?

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We’ve now reached the point where Iran’s leaders are tweeting U.S. stock market
”advice”, and the wild part is they actually nailed it on Monday. The gist of what they said is that this is a “sell the rip” environment, which, if you’ve been reading this newsletter or just watching recent price action, you already knew. It’s still a real wild time in the markets.

Futures opened lower on Sunday night, but by Monday morning SPY gapped up, as has become the new normal. That gap got sold off, because that’s what happens in bear markets. The best-case scenario in the short term would be a decent-sized gap down in the coming days where bulls actually step in and buy it. If we gap down and the bulls don’t show up, then the bulls have a real problem and we’re likely entering the panic phase of this move.

SPY Daily Chart

I go over the markets and all your favorite charts in the video below, so check it out for a detailed breakdown of where we stand.

A few key things happened today: SMH broke key support as TSM fell below its 100-day SMA, NVDA sold off further, and MU broke down hard. IWM finally lost its 200-day SMA, giving up the bullish edge that small caps had been clinging to for the past few days. We also saw AAPL break its 200-day SMA, which is a big bearish development.

It looks like all of the Trillion Dollar Titans have more room to fall from here. Nothing about the NVDA chart is bullish right now. AAPL is below its 200-day SMA, with its next key support sitting just below current price levels before the 100-day SMA. GOOGL looks destined to test its 200-day SMA, a level it desperately needs to hold. MSFT and META are in full-blown crash mode. AMZN broke its 100-week SMA and has a gap below at $194 that needs to fill. AVGO and TSLA are both below their 200-day SMAs and sitting in no-man’s-land, with meaningful support still further down.

The QQQ looks like it has a little more downside before we get a 4th wave correction up into the $573–$583 level. After that, it should push back to a new low near the prior all-time high zone around $530–$540. The SPY is telling a slightly different story and suggests the next bounce could be larger and more drawn out, possibly reaching into the 200-day SMA and taking a few weeks to play out. Either way, the charts are saying we’re not yet near a durable bottom. Of course, there’s always the possibility that full-on panic hits and we drop straight down another 2-5% on SPY to reach the 600 range. I haven’t entirely ruled that out.

QQQ Daily Chart

Unity Software

One of our Top Trades today comes from Jerremy Newsome himself. He has mentioned and discussed U a few times in past Tuesday Top Trades videos, and today’s trade is the clearest bull signal it has given us since it broke below the 100-day SMA back in late January.

The stock has been trying to bottom after a disastrous breakdown into earnings and is working hard to form a double bottom. On Friday, U was one of the strongest names on the tape, gapping up and closing nearly 15% higher with a bearish hammer candle. It closed just over that candle on Monday, triggering breakout buyers.

The trade now would be a limit buy somewhere into the top of that big bearish hammer, with a stop below it. If it closes back below Monday’s candle anytime soon, that would be a signal to mitigate risk. But if it closes back below Friday’s candle, the bull thesis is dead, killed by AI along with everything else.

The ultimate target would be the $27.00 range to fill the gap, though $23.00 would likely act as resistance on the way up.

U Daily Chart

Alphabet Inc

GOOGL is a really interesting chart right now. For one, it has about as perfect a head and shoulders pattern as you can get, with a clean break below the neckline. It has yet to retest that neckline, which supports the overall thesis of the bull trade, believe it or not.

If GOOGL can drop down to the 200-day SMA and the gap at $261 and find a bottom without a severe break of the 200-day SMA, it could make for a nice trade — whether GOOGL is eventually headed lower or not.

Say the correction is over and that was the full ABC move, and it’s now heading to new highs. That would be a great buy zone, obviously. But say this is just the first leg in a larger correction that will eventually take it to the Warren Buffett gap and the 100-week SMA. Even under those circumstances, it should see a B-wave bounce higher, at least into the neckline around $294.

This setup gives decent risk-reward and the opportunity to collar the position around the neckline, locking in a solid win either way. If it closes strong below the 200-day SMA and doesn’t regain it quickly, the bull thesis is in trouble and hedging or stops are likely in order.

GOOGL Daily Chart

The selling picked up steam again on Friday, with big tech once again leading the way down. META and MSFT are in absolute free fall, while NVDA, GOOGL, and AMZN all broke key technical levels. Unlike MSFT and META, those three — along with much of the broader market — have only been under heavy pressure for about three days. This raises the odds of continued downside this week. I will note that BTC gave us zero directional help this weekend as its about as flat over the weekend as I have ever seen it.

As I’ve been warning for the past two months, ever since the 100-day SMA broke on SPY, the risk of a larger sell-off has been elevated. Historically, when SPY gaps below the 200-day SMA and fails to reclaim it, the subsequent declines tend to be brutal.

I don’t usually focus heavily on the news — price action remains my primary guide. That said, I spent time this weekend reviewing historical conflicts involving oil supply shocks. Let’s just say, the results lean bearish.

There is a real risk that the current Iran conflict escalates or drags on far longer than the Trump administration or the markets would prefer. Unlike the tariff pivots in 2025, Trump cannot simply walk this back. Multiple parties are now involved, all needing to reach agreement. Uncertainty is enormous — and markets hate uncertainty.

Geopolitical Conflicts & Oil Shocks

Looking at geopolitical conflicts broadly, the data is mixed. We often see a sell-off, but it can be mild, with markets returning to highs relatively quickly.

However, when an oil supply shock enters the picture, the outlook turns significantly more bearish. Initial declines frequently reach the 15–20% range, with even deeper drawdowns possible if the disruption fuels sustained inflation or tips the economy toward recession. Oil supply shocks reliably amplify market pain, pushing drops well beyond the typical ~7% baseline for non-oil geopolitical events.

1973: Yom Kippur War + Arab Oil Embargo

The classic example is the 1973 Yom Kippur War and the subsequent Arab Oil Embargo.

The war itself lasted roughly one month. The market didn’t drop sharply during the fighting because investors initially viewed it as short-lived and contained. However, the broader index had already been in a decline earlier in 1973 and was pushing into the 200-day SMA in what resembled a B-wave.

The real damage came after the embargo triggered a massive oil price spike. The controlled selling we saw early in 1973 looks eerily similar to the action we’re experiencing right now. SPX broke the 200-day SMA, retested it twice in the following weeks, then rolled over. Later, it staged a larger B-wave that retested the 200-day SMA once more before the brutal C-wave sell-off unfolded into 1974.

SPX 1973 Yom Kippur War + Arab Oil Embargo

Current Outlook and Key Levels

It is a high-probability that SPY moves lower into the $600–$610 support zone on SPY. We have the prior ATH, a key gap at $600.54 and the 100-week SMA all forming support at that level. The main question is how we get there:

• Do we see a bounce first, retesting the 200-day SMA?

• Or do we drop straight down in a fear-driven waterfall?

If we plunge directly into the $600–$610 area without a meaningful retest of the 200-day, I would expect a 1973-style pattern to play out: a B-wave rally back to retest the 200-day SMA, followed by another leg lower. That next wave lower should take us at least to the May 12, 2025 gap fill around $569 — roughly an 18% drawdown from the all time high. That magnitude lines up closely with historical oil-shock declines.

To gauge which scenario is unfolding, I’ll be watching the Trillion Dollar Titans closely, along with key ETFs like SMH, XLF, and XLE, plus the DXY and TLT.

With so many key supports broken and market structure altered, I’ve shifted firmly into “sell the rip” mode until proven otherwise — or until we reach support levels where the risk/reward improves significantly which at this point is the $600-$610 level on SPY. While I will still buy selective dips, I’m doing so less aggressively than before, with a longer time horizon in mind for any new positions.

SPY Daily Chart

The sell-off intensified on Thursday, marking a full week since the SPY closed below its 200-day simple moving average. Historical price action has shown that reclaiming this key level within two days is necessary to avoid a painful downside for the bulls. One week later after no reclaim came, that ugly outcome is unfolding in real time.

The SPY has now corrected about 7.5% from its recent highs but has only retraced a modest 23.6% of the rally off the April lows. Meanwhile, the QQQ is down nearly 10% and has similarly retraced just over 23.6% of its move from those lows.

When we zoom in on the Trillion-Dollar Titans (the heavyweights driving the indices), the charts are far more broken. Several names have already surrendered nearly all of their 2025 gains, and most have broken critical support levels.

At roughly 43% of the QQQ and 32% of the SPY, what these Tech Titans do next matters enormously. Without strength from this group, a sustainable return to the bull market is impossible. This is precisely why I track these names so closely.

We first saw signs of weakness in the MAGS (Roundhill Magnificent Seven ETF) when it topped on October 29th alongside the QQQ. While the SPY managed a new high in January 2026, both QQQ and MAGS formed lower highs. This divergence echoed a similar pattern in 2025, when MAGS peaked 63 days before the broader market. These stocks are truly make-or-break for the indices right now, and the setups are leaning heavily toward break.

MAGS Daily Chart

NVDA

The big dog in tech still holds a market cap over 4 trillion dollars (for now). NVDA has been locked in a clear distribution pattern for the past 245 days. It repeatedly tested the $193 resistance level only to get rejected by heavy selling. It has now broken below its 200-day SMA and is approaching the critical $171 support that has held throughout this distribution process.

If that level fails, there is little meaningful support until the prior all-time high near $153. The 100-week SMA currently sits in the mid-140s and continues inching higher. Assuming we are in an ABC corrective structure from the October 29 high, we are likely close to entering the swift and volatile C-wave lower.

If NVDA breaks below $170 dollars convincingly, it is hard to imagine the broader market not following suit. A drop toward the 100-week SMA in the $140s could offer nice risk/reward for a B-wave bounce back toward the $170 resistance. However, a weekly close below the 100-week SMA without quick reclamation would be bearish and open the door to much lower prices.

NVDA Daily Chart

AAPL

AAPL is holding up best among the group, down only about 12% from its prior all-time highs. It remains above its 200-day SMA, for now. As long as that level holds, a short-term bounce toward the 100-day SMA remains possible if the market finds some relief.

If AAPL loses the 200-day SMA, the next major support lines up with the 100-week SMA and horizontal level near $237, representing roughly a 20 percent drawdown from all time highs. A break below that would likely target the $215 area (major gap and support).

Should AAPL close comfortably below the 200-day SMA, the broader market will take notice and likely follow lower.

AAPL Daily Chart

GOOGL

GOOGL seemed like the safe haven among the big tech names until its February earnings gap exposed cracks. Since the post-earnings gap down, the chart has shown repeated breakdowns: a swift close below the February 5th bullish candle, loss of the 100-day SMA, and repeated rejections at the anchored VWAP from the highs.

This Tuesday delivered the biggest crack yet: a decisive break below the $295 key support and confirmation of a head-and-shoulders pattern. GOOGL went nearly straight up in 2025, leaving sparse horizontal support. The next support zone is the gap fill near $261, which also aligns with the 200-day SMA.

A bounce back to the $295 dollar resistance could set up a quick short back down to the 200-day SMA, where longs would once again have decent risk/reward. Losing the 200-day SMA would bring the Warren Buffett gap and 100-week SMA into play, as there is little to no support on this name until that key level.

GOOGL Daily Chart

MSFT

MSFT is just 5 percent away from breaking below its April 7 low. It has erased nearly all of its 2025 gains, is down around 35% from highs, and has already slipped below the 200-week SMA and 50-month EMA. A close below the 200-week SMA would be the first since 2012, a significant shift in character after more than a decade of strength.

A multi-week to multi-month bounce looks probable soon, potentially taking MSFT back to at least $412 and more likely toward $450 (underside of the 100-week SMA). That said, anyone going long here should recognize the elevated risk: this is uncharted territory for the stock in over a decade. In a worst-case scenario, the 200-week SMA could flip to resistance, and a gap-down on earnings could push MSFT back into the 200s.

MSFT Daily Chart

AMZN

AMZN has held relatively well at the 100-week SMA. As long as it defends that level, a push toward the 100-day and 200-day SMAs looks feasible before a deeper drop into the gap fill near 176 dollars.

I expect AMZN will ultimately erase most (if not all) of its 2025 gains in a final C-wave, with longer-term support around the 200-week SMA. The question is timing: will it deliver one more decent bounce first, or head straight down? AMZN is one of the choppier names right now. In a headline-driven market, it is close to a coin flip. Watch the 100-week SMA closely. A break below it increases the odds of a direct move toward the 177 dollar level.

TSM

Though not in the QQQ or SPY, TSM is one of the world’s largest companies and a critical part of the AI ecosystem. It serves as a clean gauge of sentiment toward AI right now. TSM is holding up well, down only 16 percent from its all-time highs, and has yet to test its 100-day SMA.

After Thursday’s bearish gap and go after the rejection at the anchored VWAP from the ATH, a break below the 100-day SMA looks likely. If the gap at $307 holds, a bounce toward the overhead gap fill at $365 is still possible. However any bounce from here likely is a B wave higher before the C wave takes us even lower.

TSM Daily Chart

AVGO

Similar to NVDA, AVGO has been in distribution for roughly 200 days and recently broke below its 200-day SMA. Support is thin until the prior all-time high near $250 . With a clear head-and-shoulders pattern in place, the chart strongly favors lower prices. Another 23% drop to the 100-week SMA would not be surprising for this volatile name.

AVGO Daily Chart

TSLA

TSLA has also broken below its 200-day SMA and looks like it is headed toward lower support around $339 before any major level comes into play. I suspect the upcoming SpaceX IPO (expected in Q2) could pressure TSLA longer-term by giving investors another way to gain exposure to Elon Musk’s ecosystem.

In the near term, TSLA continues to respect a massive parallel channel dating back to 2023. The lower trendline of that channel aligns nicely with the 100-week SMA, suggesting that zone is likely an area to watch if it drops further.

TSLA Daily Chart

META

Last and probably least we have META which dropped 8% on Thursday after losing its 100-week SMA just days earlier. It also broke the key trendline held since the November low. See, losing the 100-day SMA is generally an early warning sign of more trouble ahead.

META is now down 31% from its ATH, and the gap near 500 dollars looks destined to fill. It is only a matter of timing. The chart looks bearish overall but watch for a retest of Thursday’s candle. Failure to hold the $485 to $500 dollar zone would bring the deeper gap fill near $400 dollars into focus.

META Daily Chart

TL;DR
The market sell-off is gaining momentum one week after the SPY broke its 200-day SMA and failed to reclaim it. While the indices have only given back a shallow portion of the prior rally, the true leaders, the Trillion Dollar Titans, have already surrendered far more of their 2025 gains and appear set up to continue lower. NVDA, AVGO, and GOOGL look ready to cascade lower at any moment, while MSFT and META have already fallen hard. AAPL and TSM are holding up relatively better for now, and AMZN may see some near-term upside but ultimately looks likely to resolve lower. Without a meaningful recovery in these heavyweights, which dominate the weightings in both the SPY and QQQ, a substantial and sustainable bounce in the market seems unlikely. Watch the highlighted support levels closely. Breaks lower could accelerate the decline, while holds may allow for short-term bounces.

Market sentiment has shifted. The “buy the dip” crowd has officially turned into the “sell the rip” crowd. For the second time this week, we gapped up into the 200-day SMA and rejected at that level. While it looks like the market is trying to form a short-term bottom, there is a lot of overhead resistance and bearish sentiment keeping it down.

As long as we stay below the 200-day SMA, the bears remain in control. Now that we’ve closed below it for the fifth day in a row, the more likely outcome is another push lower after a B wave bounce.

SPY Daily Chart

Bond Market Pressure

The Trump administration is pushing daily for a resolution with the Iran conflict. One major reason could certainly be the bond markets recent behavior. Last Friday, the 10-year yield broke out and pushed into the 4.45% range. The 10-year has been forming a large triangle pattern since 2023. A move toward the upper end of that range lines up with strong horizontal resistance around 4.6%.

That would not be bullish for equities. As the risk-free rate pushes back toward levels last seen in 2023, it tightens financial conditions and pressures valuations. If yields break out from that longer-term triangle structure, it would be a meaningful headwind for risk assets.

10 Year Yield Daily Chart

The Government’s Dilemma

Higher yields create a major problem for the government because they increase borrowing costs and interest expense. There is a strong incentive to avoid a sustained move higher in rates. The challenge is that inflation remains above target. If energy prices continue to rise, that pressure persists. This limits the policy options available without potentially reigniting inflation. If the war persists and the Straight of Hormuz remains disrupted we would likely start to see inflation tick up in the economic data making things even more difficult for the new Fed president.

Another way to view the bond situation is through the iShares 20+ Year Treasury Bond ETF. TLT is trying to bottom after breaking below support around $86. If TLT can rally back toward the 100-day and 200-day SMAs to fill the gap above, that would likely support equities move higher and align with a B wave bounce. On the flip side, if TLT breaks below recent lows, it is a clear red flag suggesting weak demand for long-duration bonds.

TLT Daily Chart

The U.S. Dollar Index (DXY) is the other chart to watch. It hasn’t broken out from its year-long base yet, but a move higher would be bearish for risk assets. A break above $100 would be a notable signal and likely would align with the next leg lower in equities. When the dollar rises, it pulls liquidity out of the system, hitting tech stocks and Bitcoin the hardest.

DXY Daily Chart

SPY Levels and the Road Ahead

Risk is elevated with a fifth consecutive close below the 200-day SMA. The trillion-dollar leaders are still not participating, which I will cover in tomorrow’s newsletter. SPY is holding above support around $650 but remains below resistance near $661. Until that changes, the market is stuck in a sideways to bearish range where rips continue to get sold.

This selloff has been relatively controlled so far, stepping lower rather than breaking down all at once. It still looks like an A wave, with a larger C wave potentially still ahead.

While Earth is Bearish, Space is Bullish

Despite the broader weakness, the space sector is showing real momentum. Several names pushed higher on Wednesday and continued to follow through. Some of the strongest charts in the space, some pun intended, include:

ASTS (AST SpaceMobile)

ASTS looks like it is either in, or has completed, an ending diagonal that would mark the end of a large move higher. However, if that count is correct, it would also suggest this is just the beginning of a much larger bullish trend for the name. I like how it has held the 100-day SMA as if that was its job, and now we are starting to see it base and establish a solid support level. Since it is such a volatile name, a push to new all-time highs is well within reason, especially considering the relative strength it has shown lately. For a short-term trade, the stop would be any close below the 100-day SMA, as that would likely open the door for a larger pullback, at least down toward the 200-day SMA.

ASTS Daily Chart

RKLB (Rocket Lab)

RKLB just pushed into my target zone on Wednesday from a trade I highlighted in the Friday Financial Forecast swing trade video. It held the 100-day SMA and bounced right into its usual resistance level. A close above $75 gives this one a real chance to push to new highs. If it can gap out of this range, that would be even better. That said, it could just as easily continue ranging between $66 and $75 until it gets a true breakout or break down.

RKLB Daily Chart

PL (Planet Labs)

PL might be one of the strongest stocks on the planet right now. It gapped up on earnings and is holding that move with impressive relative strength. At this point, I would not want to see it close below the pivot formed by the prior three-day candles. As long as that level holds, the sky is the limit. If it does break below, it likely fills the earnings gap, but given the strength of this trend, that would still likely be a buyable dip back into the mid-20s near the 100-day SMA.

PL Daily Chart

FLY (Firefly Aerospace Inc)

FLY is not in the same established uptrend as the other three names, quite the opposite. However, it is showing signs of basing. It just closed above two of the largest bullish volume candles on the chart on Wednesday, and it has recently reclaimed the 100-day SMA and all of its moving averages. Monday’s low should hold, and as long as it does, this one has room to run as it attempts to form a double bottom on the weekly chart. A close above $34 would confirm that pattern, which is roughly 25% higher than Wednesday’s close.

FLY Daily Chart

The market was set to gap down at the open on Monday morning when Trump dropped a bomb of his own in the form of a Truth that was later called a lie. At 7:00am, he claimed that the US and Iran had been engaged in very productive talks all weekend and that he would be postponing any and all military strikes for the next five days. Yup, you read that right…just in time for the weekend once again.

This was a major de-escalation from the original 48-hour deadline that had been set to expire Monday morning. The market reacted instantly. SPY surged 3.7% in the first 15 minutes and opened above Friday’s candle. But when Iran responded, saying none of that was true, the market gave back a portion of the move after once again rejecting the 200-day SMA. Even so, it still managed to close up over 1% on the day with a huge volume candle. The takeaway is clear: the market is looking for any excuse to push higher right now and is eager to buy or cover on good news.

The key level we’ve been watching remains the 200-day SMA. Monday marked the second consecutive close below it, and if we can’t reclaim that level tomorrow, history suggests that lower prices are likely coming, and sooner rather than later. SPY has now rejected twice at the 200-day SMA. To shift momentum, bulls need to push price back above the average and close convincingly above Monday’s high to show they are back in control. Even then however, the likelihood of a B wave, lower high in many of the key charts we are watching is high. Some big levels have been broken and risk here in is elevated.

SPY Daily Chart

In a highly news-driven market, where a single social media post can completely change a chart, there is nothing wrong with taking a step back, de-risking a bit, and waiting until you can find a real edge. Overtrading and swinging for home runs during volatile periods often leads to drawdowns that can get large quickly because of how fast things are moving.

Also, when stocks are beaten down and trading below key support levels, it doesn’t mean they can’t be great long-term holdings. It just means you’re buying into a downtrend, and your time horizon needs to be much longer than if you were buying a momentum stock in a strong uptrend. It also means you’ll likely have to sit through some pain and red before things turn, because you’re not going to nail the exact bottom. In these situations, shares are your friend. Options lock you into a timeframe where you have to be right, and that’s a tough game to play in a choppy, volatile market in a downtrend.

Bottoms take time to form. Real reversals are usually sparked by a catalyst and often don’t see true momentum return until a bullish gap or a strong confirmation candle, many times around earnings. If you’re buying 30 DTE options, you’re simply not giving the trade enough time to work.

Take MSFT for example. Do I think we’re nearing a short-term bottom? Yes, I do. But I also said that back on February 5th when we were at nearly the same level we’re at today. In that time, we’ve had nearly two months of options expire. Slowly accumulating shares, on the other hand, avoids that time pressure. When a stock is nearing a major level like its 200-week SMA, 50-month EMA and remains a key player in the AI trade, that approach makes a lot more sense to me.

If MSFT puts in a strong weekly close below the 200-week SMA, I’ll look to protect my position. Otherwise, I’ll continue adding on down days near that level and look to collar the position once the stock finally starts to bounce.

MSFT Weekly Chart

For more market analysis and technical break downs, check out the Tuesday Top Trade video below.

In last Thursday’s newsletter “The Long and the Short of It,” I outlined two scenarios after SPY and QQQ gapped below the 200-day SMA. Either we cascade lower, similar to what we saw in 2025, or we quickly reclaim the key average within 1–2 days and move higher in a final B wave bounce, like in 2019. I was leaning toward the latter based on the analogs I’ve been working with over the past month.

However, instead of a gap up and continuation back above the 200-day SMA, Friday gave us a nasty gap-and-go to the downside. I pivoted. I stopped out of my QQQ position from Thursday, tightened stops on my remaining longs, and flipped bearish for the day. I had already purchased SPY puts on Thursday during the retest of the 200-day SMA as protection in a worst-case scenario. That allowed me to hedge while still holding shares in case we get an early-week bounce.

Thursday’s gap below the 200-day SMA was a red flag. Friday’s gap and go was that same red flag getting slapped across your face by a massive bear. In general, the probability of a bearish outcome increases significantly when we lose the 200-day SMA, and even more so when we gap below it and fail to reclaim it within a couple of days. Sometimes trading really is this simple: above the key average, you lean long. Below it, you lean short to neutral. The 200-day SMA is one of the cleanest lines in the sand between bull and bear markets.

SPY Daily Chart (Keep it Super Simple)

That said, as frustrating as it is, I can still see both paths playing out here. The risk of a sharp move lower increases the longer we stay below the 200-day. This is where traders need to stay nimble. I’ll continue outlining the most probable scenarios each day, but things can change quickly. I’ll also be updating the RLT community in real time in the swing trading room with intraday developments.

SPY Daily Chart with Both Analogs

Scenario 1: Gap down Monday, bounce, then fail at the 200-day SMA

A gap down in SPY and QQQ would strongly favor the bearish scenario, as it removes any realistic chance of a quick reclaim of the 200-day SMA. The deeper we drop, the more likely it is that a retest of the 200-day acts as resistance before the next leg lower.

That said, we’re getting short-term extended. If SPY gaps down into the $642 area (the AVWAP from the April 7th low) or lower, I’d expect buyers to step in and shorts to cover, potentially setting up a short-term bottom for a bounce. In this scenario, QQQ would likely break its major horizontal support, which SPY already broke on Friday. That opens the door for a more direct move lower toward prior all-time highs.

The small bounce back to the 200-day SMA would still qualify as a B wave bounce, just smaller than initially anticipated. I’ve overlaid a bars pattern from May 20, 2010 (red) on my chart above as a reference. The May 10 candle in that analog also came on heavy volume and pushed RSI down near 31, very similar to what we just saw. It would also closely mirror the drop we got in 2025.

SPY Daily Chart May 2010 Analog

Scenario 2: Bullish gap and go, trapping shorts and pushing higher

A bullish gap and go on Monday that closes above Friday’s candle would trap a large number of shorts who piled in during that high-volume selloff and could fuel a strong move higher over the next few weeks. This would align with the larger B wave bounce I’ve been watching for, as well as the scenario where we quickly reclaim the 200-day SMA and push higher into the 0.786 retracement of this recent drop.

RSI has dropped to around 30, which typically produces at least a short-term bounce in SPY. A 7% pullback from the highs is also a meaningful move within a standard correction. Historically, the last four instances of large volume spikes like Friday’s either marked the low or led to one final low the following day, as we saw in 2025.

I’ve included the June 27, 2016 analog (shown in green on the chart above) to illustrate what a bullish gap and go from this level could look like. That day, similar to now, price was below the 200-day, volume surged, and RSI tagged 30 before a sharp upside move followed.

While a bounce feels likely in the near term, risk remains elevated, and I still believe the market ultimately resolves lower. For longer-term, patient investors, that likely means better opportunities ahead. For active traders, there are going to be great long and short opportunities emerging this week.

SPY Daily Chart June 27th 2016

My Game Plan

If we start taking out Friday’s candle to the upside on Monday or Tuesday, I’ll begin adding bullish exposure with tight risk controls. If we gap down Monday, I’ll look to add small into that weakness with very tight stops, targeting a bounce back toward the 200-day SMA, where I would once again lean short.

It’s still entirely possible we see a waterfall lower from here, so risk management is critical, especially if you’re buying into weakness.

After an extremely weak close on Wednesday, SPY and QQQ both gapped below their 200-day SMA. That is a big deal. This marks the first interaction with this key average since May 12th, when we gapped strongly above it.

SPY Daily Chart

Looking at history, what happens next typically falls into one of two paths (all charts are hyperlinked below for more in-depth study).

Option 1: Breakdown and acceleration lower

If we break below Thursday’s low in the next few days, the odds favor a fast move lower.

• March 10th, 2025: SPY gapped below the 200-day SMA, drifted lower for a few days, then retested the average from below, rejected hard, and plummeted 16% lower in just 9 days.

• April 6th, 2022: SPY gapped below the 200-day SMA, moved sideways beneath the average for three days, and then gapped down again, sparking a full-blown bear market that lasted another 190 days and took price 22% lower.

• July 7th, 2015: A bearish gap below the 200-day SMA kicked off an 11% drop in just 3 days. The consolidation looks very similar to today. However, as I’ve discussed in “The Last Bounce,” I still believe we are tracking closer to the purple arrow in the structure.

• June 23rd, 2011: 2011 is another key analog I have been watching and it kicked off its final drop with a gap below the 200-day SMA, triggered major selling. That gap occurred on the second touch of the average, while we are still on the first, which is why I believe we are at the purple arrow as opposed to the red. However, the next few days will be critical in determining where we are.

• May 20th, 2010: The market gapped lower below the 200-day SMA, failed to reclaim the average, rejected on the retest, and ultimately made lower lows 42 days later after a 17% decline.

SPY Chart March 10th 2025

Option 2: Quick reclaim and reversal higher

If we reclaim the 200-day SMA within the next 1 to 2 days and hold it, the odds shift toward a short-term low being in place and the start of the B wave higher.

• May 31st, 2019: A bearish gap down below the 200-day SMA after SPY had already seen a decent selloff. It reclaimed the 200-day SMA within two days, briefly closing below the initial candle before gapping back above the 200-day SMA, which led to a strong move higher.

• March 8th, 2019: A bearish gap below the 200-day SMA after four consecutive bear candles. It formed a bullish candle that closed just under the 200-day SMA, just like we did on Thursday, and then gapped up the next day, leading to a sharp upside reversal.

• December 3rd, 2018: A strong gap above the 200-day SMA that reversed the very next day, moving sharply in the opposite direction of the gap.

• November 7th, 2018: A similar gap above the average that failed within 2 days and continued lower, in the opposite direction of the gap.

• June 27th, 2016: The market gapped below the 200-day SMA and closed with a bear candle. It then gapped up the next day reclaiming the average and launching higher in a V-shaped recovery.

SPY Chart May 31st and March 8th 2019

That covers the majority of the key gap scenarios around the 200-day SMA in SPY’s history. Knowing that Option A is a very real possibility means caution is warranted here. Picking up some puts or tightening trailing stops makes sense, especially if we do not reclaim the 200-day SMA by Monday at the latest. The good news is that we should know very soon which scenario is playing out.

Beyond SPY & QQQ

If we look outside of SPY and QQQ charts, we can find a lot of names that are pretty oversold and finding support at key levels. Many of the Trillion Dollar Titans are reaching levels where we normally see bounces. We are also seeing some areas of relative strength, like SMH, which I reviewed in the Tuesday Top Trade video, putting in higher lows. Seeing some markets and sectors diverge in a bullish direction is a good sign that a bounce may be coming. However, if SMH takes out Thursday’s candle and loses support at $372, that will be a big deal, and the selling from there will likely be swift and brutal, pushing it down into its 200-day SMA.

SMH Daily Chart

DIA has also dropped almost vertically over the past 37 days. I have to say I called the top perfectly in my Divergence at the Top newsletter. It could push a bit lower, perhaps into $451 at the prior ATH, but I think at least some kind of bounce is due, even if it results in a lower high, as I believe it likely will. If it breaks down further, the next major support will be at the 100-week SMA near $437, nearly 14% off of the all time highs.

DIA Daily Chart

Speaking of calling tops, another one I nailed was in SLV back on January 29th in the Hi-Yo Silver, Away newsletter. After the initial drop, I overlaid the 2011 bars pattern I used to call the top, and it has tracked nearly every pivot for over a month.

While I haven’t traded it since shorting the top and taking a quick swing long shortly after, anyone following that 2011 bars pattern has had multiple opportunities to catch pivots and swings in SLV. The pattern is now suggesting that we either put in a low on Thursday or will do so within the next few days before a larger B wave bounce begins.

SLV 4 Hour Chart

Even though my SLV chart suggests a low is here or very close, GLD seems to have a bit more downside based on my Elliott Wave analysis. I believe we are in a C wave, with at least one more leg lower before completion. If XAUUSD can drop back down into the $4,400-$4,100 the risk/reward should get pretty nice once again for a bullish move.

Across sectors, we are seeing key levels get tested everywhere. IYT (Transportation) is at the 200-day SMA. XLF (Financials) is at/just under the 100-week SMA. XLB (Materials), XLI (Industrials), and XLP (Consumer Staples) are all back at their 100-day SMAs.

Meanwhile, the mega caps are mostly sitting on critical levels as well. NVDA and AAPL are right on their 200-day SMAs. GOOGL is just above key support at $295 while it hugs its 100-day SMA and won’t let go. MSFT is approaching major support at its 200-week SMA. AMZN is sitting on its 100-week SMA, and TSM is bouncing just above its 100-day SMA.

MSFT Daily Chart

The Long and the Short of It

The entire market looks like it is sitting on the edge of a cliff, either ready to tip over into a free fall or give us one more bounce higher, even if that bounce ultimately results in a lower high.

Putting everything together, the probabilities and the patterns suggest that a low is either in or very close, with a bounce likely over the coming weeks or months. My downside levels were hit when both SPY and QQQ tagged the 200-day SMA, which should mark the end of this A wave lower. SPY also put in a slight RSI bullish divergence at the lows, which adds to the case.

However, this is a critical moment. If we fail to reclaim the 200-day SMA in the next few days and instead break below Thursday’s low, history suggests we should see a fast, violent move lower.

Watch SPY and QQQ very closely here. If we see downside continuation followed by a retest and rejection from below the 200-day SMA, that would be a major warning sign that things are turning more vertical to the downside, and the B wave I’ve been watching becomes much less likely.

On the other hand, if we start closing back above or even gap back above the 200-day SMA tomorrow or early next week, that would be a strong signal that the B wave is underway. Risk is still elevated at these levels and with these patterns, but that scenario could open the door for a bullish move.

Hotter-Than-Expected PPI and Spiking Oil Prices

The Producer Price Index (PPI) released this morning came in hotter than expected, with final demand rising 0.7% MoM in February 2026, pushing the YoY rate to 3.4% (versus expectations of 2.9%). Core PPI (excluding food and energy) accelerated to 3.9% YoY, above forecasts and the highest in over a year. At the same time, oil prices are spiking hard amid the ongoing Iran conflict. We are seeing disrupted supply through the Strait of Hormuz which is driving crude higher, almost to $100 once again on Wednesday, with the possibility for another high still on the table. That is not an environment for rate cuts, and Jerome Powell and the Federal Reserve made that clear in today’s presser.

Fed Holds Steady, Rate Cut Odds Evaporate

While there was no change to rate policy at today’s March 18th meeting (rates held in the 3.5–3.75% range after prior easing), the likelihood of cuts later this year continues to drop sharply. With this much uncertainty around oil prices and inflation metrics still running hot, the Fed would look foolish cutting into this environment. As of now, the market is pricing in no cuts for the near term, with probabilities heavily favoring rates remaining unchanged at the December 9th meeting according to the Fed Watch data.

December 2026 Fed Funds Rate Expectations

SPY Hits the 200-Day SMA

With Wall Street abandoning all hope for near-term rate cuts, markets sold off pretty hard on Wednesday, undercutting last Friday’s lows as I expected. As I’m writing this, SPY tagged the 200-day SMA in post-market action making this the first time it touched the key moving averages since May 23rd 2025. Since SPY broke down below the 100-day SMA at the start of this month, the 200-day SMA touch became a high probability that I have been patiently waiting for.

I am not sure if that’s the ultimate end of this A wave lower, my base case is that SPY undercuts the 200-day SMA at least slightly, with more meaningful support around $655 and $653. If we start closing below that level and fail to reclaim it quickly (for example, the very next day), then this market is in trouble and a waterfall move becomes likely.

After all, the market has been distributing for the last 189 days. If we break down below that entire range, it confirms distribution and suggests larger players have been selling into strength. In that scenario, a move toward $613 becomes likely sooner rather than later.

I’m open to a wick or quick flush below $653, but I do not want to see sustained selling below that level with expanding volume, gaps, or momentum. That would be a clear signal that the B wave bounce I’ve been yapping about for weeks is not going to materialize, and instead we’re on a more direct path lower.

SPY Daily Chart

Gold Under Pressure: C Wave Lower in Play

We’re seeing most markets drop together on this move. Gold led the weakness Wednesday morning, selling off hard right out of the gate. It’s already in a C wave lower, continuing its correction from the blow-off highs on January 29th. The most likely scenario is a move to new lows, breaking below the February 2nd candle and potentially testing the 200-day SMA. That would create a symmetrical A and C wave decline and bring gold back into the fourth wave of one degree lower that has a range of $4,380 to $3,888.

What matters most for gold is the structure of the next bounce. If the next rally is a 3-wave move, that’s a problem. It would suggest a larger B wave is forming and that a deeper correction is still ahead (Purple count).

There’s also the possibility of a running flat, where the C wave does not break below the A wave low at $4,400 and support comes in around the 100-day SMA. If price holds there and turns higher in a clean 5-wave move, that’s the most bullish outcome. Running flats often lead to strong upside because bears have failed to even make a new low before bulls regain control.

My base case is support coming in somewhere between $4,400 and $4,200, which would offer a solid risk-reward setup for a potential move back toward all-time highs, or the larger B wave in the more bearish scenario.

XAUUSD Daily Chart

Bitcoin Rejects YTD Anchored VWAP

Bitcoin rejected perfectly at the year-to-date anchored VWAP after a clean A-B-C wave off the lows. After eight consecutive bullish candles, it was an ideal level to take profits that I called out in the RLT Swing Trade chat.

From here, if we see a 3-wave pullback that finds support between $69,000 and $62,000, followed by a 5-wave push higher, that would confirm a larger B wave higher is under way and is likely to culminate around the $80,000 to $87,000 range, similar to the size of the bear market rallies we saw twice in 2022.

However, Bitcoin already rallied 27% over 43 days in what looks like a completed 3-wave corrective structure. That is sufficient for a bear market bounce. If price starts breaking down aggressively from here in a 5 wave pattern, I would expect the C wave lower to already be underway, taking BTC at least to $59,000, and more likely into the low $50,000s or even $40,000 range based on the symmetry of the move.

From a longer-term perspective, I think the risk-reward becomes very attractive once we get below the $55,000 area. That is where the Realized Price is, which has always been touched in prior bear market cycles.

Bitcoin Daily Chart

Wrapping Up: Tactical Positioning and Key Levels

All in all, this weakness and the move to new lows in SPY was expected. I did pick up some shares off the 200-day SMA in the post-market, fully expecting price to push lower over the next couple of days before finding a more durable low later this week or possibly early next week.

If we see a larger gap down over key support on heavy volume with no real response from buyers, that’s a major warning sign that something more bearish is underway.

Keep a close eye on those key technical levels. If we start breaking those, it doesn’t matter what count or pattern used to be in play, price is king and those key supports need to be respected. Macro headwinds (hot inflation, oil and geopolitics, rising dollar, Fed caution) are overriding near-term optimism right now. Watch closely, key levels matter more than narratives.

Market Update: Still Waiting for Clarity on the Next Leg

Not much changed on Monday from a longer-term perspective. It’s possible the B-wave bounce has already started and this pullback won’t reach the 200-day SMA—but Monday offered little confirmation either way.

Friday’s candle did print a new low, completing a pattern off the highs. A strong bullish gap with follow-through would now signal the next leg higher is underway. Until we see a decisive close above $674, I’m still watching for a final flush into the $650s, where the 200-day SMA resides.

SPY Daily Chart

Trillion Dollar Titans

Among the TDT names, AMZN currently offers the most attractive quick-trade risk/reward. It’s holding the 100-week SMA (a level I love), which prompted me to buy it Monday morning. I’ve noted before that it could see a B-wave move up to fill those overhead gaps, a setup that aligns nicely with the potential B-wave bounce I’m tracking in SPY. If it starts closing below the 100-week SMA, I’ll protect the position and or exit.

AMZN Daily Chart

META: I bought it off the 100-week SMA on Friday and sold at today’s open (shared in the RLT Swing Trade Chat). It could still go higher as long as it respects that 100-week SMA, with $650 as the next upside target.

NVDA: A break above Monday’s candle could fuel a nice rally higher. But losing the 200-day SMA would be bearish and open the door to the $150s or lower.

AAPL: Risk/reward only gets compelling near the 200-day SMA. However the ideal level is at the 100-week SMA around $230.

GOOGL: It’s settling in below the 100-day SMA. A loss of $295 would be significant and likely trigger a quick flush to $270 or lower. If it can regain the 100-day SMA a push to $330 is doable.

MSFT: The low may already be in, or we could see one more leg down to $370–$360. Either way, it’s positioning for a larger B-wave bounce.

AVGO: Sitting right on the 200-day SMA, which aligns with horizontal support held since September. A break lower would be bearish, targeting the prior all-time high near $250. On the flip side, reclaiming the 100-day SMA (~$350) would open the gap fill toward $394.

TSM: Looks like it wants to hit $307 after completing a double-top pattern, retesting the neckline, and consolidating for three days. A push above those three bearish candles could spark a bullish gap-fill trade to $360–$365, which I’d consider playing. Overall, though, it still leans toward testing longer-term averages lower.

TSLA: It’s clinging to the 200-day SMA. Risk/reward improves significantly if it drops back toward the 100-week SMA, given its complex three wave structure and massive parallel channel.

Dollar Index & Broader Implications

The DXY chart has been staring to get more attention lately and for good reason. It flashed lower on January 27th and has been grinding higher since. The inverse correlation with BTC (and risk assets) remains striking: BTC tends to rise when DXY falls, and vice versa.

DXY is hovering near a key breakout level at $100 which as been a major support/resistance. One plausible scenario: SPY pushes higher in a B-wave while DXY pulls back toward its long-term daily averages around $98 over the next month. That window could lift Bitcoin and many stocks. Then, if DXY breaks out decisively above $100, it would fuel its bullish momentum—catalyzing the C-wave lower in risk assets.

This involves some wild speculation, but the correlation between a stronger dollar and weaker risk assets is well-established. The critical question: Does DXY actually break and hold above $100?

DXY Daily Chart w/BTC Tops

Tuesday Top Trade

Adobe Inc.

Apparently AI has killed Adobe. It has certainly killed its chart. The stock is down about 64% from its 2022 highs and has been in a brutal, straight down C wave correction for the past year. That said, it may be approaching at least a short term bounce zone.

For one, the 200-month SMA sits just below current price action. This average has only been touched once before in 2008. It is also very close to the monthly RSI lows reached during the 2008 correction, when the stock dropped about 67% from its highs. And yes, in case you were wondering, the 200-month SMA today would represent roughly a 67% decline from the 2022 high as well, which lines up almost perfectly with that prior historical move.

Now, I am not certain price actually has to reach that level, which is why I see two possible trades in ADBE right now.

The first would be to play the earnings gap down candle with a tight stop and look for a bounce that partially or fully fills the gap. The second would be to wait patiently for price to tag the 200-month SMA and buy there.

Honestly, I will go with a bit of a combo approach. Take a smaller risk trade here with a tight stop, while keeping the ability to add into the position if price reaches the 200-month SMA. If I can pick up ADBE near that level, I think the probability of at least a 10% bounce is very high, and potentially a good deal more.

ADBE Monthly Chart

ADBE Daily Chart

Check out the Tuesday Top Trades Video below for an in-depth breakdown of the markets, along with detailed analysis of some of my favorite stocks and scan results. Don’t miss the actionable insights!

Fear is finally creeping into the market as uncertainty builds and major indexes start losing critical levels. On Friday, SPY closed below Monday’s candle, exactly as Jeremy and I flagged in Tuesday’s Top Trades video and newsletter. DIA and RSP did the same, leaving their charts looking particularly ugly.

Not everything broke down, though. QQQ and IWM are clinging on (barely), while SMH is displaying solid relative strength, driven largely by MU, which right now feels like the strongest stock on the planet. That said, if NVDA and TSM (which together account for roughly 30% of SMH’s holdings) start cracking, that outperformance could vanish in a flash.

While I have been warning about caution for all of 2026 based on the chart patterns unfolding, it finally feels like that fear is starting to permeate the market. Ironically, with so many traders hedged and nervous about a drop, the setup screams for a classic B wave bounce soon. I’d still prefer a bit more downside before the bounce: an RSI dip on SPY to around 31 (a level that has reliably triggered bounces) would be perfect. That would also drag SPY into a strong support zone between $659 and $650, where the 200-day SMA and the anchored VWAP from the May 12 breakaway gap currently live.

SPY Daily Chart

Historical Parallels Are Stacking Up

I spent hours this weekend poring over SPY and SPX charts, reviewing prior drops, divergences, and every bear market back to 1929. As I laid out in my February 19 article, “The Deadly Flatline,” the 2011 and 2015 consolidations still align spookily well with our current structure.

A month later even more parallels jump out. In 2015, the market chopped sideways for months, clinging to the 100-day SMA until it finally gave way. The slide from the 100-day break to the 200-day SMA took just one day, but the 200-day held, sparking a bounce into a lower high (back above the 100-day and just past the 78.6% retracement) before the real carnage unfolded in a vicious C wave that caught many off guard.

2015 Daily Chart Analog

2011 showed almost the identical playbook: after a blistering run, SPY kissed the 100-day SMA once then rocketed to new highs (mirroring our November & December move). A few months later it touched the 100-day again, struggled to go higher, and broke it decisively. It flushed quickly to the 200-day (which held perfectly), bounced to a lower high near the 78.6% retracement and just above the 100-day SMA, then plunged lower in a sharp C wave vertical drop.

2011 Daily Chart Analog

A Fresh (and Eerily Similar) Analog: 1966

During my market study this weekend, I also found another analog that I like for this move. As you know, I had been closely watching the dot-com analog for some time because there are only a few periods in history where markets have moved as bullishly as they did in 2025, and the late 1990s was one of them. However, if we were still tracking that pattern, we should have seen a strong blow-off move to new highs that hit all targets and sucked in breakout buyers before this most recent drop. Since that did not occur, I am no longer tracking that pattern for now.

Instead, the 1962-1966 market is showing remarkable similarities. The 2022 bear market bottomed in October, just like the 1962 double bottom. Both saw powerful rallies to new all-time highs over roughly 450 days. The first major pullback hit ~2.5 years after those October lows. A steep drop in 1965 and 2025, followed by sharp recoveries to new highs, both in about 80 days.

The alignment gets even crazier from there. On March 3, 2026, SPY decisively broke the 100-day SMA. The equivalent break in 1966 occurred on February 21, just nine days apart almost exactly 60 years later. From there, the 1966 market flushed lower into, and slightly below, the 200-day SMA, found support, and then bounced to the 78.6% retracement of the initial drop. It briefly reclaimed the 100-day SMA, just like we saw in 2011 and 2015, before everything unraveled into a brutal C wave that retraced roughly 50% of the entire advance off the lows over the next five months, ultimately retesting the prior cycle highs from 1962.

SPX 1966 Daily Chart

SPX 1966 Analog Bars

The 2018 Frankenstein Bars

I’ve also stitched together a new bars-pattern analog in red on my SPY chart, pulling from the 2018 correction. The February 6, 2018 candle mirrors our Monday, March 9, 2026 bull candle very well: bear candle gapping down below the 100-day SMA but not into the 200-day SMA, aggressive dip-buying on heavy volume to close with a long day bullish candle. In both cases, that bullish candle was erased and closed below within the week.

In 2018, the market hit the 200-day SMA quickly (one day after the close below that bullish candle), found support, then bounced sharply to the 78.6% retracement before rolling over. The actual 2018 chart then chopped sideways from April through October, but since we’ve already done plenty sideways chop, I cut that portion and placed the C wave directly after the B wave for my current pattern.

Yes, it’s a bit of a Frankenstein Chart Monster. But it visually captures the essence of the historical setups above.

SPY 2018 Frankenstein Analog

Bottom Line: Probabilities Still Favor a Bounce, Then Lower Lows

The parallels across these periods are striking. Of course, this time could be different. We might skip touching the 200-day before bouncing, or a fear event could gap us straight through that key average on heavy bearish volume. If that happens, I will quickly pivot.

As I have been saying all year, I think caution is absolutely warranted right now. However, based on this analysis, I do not mind trying to trade some of this fear to the upside for a month-long B wave bounce. With many individual stocks looking ready for a short-term reaction higher, and midterm-year volatility right on historical schedule, the probabilities still lean toward some kind of bullish bounce before a larger and steeper selloff materializes later this year.

Right now, the market is defined by a strange contradiction. Everyone seems to be short and hedged to the gills. The cost of puts is among the most expensive we have seen in history, even though SPY and QQQ are hardly down at all.

The one-month call/put skew is currently at levels seen during the 2025 tariff panic and the 2024 Japanese Yen carry trade blowup. Meanwhile, SPY is only about 4.5% off its highs. This dynamic may actually be why the market isn’t breaking down in a sustained way. Instead, it continues to grind lower in a choppy fashion, allowing those expensive options to slowly decay before a larger drop develops.

The Fear vs. Reality Gap

Think back to November when the Fear and Greed Index dropped to 5. That was just two points above where it sat in April 2024 after a 20% correction. However, when it hit that extreme reading on November 20th, the market was only down about 5%. The fear of a correction has been present for a long time, yet the actual “crash” has not arrived.

Under the surface, however, the damage is much worse than the indices suggest. While SPY is only down 4.5% from its January 28th high, it is difficult to find a major name with a similarly small drawdown:

• MSFT: Down roughly 27% (Topped last July)

• META: Down about 20% (Topped last August)

• AMZN: Down about 20% (Topped last November)

• AAPL: Down about 12% (Topped last December)

• TSLA: Down around 20% (Topped last December)

• AVGO: Down roughly 20% (Topped last December)

• GOOGL: Down around 13% (Topped February 3rd)

AMZN Daily Chart

The Rotation Narrative Unravels

Outside of tech, we are seeing real weakness in financials. Banks have been diving. Goldman Sachs (GS) has broken its 200-day SMA and now sits 20 percent off its highs. The XLF ETF has also just closed below its 100-week SMA and, arguably looks ready for a bounce. A quick scan of the Dow (DIA) shows similar damage in names like HD, AXP, JPM, and NKE.

Late last year and early this year, the prevailing narrative was that the tech selloff was simply a healthy rotation. Investors pointed to Financials (XLF), Materials (XLB), Consumer Discretionary (XLY), Industrials (XLI), and Consumer Staples (XLP) as evidence that the broader market was holding up well while Big Tech cooled off.

However, we are now losing those names too. We are seeing a simultaneous loss of strength across those cyclical sectors while the Trillion-Dollar Titans that drive the index remain weak. This raises a simple question: Where exactly is the long term bullish fuel supposed to come from if we don’t see some kind of broader pullback first? Without a clear leadership group to pick up the slack, the case for a sustained bull market from these levels becomes very difficult to make.

XLF Daily Chart

Finding the Bottom

Market breadth is reaching interesting levels. Only about 28 percent of Nasdaq 100 stocks and 31 percent of S&P 500 stocks are currently above their 50-day SMA. Historically, when breadth reaches these zones, we often see at least a short-term bottom.

Nasdaq 100 Stocks Above 50-Day Average

With traders heavily hedged, breadth nearing support, and SPY approaching its 200-day SMA, I believe a short-term bounce is nearing. My view will be proven wrong if we gap down decisively below the 200-day SMA and buyers fail to step in. If we see panic and accelerating selling instead, the market has further to fall.

Otherwise, my base case is a short-term bottom followed by a “B-wave” rally. I don’t expect a rocket ship to new all-time highs. Instead, I expect many stocks to make lower highs while those expensive puts expire worthless over the next month or two.

The Bitcoin Signal: Relative Strength

I would be remiss if I didn’t also mention the “strength” in Bitcoin right now. While it has been range bound for the last 35 days, BTC has continued to grind higher even as SPY grinds lower. If the equity markets were ready to waterfall lower, we would likely see Bitcoin following suit. This divergence supports my main thesis that we get a tradable bounce soon, followed by another drop later this year.

As you know if you have read my recent work on Bitcoin, I still believe we eventually follow through to new lows, likely under the 200-week SMA at the very least. The Realized Price is currently around $54,400. In every previous cycle low, we have undercut that level by at least a small margin.

If Bitcoin breaks out above the $75,000 level, I will assume we are in the B-wave bounce that could take price into the $80,000 to $100,000 region. I am long BTC for that possibility, but I will be much more aggressively long once we get a drop to the $50,000 range or potentially even lower.

I currently have three counts: Green, Blue, and Red. Two of them suggest the low is in for a B-wave bounce, while the Blue count suggests we see one more slight low first. Either way, I think some kind of bounce materializes from here. During the 2022 bear market, we saw two 45% pushes from the lows over a 60 day period. A similar move here would take Bitcoin right into the bottom of the 100-week SMA around $87,000 around the first half of April.

Bitcoin Daily Chart

The Midterm Cycle

Seasonality offers conflicting signals right now. Ryan Detrick recently noted that over the past 20 years, the S&P 500 has bottomed for the year around March 12th on average. If that held, the lows would be in today.

However, this is a midterm election year, and those behave differently. As Benjamin Cowen pointed out in a reply, when you look at the last 100 years of midterm data, the S&P 500 tends to bottom much later, closer to late Q3 around August 19th.

I am leaning toward the Q3 timeline. I think it is highly unlikely that this week represents the low for the month, let alone the year. Ideally, I want to see SPY move down to the 200-day SMA, perhaps wick below it into the anchored VWAP, and then begin a “B-wave” bounce.

B-waves are notoriously difficult to trade because they are messy and produce lower highs or even deceptive higher highs. The key is securing entries near the “A-wave” low and actively managing risk before any potential “C-wave” decline begins.

SPY Daily Chart