When the portfolio speaks, you’d be a fool not to listen.

And right now, mine is telling me one thing: outside of energy, longs simply aren't working. Tech longs? Brutal.

I won’t bore you with the specifics of what has been playing out throughout July, you know the deal by now - Koreans are getting liquidated, semis are flushing lower and those software stocks that I’ve been monitoring for months now, just can’t seem to break above the 200dma.

Adding to the drama, this week we’ve got the FOMC to contend with, complete with the on-and-off again relationship that’s playing out between the Whitehouse and Iran. Oh, and if that wasn’t enough, how does a slew of MAG7 earnings tickle your wick?

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Of course, a few weeks of poor price action doesn’t automatically mean the bull market is over. But it does mean it’s time to stop forcing trades and start paying closer attention to what the market is actually saying.

With that in mind, here are a handful of charts I’m watching most closely over the coming days. None are particularly complicated, but together they paint a useful picture of where money is flowing, where it’s leaving, and whether this latest bout of weakness is simply another shakeout- or something a little more meaningful.

Let’s start with the one that’s grabbed my attention more than any other: XLC.

What’s concerning here is that the price action that’s playing out on XLC looks eerily similar to that which played out in November 2021 - two months before the broader market peaked and rolled into a bear market.

Speaking of, the broader market itself isn’t looking all that shiny here either.

With my Risk Composite model flashing a score of 3/5, we’re back in the amber ‘warning zone’ - with heightened volatility, weakness in discretionary stocks relative to staples and, most alarmingly, widening credit spreads, contributing to the current malaise.

And yet despite these warning shots being fired, the simple fact is that so many charts outside of tech refuse to quit - just look at the equal weight S&P…

Look at banks…

Look at industrials…

Look at healthcare…

All of these charts are definitively bullish. That’s not an opinion, it’s straight up fact - higher highs, higher lows, all trending up and to the right above key moving averages.

So what’s going on?

At times like this, the traders who dismissed narratives on the way up are often the first to reach for one on the way down.

It’s just deleveraging. It’s just tech. It’s just Iran.

Maybe they’re right. Maybe they’re not.

But the market doesn’t care about the story you’re telling yourself. It cares about price. And right now, price is telling us that tech is starting to look heavy - like, real heavy.

Could this change post-FOMC? Could we see IGV finally reclaim the 200dma and inspire tech bulls to rotate out of names like TSM, NVDA and ALAB back into laggards such as PLTR, MSFT and NOW?

Maybe.

Or maybe this is simply the market reminding us that leadership rotates, not all corrections end the same way, and the only thing more expensive than buying weakness is blindly buying every weakness.

Either way, I’m not particularly interested in guessing.

Instead, I’m happy sitting on my hands and waiting for the tape to show me the way. Boring, but ain’t that just the game?

Best,

Alex

But before we get to that, consider this quantitative study from Bluekurtic.

What it shows is remarkably simple. In 16 of the previous 17 years in which the S&P 500 made a new high during June, the index went on to make another new high in July.

As things stand, preserving that impressive record simply requires the S&P 500 to rally a little over 1.8% during the nine trading days remaining this month.

So rather than asking whether we’ll make another new high, I’m more interested in what might get us there.

The MVPs are Stepping Up

For those of you that caught my latest newsletter, it won't come as any surprise to see the likes of MTUM and DRAM taking a breather this month. In fact, throughout July, both Q2 leaders have corrected by 12.5% and 29% respectively. So far, so predictable.

But while much of the market remains fixated on mourning the loss of its biggest winners, others have been keeping a weather eye on the stocks most likely - at least from a purely mathematical perspective - to drag the S&P 500 over the line and into fresh all-time highs.

I am, of course, referring to MAGS - the ETF tracking the Magnificent Seven. Because for all the talk of broadening participation, when it comes to dragging the index higher, these seven still do an awful lot of the heavy lifting.

Right now we’re seeing MAGS trending higher above key moving averages, having offered savvy buyers a solid entry point between the 61.8 and 78.6 retracement.

Not All MAGS Are Equal

Of course, recognizing that the Magnificent Seven are likely to do the heavy lifting isn't the same as concluding they're all buys. Far from it.

AAPL, for example, has already enjoyed an exceptional run and is beginning to look stretched from a risk/reward perspective. MSFT, meanwhile, remains below its 200-day moving average - a hurdle I’d rather see reclaimed before committing fresh capital.

That leaves a much shorter list.

AMZN, TSLA and NVDA all strike me as names quietly coiling beneath the surface. None have yet made the sort of euphoric move seen elsewhere, but all are displaying the kind of constructive price action that could see them assume leadership should the S&P 500 make one final push to fresh highs this month.

In other words, if the Magnificent Seven are going to provide the fuel, I’d rather own the names with room to run than those that have already emptied the tank.

NVDA

Of these names, NVDA has me the most interested. Trading above an upwardly mobile 200dema, check. Higher low above a key retracement level. Check. Moving averages coiling for a big move. Check, check and check.

AMZN

AMZN, similar story - trading above key MAs having offered a nice entry when price reclaimed the 200dema back late June.

TSLA

TSLA is worth a look here too. Spicy, for sure. But that potential higher low in the golden pocket makes this one worth considering - with the obvious trigger being a sharp and swift move back above the coiled moving average ensemble.

So What’s The Trade?

Given the combined 40% weighting of AMZN and TSLA within XLY, my attention is increasingly turning towards September $120 calls.

The extra time gives the trade room to develop, while the risk management is straightforward: as long as price holds above the 200-day moving average, I'm happy to stay involved. A decisive break below it, and I'm out.

I’m also eyeing a swing position into NVDA earnings in late August.

For this trade I’ll likely go further out of the money to keep the premium manageable, while bringing the expiration in slightly compared to the XLY calls.

The hope is that a strong pre-earnings run quickly pushes the options into the money, allowing the move in the underlying stock to do the heavy lifting rather than simply relying on more time.

Have a great week.

Alex

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Disclaimer: None of the information contained in this newsletter constitutes financial or investment advice, nor should it be interpreted as a recommendation to buy, sell or hold any security or financial instrument. Everything shared here reflects my own research, opinions and trading process at the time of writing, and is intended for educational and informational purposes only. Markets are inherently risky, and past performance is no guarantee of future results. If you choose to act on anything discussed, you do so entirely at your own risk. Always carry out your own research, consider your personal financial circumstances, and, where appropriate, seek advice from a qualified financial adviser. Options trading carries significant risk and can result in the loss of your entire premium.

I’ve been thinking a lot lately.

Not just about the markets, but about what actually constitutes a worthwhile addition to your weekly diet of technical, macro and market analysis.

If you’re anything like me, you probably spend a good chunk of your week scrolling through setups, relative strength charts and the latest hot takes from your favourite finfluencers.

But the longer I trade, the more I realise how little of it is genuinely useful.

Take this morning, for example.

I sat through a 40-minute video on market internals. The analysis itself was solid, but by the time it finished, I couldn’t help feeling a little short-changed. Not because the information lacked value, but because after 40 minutes of talking, the host offered a grand total of zero actionable ideas.

No tradable setups. No framework for putting the data into context. Not even a view on how it might shape the opportunities heading into a new trading month.

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Is that really how we're generating alpha these days? By staring at the windsock, declaring the breeze to be easterly, then calling it a day?

Or should we be putting our balls on the line and offering a hypothesis about what that might actually mean over the coming days and weeks?

Or should we be putting our balls on the line and offering a hypothesis about what today’s evidence might mean for the days and weeks ahead?

With that in mind, this week’s newsletter takes a slightly different approach.

Rather than throwing another deluge of charts and trade setups your way, I’m going to do something far more useful: put my neck on the line.

Below are the themes I expect to define the next few weeks, the evidence supporting them, and the areas of the market I think are most likely to benefit if I’m right.

Swimmers off. Balls out. Let’s dive in.

A Different Kind of Bull?

You’ve probably read all the explanations as to why MU and AMD ran so hot throughout Q2. AI demand, earnings upgrades, and secular growth trumping macro headwinds, not to mention bottlenecks, bottlenecks and more bottlenecks.

It’s been a generational run for momentum (MTUM) since the April lows, but with a new quarter comes new opportunities.

In my view, MTUM is threatening to put in a top here, with a death cross on the 10/20dema looking likely barring a big reversal next week. Add to this the bearish divergence that’s been building between price, RSI and the MACD, and the setup looks ready to punish late longs.

Lastly, there’s this ‘lil nugget by Warren Pies.

Sure, this all might sound a little scary, especially if you’re trading MU with 10x leverage. But for those of you who, like me, currently find yourself sniffing around for opportunities outside of the names that crushed Q2, there are plenty of reasons to remain optimistic.

Hawkishness, What Hawkishness?

As discussed last week, the market has continued to shrug off rate hike fears - a thesis which now appears to be slowly making its way into the mainstream.

Whereas last week Kalshi was assigning an 81% probability of rate hikes before 2028 and a 65% chance of a hike arriving as early as July next year, those numbers have since cooled to 73% and 58% respectively - a drop likely attributable to this week’s weaker than expected NFP print.

Are we out of the woods completely? No. But that’s not a bad thing as far as I’m concerned. Give me more talk of rate hikes to fade and that wall of worry to climb!

Should this easing of hawkish rhetoric continue throughout Q3 - I see little evidence of the time of writing as to why it shouldn’t - then I’m looking at crypto-proxies, high beta, homebuilders and retail as potential benefactors.

One chart that ticks two of these boxes? Coinbase.

At the time of writing COIN is holding above its Q2 lows, a major support zone ~$140 and the AVWAP from the company’s IPO. Should price hold these levels and trend higher, I’ll be looking for a favorable entry for a short-mid term swing.

XLY has my attention too.

Having traded in a broad range and lagging the broader index on a relative basis throughout Q2, I can see why so many traders aren’t interested in discretionary stocks right now.

But if this breaks out, driven by the potential tailwind that potentially comes with a more dovish-leaning FOMC, then TSLA and AMZN probably deserve your attention.

From Failed Moves…

One of my favourite setups is when the market narrative and price action drift apart. Failed breakouts and breakdowns are the obvious examples, but they're really just symptoms of a broader theme: when the crowd says one thing and the tape says another. Double bubble!

XLC is top of my watchlist for a failed breakdown. If this thing holds and the MACD continues to support the pop above the Q2 lows, then META, GOOG and NFLX come into play as potential longs.

As far as failed breakouts are concerned…

As I rightly predicted a few weeks ago, financials were among the standout performers in the latter half of Q2.

But with everyone and their dog now pitching XLF and KRE as the hottest tickets outside Marbella, I’m becoming a little more cautious. Cautious - not bearish.

If the sector spends the next few weeks or months digesting those gains, I’ll happily revisit it. Until then, I think there are better opportunities for my cash elsewhere.

What About the Index?

Given the weightings of the MAG7 (roughly 35% of SPY and over 40% of QQQ), if you’re looking to trade the indices, ‘monitoring the situation’ on MAGS isn’t the worst idea.

When stocks that account for such a large share of both SPY and QQQ take a breather, it’s difficult for the indices to make meaningful progress - even if plenty of stocks beneath the surface are quietly getting on with the job. That’s just pure, unadulterated math at work, folks.

But despite all the talk of MAGS lagging the broader market of late, until we see a decisive break below the 200-day moving average cloud and the AVWAP from the April 2025 lows, there’s not much to fear here in my view.

In fact, if much of what I’ve outlined in this report plays out, there’s a reasonable chance the MAG7 end up as one of the main benefactors in Q3.

What do we need to see in the short term to turn this hypothesis into reality?

A golden cross with the 10dema (orange line) crossing above the 20dema (purple line) wouldn’t be the worst place to start. Add to that a rising MACD histogram, and you’ve got a couple of reasons to lean bullish SPY and QQQ.

TLDR

If there’s one takeaway from this week’s newsletter, it’s this: don’t confuse rotation with deterioration.

The headlines will continue to change. Narratives will continue to swing. The market will keep trying to convince you that the move you’ve just missed is the only one worth chasing.

I suspect the better opportunities over the coming weeks will come from asking a different question: where is capital likely to flow next?

That’s the hypothesis. Time will tell whether it’s right, but I’d rather put a view on the table and be judged by it than spend 40 minutes describing the direction of the wind.

Have a great weekend.

Best,

Alex

Disclaimer: The information contained in this newsletter is provided for educational and informational purposes only and reflects my personal opinions at the time of writing. Nothing here should be construed as financial advice, investment advice, or a recommendation to buy or sell any security. I may hold positions in securities mentioned. Always conduct your own research, consider your own financial circumstances, and consult a qualified financial adviser if appropriate. Investing and trading involve risk, and past performance is not indicative of future results.

When Kevin Warsh stepped away from the mic after his FOMC presser debut, the sound of traders desperately typing out their ‘quick takes’ filled the Twittersphere.

While some interpreted the presser as hawkish, others celebrated the new chair’s ambiguous stance relating to forward guidance - something echoed by none other than the US Treasury Secretary, Scott Bessent.

Similarly, the market has been sending mixed signals as it digests the presser.

Mega cap tech is siding with the hawks. Bonds, biotech, homebuilders and small caps...not so much.

MAGS Signal Weakness

On the surface, it’s easy to understand why the market has become increasingly hawkish.

Since Warsh’s debut, MAGS has slipped below its 200-day EMA for the first time since April, while all seven constituents traded beneath their respective 50-day moving averages during the weekly session.

Relative performance looks even worse.

MAGS/SPY has registered fresh 52-week lows in four of the six sessions since the FOMC meeting, prompting traders to jokingly rename the ‘Mag 7’ the ‘Lag 7’.

Who said originality was dead?

Sure, taking the relative performance of MAGS and indeed the S&P500 - and to a lesser extent, the Nasdaq - in isolation, it’s easy to see why so many traders have attached themselves to the popular narrative that rate hikes, rather than rate cuts, are becoming ever-more likely in H2 2026 through H2 2027.

Prediction markets have embraced the same view. At the time of writing, Kalshi assigns an 81% probability of rate hikes before 2028, with a 65% chance the first arrives as early as July next year.

Sure, if you only looked at mega-cap tech, you’d probably reach the same conclusion.

The problem?

The rest of the market isn’t telling the same story

The Market Disagrees

Earlier this week I shared some thoughts on what I felt was a confusing tape.

On the one hand, mega cap weakness and a strengthening dollar. On the other, the incredible strength displayed by biotech stocks (XBI) and small caps (IWM).

Since then, I've spent some time digging into the data. The more I look, the less convinced I am by the market's prevailing hawkish narrative.

Here's a quick recap of what's happened since the FOMC press conference (in no particular order):

• After closing at 4.95% on the day of the press conference, the 20-year Treasury yield has fallen to 4.87% (an 8 bp decline), while TLT is threatening a breakout above its 200-day EMA.

• XBI has closed at fresh all-time highs every session since June 17, showing persistent leadership from one of the market’s most duration-sensitive groups.

• IWM has held both its 10- and 20-day EMAs, registering three new intraday highs over the past five sessions.

• XHB has broken to multi-month highs and remains firmly above its 10-, 20-, 50- and 200-day EMAs.

• XLI has printed another all-time high and continues to trade well above a bullish moving average ensemble.

Here’s a question I can’t shake:

If Warsh had genuinely delivered a hawkish surprise, why are some of the market’s most rate-sensitive areas continuing to lead?

Traps Are Being Set

Right now, the tape appears to be setting traps in both directions.

Mega-cap weakness and a stronger dollar are tempting investors into a more hawkish interpretation, while beneath the surface, money continues to rotate into some of the market's most rate-sensitive areas, keeping the ‘peak hawkishness’ thesis in play.

These two messages rarely coexist for long. At some point, one camp is going to be left red-faced as the tape tears apart their carefully constructed, comfortable narrative.

Who wins?

In my view, bonds decide.

If the prevailing narrative proves correct and further rate hikes begin to enter the conversation, it’s difficult to argue against equities facing increasing headwinds.

The last time TLT experienced a sustained drawdown- 2022 being the obvious example- SPY entered a bear market, ultimately falling roughly 27% from peak to trough across a 12 month period.

But what if that doesn’t happen? What if the ‘long DXY, short TLT’ trade is over crowded? What if Warsh, isn’t as hawkish as everyone believes him to be?

A Quick Word on Warsh

One inflation metric I'll be paying particularly close attention to over the coming months is Trimmed Mean PCE- the measure Kevin Warsh has repeatedly highlighted as his preferred gauge of underlying inflation.

Like headline CPI and core PCE, it's still moving in the wrong direction, reinforcing the market's increasingly hawkish interpretation of recent data.

That said, it's worth remembering that inflation is inherently backward-looking.

With tensions between the US and Iran easing and the risk of a sustained energy supply shock appearing to fade, it's not unreasonable to expect some of the recent inflationary pressure to unwind in the months ahead.

Therefore, should this metric begin to cool, it could provide a more compelling signal than CPI alone that underlying inflation isn’t the existential threat many argue it to be today, potentially reopening the door to a more accommodative Fed and, in turn, a more supportive backdrop for risk assets.

So What’s The Trade?

Assessing the weight of the evidence is part and parcel of being a trader. Right now, that means keeping a close eye on names and sectors that should be most sensitive to a changing rate environment, namely IWM, XBI, XHB and TLT.

Sure, we may continue to see the market shake out below its shorter-term moving averages. SPY and QQQ may even lose their 50-day EMAs. But in isolation, I’m not convinced that tells us much beyond the market taking a well-earned breather after a strong run.

If, however, the selling begins to broaden out and those rate-sensitive areas start rolling over alongside the major indices, then the weight of the evidence shifts - and with it, the outlook.

For now though, the tape remains choppy rather than broken. No need to panic. No need to rush in.

With that in mind, I’m happy to stay patient, let the data come to me, and adjust my positioning as the evidence evolves.

Have a great weekend.

Best,

Al

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If April and May were easy, June has been anything but.

Despite very little actually breaking outside of inflationary prints - in fact, June has delivered the clearest signs yet of easing tensions between the US and Iran - I find myself increasingly muddled by what the tape is telling us.

The market hasn’t given a decisive signal one way or the other. Instead, it’s been a month of mixed messages, contradictory narratives and volatile price action in both directions. Hardly conducive to the kind of clean swings I like to make when trading.

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Risk Composite

My Risk Composite Model supports this view.

Earlier this month, strengthening staples relative to discretionary stocks and a spike in the VIX were enough to push the model into 'caution' territory.

This week, we're seeing another yellow flag, with volatility re-emerging and TLT/SPY reclaiming its 50-day moving average.

None of this screams panic. But it does suggest that left-tail risk is beginning to creep back into the conversation, reinforcing the idea that, while the tape isn't broken, it isn't as clean and straightforward as it was throughout April and May.

Strat Universe & Moving Average Ensemble

The standout feature of this dashboard is the unusual leadership profile.

Despite DXY pushing to fresh multi-month highs and six of the Magnificent 7 trading below their 50-day moving averages, XBI and IWM occupy the top two spots in the rankings.

That’s not the leadership mix you’d typically expect in a risk-off environment.

Meanwhile, SPY and QQQ have lost some short-term momentum, but remain above their medium-term trend measures.

Taken together, this suggests we're not looking at a market that's outright risk-off. Rather, we're witnessing a rotation of capital from former leaders into prior laggards.

The biggest beneficiaries of that shift are highlighted below - a useful starting point when weighing up opportunities heading into Q3.

Relative Performance Analysis

Looking at sectors relative to the broader market can be a useful way to identify where capital is rotating beneath the surface.

While XLK remains the obvious leader, it's often the less-loved sectors quietly outperforming the index that provide the earliest clues about where the next opportunities may emerge - as well as the overall health of the tape.

XLF/SPY

Let’s start with financials. They lead us higher on the way up, and lower on the way down. Which makes today’s level all the more interesting.

If this latest ‘oops’ reversal can hold and the ratio continues to trend higher, I’d view that as one of the clearest signals that the broader market remains in a healthy, risk-on environment. Party on, playboy.

If we breakdown? Well then that’s a different conversation entirely. One that likely takes place over a bowel of microwave ramen, rather than steak tartare.

XLV/SPY

Healthcare has been getting a lot of attention lately, having reclaimed key mid-long term moving averages during the last month as a sector in isolation. And just check where the sector is sitting relative to the broader index.

If healthcare can continue to climb here, I’m looking at LLY to hold its 20dema, NVO to challenge its overhead 200dema and UNH to hold its bullish moving average ensemble.

Can it head lower? You bet. But until we see the tickers mentioned above breaking below their respective moving average ensembles, I see little reason to fade them.

XLE/SPY

Higher oil prices and rising energy costs have been a recurring theme throughout the first half of 2026. Whether that trend continues is anyone’s guess. But if XLE/SPY can continue to hold above its now-rising 200-day EMA, the weight of the evidence would suggest the energy supply shock may not be behind us just yet.

If energy prices make a strong start to H2 2026, the inflationary implications and the FOMC’s stance around rate hikes could act as a headwind for risk assets across the board - so it’s well worth keeping an eye on this one in my opinion.

XLP/SPY

Thankfully, XLP/SPY has our backs when it comes to spotting regime shifts. Below the 200dema, risk assets remain bid and bull markets thrive. Above that level, and things tend to get a little nastier.

Right now, price remains locked in a downtrend below the 200dema. No doy, it’s a bull market until proven otherwise.

A Quick Word on Tech

While semiconductors continue to do the heavy lifting, I’m increasingly of the view that QQQ’s rally off the April lows will struggle to sustain itself unless the rest of the cavalry starts to show up.

Software, communications, and several former mega-cap leaders remain well below their relative highs, leaving the advance looking increasingly narrow.

Long story short, if QQQ is going to push meaningfully higher into Q3, some of the laggards need to pull their weight, and soon.

XLC

If it looks like a top, walks like a top and talks like a top…then it’s probably a top.

Home to the likes of META, NFLX and GOOGL, XLC looks rough right now. If indeed this is a top, keep in mind that the top three communications holdings account for roughly 10% of QQQ. So don’t sleep on its significance as a sector.

Could we stage an ‘oops’ reversal here? Man, that’d be awesome.

But until XLC reclaims some key moving averages - and META and GOOGL do the same - I’m steering well clear of this one.

IGV

As long as IGV continues to retest prior resistance without breaking down, there’s hope for the bulls. Ideally I want to see a close above the AVWAPs shown on the chart before allocating more risk into this area - not before.

Home to MSFT, CRM, NOW, ADBE and PANW, IGV isn't some niche corner of the market. Depending on how you define the group, core software names account for roughly 15–17% of QQQ - so you wanna pay attention here.

Closing Thoughts

If there’s one takeaway from June’s data, it’s that certainty remains in short supply.

The trend is still up. The risk models aren’t flashing red. Yet the leadership profile, sector rotations and mixed signals beneath the surface make this one of the more difficult tapes we’ve seen since the April lows.

Maybe the answer is as simple as waiting and seeing.

But for now, I’ll keep following the data, respecting the tape, and waiting for the next high-conviction opportunity to emerge.

Until then, remember: nobody knows nothing.

Thanks for stopping by.

Best,

Al

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Disclaimer: The content provided by Al Trades Charts is for educational and informational purposes only and should not be considered financial advice. I am not a financial adviser, and nothing published here constitutes a recommendation to buy, sell or hold any security. All views expressed are my own and reflect my interpretation of market conditions at the time of writing. Markets can and do change rapidly. Trading and investing involve risk, including the potential loss of capital. Always conduct your own research, consider your financial circumstances, and consult a qualified financial professional before making any investment decisions. Past performance is not indicative of future results.

If I were to try and define the weekly session in a word, it’d be…humpphhhh.

On the one hand, my risk composite model remained in the ‘all clear’ zone (more on that later) after briefly signaling a ‘caution’ signal last week - with risk assets across the board gapping higher on Monday’s session.

Those gaps, which seemed so promising at the start of the week, are now filled on SPY, QQQ and IWM - all whilst Bitcoin, which enjoyed a brief rally back up the 20dema during Monday’s session, is once struggling to hold any momentum and is down ~7% from the weekly high.

On a personal level, Monday’s gap had me fooled.

Excited at the prospect of new highs, swings that were opened on SPOT, TEAM and NOW all proved to be losers. Software, which I had hoped (and still do, to a point) to find buyers at the AVWAP from the prior lows, stuttered - with a number of key holdings currently pinned below key moving averages.

I could attempt to insert a narrative here to explain why the week played out the way it did, Warsh, OPEX etc. But where’s the value in that?

Instead, I’m simply going to hold my hands up, take the L and reassess where we’re at, and more importantly, where I think we might be headed as Q2 comes to a close in a few weeks time.

The lesson? Don’t chase up-gaps during FOMC and OPEX week.

Onwards and upwards.

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Risk Composite Model

During yesterday’s session, I made a quick change to my risk composite model.

Instead of using XLY/XLP as one of the key risk metrics used to determine the overall health of the market, I subbed-in RSPD/RSPS instead - essentially ditching the former for an equally-weighted version of the same metric. Something I’m hoping will help to reduce false signals, which tend to occur when XLY’s largest weightings - AMZN and TSLA - make oversized moves.

Right now, we’re still showing a score of ‘0’ - signaling that under the market’s hood, few signs of stress exist - at least those measured on the composite model.

Rotation Thesis - Playing Out

Despite IGV and XLC continuing to lag, it’s good to see that the rotation thesis outlined a few weeks ago has played out, with XLF XBI and XLI the obvious winners - much to the delight of my JPM calls.

Tech bulls, myself included, will be pleased to see XLK holding nicely above an inclining 20, 50 and 200dema, though I remain frustrated by the bifurcated nature of the space, with SMH clearly dominating over former leaders, such as META and MSFT. Just take a look at SMH/IGV:

Will this momentum divergence between semis and software ever resolve?

Who knows.

All that matters right now is that until we start to see signs of cooling in semis and some rotation into other tech-specific sub-sectors, the choice remains simple: chase momentum in names like MU, INTC and TSM, or prepare for opportunities elsewhere?

Communications, Can You Read Me?

Whilst I may have been early on my XLC thesis, I’m still reluctant to accept that I’m wrong. Same goes for IGV. The bad news is that the market doesn’t care what I think. The good news, however, is that both sectors are offering solid entries at current levels, with tight stops on offer at/near this week’s low.

XLC

META

SPOT

NFLX

Healthcare Has a Pulse

Another area I’m looking at right now is healthcare. Right now, XLV is retesting the 50dema from above for the first time this month - and if it holds, I think there are some mid-term swing opportunities in this space.

XLV

LLY

NVO

HIMS

One last thing…

Whilst crypto continues to trade like a dog, there is one chart that’s caught my attention during this latest sell-off. Check COIN relative to ETH below - whilst the latter made a new low this month, the former is yet to do so, a divergence that in prior instances has signaled a bottom for both the crypto token, and COIN.

Does this signal the end of the crypto bear market is coming to a close? Not even close. But it’s definitely interesting - and one I’ll be monitoring over the next few weeks for further clues.

Have a great long weekend and enjoy some football.

Best,

Al

Disclaimer: The content provided by Al Trades Charts is for educational and informational purposes only and should not be considered financial advice. I am not a financial adviser. All opinions are my own and reflect my personal interpretation of market conditions at the time of publication. Trading and investing involve risk, and you should always conduct your own research, consider your financial circumstances, and consult a qualified professional before making any investment decisions.

Let’s keep it simple.

After nine consecutive weeks of gains through April and May, the market decided June would be a month of consolidation. A little giving back. A little profit-taking. A healthy reminder that stocks don't move in a straight line forever.

Over the last fortnight, the 50dema was tested. And held.

The AVWAP from the Megagap of April 8 was tested. And held.

Gaps were filled. Narratives were challenged. Conviction was tested.

And for late buyers, pain was felt.

Yet despite all of that, last week’s close offers reason for optimism. Looking at SPY, price closed above both the 20-day EMA and the all-time high AVWAP.

What’s more, my Risk Composite Model re-entered the green zone, with the VIX falling back below the 50dema during Friday’s session.

Long story short, if SPY can continue to climb above 740 next week, my plan is simple: re-engage. Buy calls. Press the gas. And lean back into the same aggressive mindset that served so well throughout April and May.

Until price tells me otherwise, I see no reason to assume this is anything more sinister than a normal consolidation after an exceptional run.

SPY/QQQ

A hammer candle after buyers stepped in a the 50dema (red line) and Megagap™️ AVWAP (turquoise) - setting up a tasty looking reversal on the weekly. So long as buyers defend SPY 740 and QQQ 687, I’m in dip buying mode.

IGV

After playing the initial pop before watching late chasers get smoked over the last few weeks, there’s probably enough blood on the streets for me to get interested again as far as software is concerned - at least in the short term. Great RR with stops below the Q1 AWVAP (turquoise).

NOW above 101 is my pick of the bunch in this space. ORCL above 190 is a close second. TEAM above 88 not bad in third.

RGTI

RR is there on RGTI above the 50dema (red line) and prior low AVWAP (turquoise). Inverted head and shoulders pattern on the daily showing a neckline retest. Risky one - this one moves fast. But what’s life without a little spice?

ADEA

Not the cleanest breakout but a breakout nonetheless. Happy holding this position above the 50DEMA and adding calls above the prior low AVWAP (turquoise). Another risky one.

SOCL

Not the most liquid of ETFs, but SOCL held up well during the last couple of weeks, which means I’m interested - especially above the AVWAP from the Q1 lows. Key holdings include META, RDDT and SPOT. Watch the latter for a potential IHS breakout from a well defined bottoming formation.

NVDA

If we’re going higher, semis won’t be sitting on the sidelines. NVDA needs to reclaim the 50dema (red line) and AVWAP from the Q1 lows in the short term. Confidence grows above 207. A break below last week’s low spells trouble IMO. One to watch.

Long and Short of It

After two weeks of consolidation, multiple tests of support, and no shortage of bearish narratives, the bulls are still standing.

Could that change next week? Of course.

But until it does, I’m happy giving the benefit of the doubt to the trend that has been in place since April.

My risk models have done a great job of telling me when to push and when to tighten up over the last few months - and as long as we stay in the green zone, I’m not going to fade it.

As always, price gets the final say.

Let’s have a great week.

Best,

Al

Disclaimer: The content provided by Al Trades Charts is for educational and informational purposes only and should not be considered financial advice. I am not a financial adviser. All opinions are my own and reflect my personal interpretation of market conditions at the time of publication. Trading and investing involve risk, and you should always conduct your own research, consider your financial circumstances, and consult a qualified professional before making any investment decisions.

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Narratives are cosy, familiar and something that human beings typically cling to as a means to justify every event that’s transpired since the dawn of time.

Ze Germans lost the war because Hitler invaded Russia.

The Titanic sank because the Captain fell asleep.

Stocks are falling because…

Granted, those are deliberately simplistic examples, but you get the point.

Humans are wired to search for cause and effect. We crave neat explanations, clean conclusions and villains we can point to when things go wrong. Narratives serve a purpose, but only up to a point.

Beyond that, they often become a lazy shortcut - a convenient substitute for the uncomfortable reality that most outcomes are driven by a messy combination of factors, probabilities and unintended consequences.

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Markets are perhaps the best example of this.

At one extreme, every down day is framed as the beginning of some mythical bubble bursting. At the other, we’re handed a more respectable-sounding explanation - the Strait of Hormuz, bond yields, tariffs, inflation, take your pick.

And yet stocks spent the best part of two months grinding higher while many of these same narratives were being peddled as reasons to stay bearish.

Then, the moment price moves in the opposite direction, they’re dusted off and repackaged as the obvious explanation.

Which is precisely why it's dangerous to anchor your investment process to headlines. More often than not, they're explaining what already happened, not what's about to happen.

Because what’s about to happen, might actually be something much less dramatic.

Here’s a chart I shared on X yesterday. On it, you’ll see I’ve annotated some key levels on interest - most importantly, in my view at the least, the turquoise line which represents the AVWAP from the ‘Megagap™️’ move of Wednesday April 8.

Here’s how the same chart looks today…

The gap has been filled and the AVWAP and 50dema are being tested.

And yet despite this irrefutable fact, provided by nothing other than price action on a chart, we’re already seeing the usual narratives being peddled to explain what may well turn out to be healthy retest of support after a monster rally.

The Strait of Hormuz.

Trump has lost control of the war.

The bubble is bursting.

We’re all going to die.

Bears, naturally, are among those shouting the loudest. And who could blame them? After spending nine straight weeks on the sidelines, shaking their fists at the sky while the S&P 500 marched higher, it’s easy to understand why they’re so angry.

But price doesn’t care. Not what the bears think, nor what I think. And it certainly doesn’t care about the latest narrative du' jour.

So what am I doing?

Pretty much the same thing I’ve been doing since the rally began: respecting price.

That doesn’t mean blindly buying every dip or pretending risk doesn’t exist. Quite the opposite. If this pullback develops into something more meaningful, I want to be ready for it.

For me, that means tightening things up beneath the 20-day EMA, respecting key anchored VWAPs and generally trading a little lighter than I was a few weeks ago when breadth, momentum and trend were all firing on all cylinders.

The gap has now been filled. The AVWAP from the April lows is being tested. The 50-day EMA is right there too. These are exactly the types of levels you’d expect price to interact with after a near-vertical move higher.

If support fails, I’ll adjust accordingly. If it holds, then this may simply prove to be another pause within a broader uptrend.

The important point is that the chart will tell us. Not X. Not CNBC. Not the guy who’s spent the last two months predicting a crash that never arrived.

Until then, I see little value in forcing a narrative onto what currently looks like a fairly ordinary test of support.

In the meantime, maybe go touch some grass.

Best,

Alex

This week, the S&P 500 notched its longest winning streak since April-May of last year.

All while the Strait of Hormuz remained closed, oil traded north of $90 a barrel and bond yields across the globe hovered near multi-year highs.

A truly fascinating (and occasionally hilarious) environment to trade.

While the macro crowd has spent the last few weeks either sitting on their hands or embarrassing themselves on X, technical traders have been doing what they do best: buying strength, respecting the trend and riding moving averages higher as stocks continue to climb the wall of worry.

Personally, it’s been one of my strongest quarters to date.

After successfully playing the April bounce and correctly calling the great renaiSAASance in May, my focus for June remains refreshingly simple: stick to the process, stay aligned with the tape and continue making money.

For those of you that signed-up for the paid tier, the live trading room enjoyed another fruitful month. Based on just one contract per trade, total profits for the month totaled $1,260, giving us a running total for Q2 of $6,020.

If this reads a little like a victory lap, so be it.

Markets like the one we’re trading right now don’t come around every day. And when opportunity presents itself and you’ve got the conviction and discipline to act on it, I think it’s important to acknowledge that.

That said, the market doesn’t care what happened yesterday. The only question that matters now is whether the conditions that got us here remain intact.

Is Breadth Deteriorating?

One development that caught my attention this week was the deterioration in market breadth.

Over the last five trading sessions, the S&P 500 has recorded negative breadth every single day. In other words, the index continues to grind higher, but fewer stocks are helping to do the heavy lifting.

Since the start of 2024, we’ve seen only three other instances where negative breadth persisted for five or more consecutive sessions. Each eventually stretched to at least six days, including an unusually long 14-day streak in late 2024.

How did the S&P 500 perform after these instances - shout out to Frank Cappelleri for the chart.

There’s also a noticeable divergence in play between the S&P 500 notching ATHs whilst the percentage of stocks trading above the 20, 50 and 200dma remains pinned below the highs set in April.

For now, I think the sensible approach is to treat these breadth metrics as a yellow flag rather than a red one.

Breadth measures like these are incredibly useful for understanding what’s happening beneath the surface, but they rarely pay to be viewed in isolation. As long as the major indices remain above key moving averages and leadership groups continue to hold their uptrends, the weight of the evidence still favours the bulls.

Could these divergences eventually matter? Absolutely.

But history suggests that markets can remain narrow for longer than many expect. Until price starts confirming the weakness, I’m inclined to give stocks the benefit of the doubt and allow time for participation to catch up with the advance.

Which brings us to the more important question: where does the opportunity lie from here?

Where I’m fishing for the next trade

With software now catching a meaningful bid and a number of names in the long-term portfolio continuing to cook, I’m reluctant to spend too much time retreading old ground.

Instead, I’d much rather focus my attention on areas of the market that looked primed for a new impulsive leg higher - and right now, that focus is squarely on financials and communications.

Whilst my JPM calls were likely premature, I’m happy holding them so long as XLF holds this bullish flag pattern (specifically above the AVWAP front he prior lows). Confidence grows above the 200DEMA shown in blue, with a breakout ahead of next month’s earnings season providing a great opportunity in some of the space’s more unloved names (hence, JPM calls).

As far as XLC goes, it’s an eerily similar setup - with one clear caveat. Weightings.

Specifically, META - which currently boasts the largest weighting in XLC at 23%. If META catches a bid above the AVWAP from the prior low at 615, I’d be reluctant to bet against XLC breaking higher from the flag shown below.

If XLC does start to move, one ticker to keep an eye on is NFLX - which currently finds itself at an interesting level having given back a lot of the gains made earlier this year.

Don’t forget the leaders

While I love fishing in underappreciated waters, it’s important to recognise the areas of the market that continue to work away in the background. Yes, this includes SMH - but also pockets of the market exposed to base and industrial metals, as well as other inflation-sensitive sectors such as fertilisers.

A few tickers worth looking at this space

FCX

CLF

MOS

HBM

And lastly, a place where NOBODY is looking

Maybe I’m still feeling a little too pleased with myself after the software call, but I can’t help looking for other corners of the market that may have fallen victim to similarly flawed narratives.

Which brings me to sports betting.

More specifically, I quite like the look of FLUT and DKNG at current levels. Here’s the latter’s chart:

The prevailing view seems to be that prediction markets are about to eat their lunch. Maybe. But that strikes me as one of those stories that sounds far more compelling on social media than it does in the real world.

Yes, prediction markets have grown at a remarkable pace, and yes, they’ve undoubtedly stolen some mindshare from traditional sportsbooks. But investors seem to have jumped straight from “interesting new competitor” to “existential threat” in record time.

Meanwhile, DraftKings just delivered 17% year-over-year revenue growth, generated record quarterly EBITDA, and noted that prediction markets have had only a negligible impact on sportsbook revenue thus far.

Consumer activity on its own predictions platform is growing rapidly, and management appears more interested in joining the trend than fighting it.

Flutter’s situation looks similar.

Despite all the handwringing, FanDuel remains the dominant player in U.S. sports betting, and management continues to describe the impact from prediction markets as minimal. In fact, they’re investing heavily in their own prediction market offerings rather than retreating from the space.

The market appears to be pricing these businesses as though prediction markets are about to replace sportsbooks altogether. The reality may be far less dramatic. Most bettors aren’t looking to become traders. They want parlays, same-game multis, boosts, loyalty rewards, slick apps and a familiar betting experience. Prediction markets may grow the pie rather than simply steal it.

Could Kalshi and others take share? Of course. But there’s a world of difference between “competition is increasing” and “the investment case is broken.”

As things stand, the market seems convinced of the latter. I’m not so sure.

Closing thoughts

As we head into the second half of the year, my biggest takeaway remains unchanged: this is a market that continues to reward conviction.

Not recklessness. Not blind optimism. Conviction.

After all, the S&P 500 has spent the last few weeks grinding higher despite a closed Strait of Hormuz, oil north of $90, and bond yields hovering near multi-year highs. In almost any other environment, those would be considered meaningful headwinds. Yet here we are.

That’s not an argument for ignoring risk. It’s simply an acknowledgement of what price is telling us.

If stocks can continue climbing the wall of worry with all of those concerns hanging over the market, it’s worth asking how much further they might travel should some of those fears begin to fade. And in that context, SPX 8000 doesn’t sound too wild.

Maybe that’s the optimist in me talking.

But optimism, backed by a disciplined process and a willingness to follow the tape, has paid remarkably well throughout Q2. Until the market gives me a compelling reason to think otherwise, I’m inclined to keep giving it the benefit of the doubt.

5 restracks and 5 likes and I’ll make the paid trading chat free for the month.

Best,

Al

Disclaimer: This content is for informational and educational purposes only and should not be construed as financial advice. I am not your financial adviser. Always conduct your own research, consider your personal circumstances, and consult a qualified professional before making any investment decisions.

…software finally looks ready to step up here.

IGV is breaking back above the 200dema, with cyber names leading the charge.

Now the question becomes: who follows?

MSFT and PLTR still look like prime candidates if software breadth keeps improving. And if risk appetite really starts expanding again? Don’t rule out crypto joining the party too. I’m looking at you here HOOD.

Meanwhile, patience still feels like the smarter play in XLF. The setup’s interesting, but the tape hasn’t quite given the all-clear yet. Maybe it comes tomorrow, maybe next week. But if we’re going higher, I don’t want to see financials breaking down here!

New video live now - charts, levels and the rotation thesis broken down in full.

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Over the last few months, I’ve had a lot of fun framing the market through movie analogies and cinematic storytelling. It helped make sense of an increasingly chaotic tape - and, frankly, kept things entertaining.

But moving forward, I want to simplify things.

Rather than comparing every market regime to a Hollywood blockbuster, I’ll be focusing more on regular video updates breaking down my favourite setups, key levels, leadership themes and actionable opportunities as they develop in real time.

Alongside that, I’ll still be publishing the occasional deep-dive newsletter covering the bigger picture stuff I’m seeing under the hood - macro trends, risk models, breadth, sector rotation, liquidity and the overall health of the tape.

The goal is simple: less theatre, more clarity.

As always, thanks for reading, watching and being part of this little corner of the internet.

Let’s keep stacking good trades.

Al

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Why? Because if these names can reclaim that level with conviction, it likely signals a market environment where we can start getting more aggressive with risk exposure again - especially beyond the usual mega cap leadership.

Think of this less as prediction and more as preparation. Build the watchlist now, so you’re ready if the market starts opening the door.

A few charts in this video are already starting to lean that way 👀

As always, not financial advice. Do your own research.

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MVPs are the lifeblood of successful teams.

The Dodgers have Ohtani. The Yankees, Judge.

When these players are swinging, good things tend to happen for their respective teams. When they’re not, the opposite rings true - with a disproportionate amount of blame falling on those with the broadest shoulders (and beefiest salaries).

But what’s often forgotten in an age that values individual brilliance and celebrity, is that no matter how good the individual, its the supporting team around them that truly makes the difference when it comes to the crunch.

The movie Moneyball brings this truism to life.

Led by Brad Pitt’s Billy Beane, Oakland A’s built a roster around overlooked players who quietly got on base and kept the machine moving. And the results - well, no spoilers here, but it didn’t work out too bad in the end.

That’s what healthy markets tend to look like, too.

And in my view, the next leg higher in this bull run boils down to just that.

Not just semis swinging homers every week, but the bench stepping up to the plate and getting on base too.

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Playing Conditions Look Good

Before taking a look at some of the benchwarmers primed and ready to take the field, a scout’s report on the current regime.

Risk models - which can now be accessed here, for free - remain in the all-clear zone, with credit spreads and volatility trading at the lower bounds of the range.

Breadth remains the primary concern here, with the percentage of S&P 500 stocks trading above their respective 50dema dropping to below 50% as of yesterday’s close.

Am I concerned about breadth in isolation? Not really.

Some will point to the slight deterioration over the last couple of weeks as a reason to tighten up. But I prefer viewing breadth as part of a wider composite and right now, most of the tickers I track within that framework are still giving the green light.

Until that changes, I’m willing to give the rotation thesis detailed below a chance to play out.

Benchwarmers Taking the Field

As detailed in last week’s post, I have little to no interest in chasing semis up here.

Instead, I’m scanning the market for those downtrodden areas that look primed and ready to breakout and keep the bull market swinging.

Top of the order, you guessed it…software.

Here’s a super quick view of IGV. Note the huge volume spikes at critical support, as well as price trending higher above the AVWAP from the prior lows, as well as the now upwardly-mobile 20DEMA and 50DEMA.

Dig beneath the surface of IGV and you’ll find MSFT. To me, this looks primed and ready for a major move. Above the diagonal purple line is what I’m looking for here, and feel comfortable holding calls above the AVWAP from the prior lows (green line).

Next up, healthcare. Specifically IHE.

Huge volume spikes and coiled moving averages, inject it baby!

Like software, this looks primed for a big move - and so long as price holds above the AVWAP from the prior highs, I’m happy siding with the bulls on this one.

My favorite name in this space, BMY.

Cup and handle. Inverted head and shoulders. I don’t care what you want to call it. To me this looks primed and ready to resolve higher from its multi-month base.

Last but by no means least, XLF.

Looks good to go, no?

Bulls get this thing cooking above that diagonal purple line and it’s game on.

JPM is my preferred vehicle for trading this thesis. Price holding above major support and the AVWAP from prior lows. Work to do to capture those key EMAs, but I’m happy holding until we see a decisive close below this week’s low.

Potential Curveball

For every team that wins the World Series, most never even get the chance to swing the bat.

Markets aren’t dissimilar in this regard. Even in strong bull runs, leadership narrows, rotations stall, and plenty of stocks get left stranded in the dugout (pour one out for your homies that own NKE).

Right now, the broader setup still looks capable of going the distance. The tape is constructive, key risk gauges remain supportive, and potential rotation under the surface is helping keep the playoff dream alive.

But this is no victory lap.

There are still more than a few pitchers warming up with curveballs capable of blowing up the bull thesis altogether - sticky inflation, rising yields, weakening breadth, geopolitical risk, and an increasingly crowded AI trade among them.

The game’s still on, no doubt.

But whether this run can go the distance relies on whether the bench step onto the field whilst the MVPs take a much-needed breather.

Best,

Alex

I’ve just launched a new chatroom for all subscribers: Watchlist & Setups.

No fluff. No “BREAKING 🚨” every five minutes. Just a focused stream of annotated charts, levels, and tickers currently on my radar.

Inside the chat I’ll be sharing:

• Stocks and sectors I’m actively watching

• Key support/resistance levels

• Annotated chart setups

• Relative strength and leadership names

• Potential breakout/breakdown candidates

• The occasional “this looks horrendous, avoid it” chart too

Not every chart becomes a trade. Not every setup triggers. But it’s the cleanest way for me to share what’s actually on my screen in real time.

What About Trade Alerts?

The Trade Alerts chat remains reserved for paid subscribers only.

That’s where I share actual positions, entries, exits, updates and higher-conviction ideas in real time.

But Watchlist & Setups gives everyone access to the process behind the scenes - the names, levels and themes I’m tracking before they potentially evolve into trades.

Available to all subscribers. Click here to access the chat.

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I’m not an economist.

But given said collective’s record when it comes to forecasting economic output and equity performance, I’m definitely not complaining. As the old saying goes, the only reason God created economists was to make weathermen look good.

At the time of writing, the usual suspects are doing their best to scare you.

This includes the leading academics you’ve seen doing the rounds on the BBC and CNBC, as well as some of the more niche names you’ve undoubtedly come across on social media.

Here’s a smart-sounding take from Henrik Zeberg, shared last week…

And here’s another, equally smart sounding take from the same account, posted back in December 2024 - just months before we saw one of the greatest bull runs in recent memory…

The point here isn’t to dunk on the likes of Henrik Zeberg or any other economist for that matter. I’m sure they have their reasons for being so bearish on the economy (those subs won’t sell themselves!).

Instead, I’d simply like to highlight that for as long as I can remember, economists have been getting it wrong. Or to put it bluntly, straight up lying to us for years.

Data Don’t Lie

Human beings lie all the time. Whether we’re lying to ourselves or others, it’s just part of the deal.

But data is different.

Data doesn’t care about political affiliations, TV ratings, engagement farming, or whether some economist on CNBC needs to justify the forecast they made six months ago.

It just is.

That doesn’t mean data can’t be interpreted poorly. It can. But raw numbers don’t wake up in the morning deciding to push a narrative. They don’t get emotional. They don’t go on podcasts. They don’t panic because the S&P is down 2% or suddenly declare a “new paradigm” after three green candles.

And that’s why I started building my own economic dashboard.

What you're looking at here is a composite of leading indicators, namely: building permits, housing starts, single family permits, 10Y-2Y spreads, initial jobless claims, weekly hrs worked and manufacturing orders from 1990 to March of this year.

The red line shows the 6mma, yellow shaded areas are recessionary periods.

What you'll notice is that prior to each recessionary period shown on the chart, leading indicators trended lower for a number of months (24 prior to the 2008 GFC) prior to each recession hitting.

No duh, leading indicators doing exactly what they're supposed to do!

Where Are We Now?

Just look at the chart.

When the composite moves from the bottom left to the top right, it signals the US economy is in an expansionary phase - good news for bulls.

When the opposite happens - and the blue/red lines trend lower - contraction is in play, often preceding recessionary periods like those witnessed in 2008.

Right now, both lines are trending higher, having recovered strongly after the slowdown seen throughout 2021 and 2022 - which, not coincidentally, aligned with the market’s last meaningful bear market.

Could this change as early as next month? Sure - but trying to predict it is akin to reading tea leaves. So for now I’m happy sticking with the data we actually have.

On that note, it’s important to understand that economic data is never truly “live.” Almost every datapoint in this chart is released with a lag. Building permits, manufacturing surveys, employment data, claims, credit conditions - they all arrive weeks after the month they actually represent.

In other words, we’re always looking slightly through the rear-view mirror.

But markets are forward-looking.

That’s why I focus less on individual data points and more on the direction of the composite itself.

Is the weight of the evidence improving or deteriorating?
Are leading indicators stabilizing or rolling over?
Is economic momentum accelerating or fading?

Right now, despite all the doom-scrolling, panic headlines, and endless recession predictions, this chart simply doesn’t look like an economy in collapse.

Have a great week.

Best,

Alex

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In Star Wars, the Empire built the Death Star. Massive, expensive, technologically overwhelming.

And whilst I’m not sure anyone residing in a galaxy far, far away traded the move - 3x leveraged lightsaber ETFs, anyone? - it’s fun to predict where money would’ve flowed had Obi Wan been granted access to a Robinhood account.

Thankfully here on earth, we don’t need to speculate how the creation of our own ‘Death Star’ looks - we’ve lived it for the best part of four years.

During this time, markets have obsessed over AI infrastructure: chips, data centers, nuclear power, cooling, hyperscale capex. The equivalent of watching the Empire assemble giant space stations across the galaxy - but with more dollars and fewer Storm Troopers.

Meanwhile, software drifted into the background. Slower growth. Multiple compression. The death of SaaS as we know it!

But lately, that narrative has started to shift. And if recent price action is any indication, the opening titles of the Software Strikes Back might be about to begin.

Dun dun dun du-duuun dun du-duuun…
DA DA DA DAAAAA… da-da da da daaaaa…

A Notable Divergence

Software vs Semis. You know the story by now: two key constituents within tech trading like the Jedi and the Sith - one good, one down right awful - so much so that as recently as this week, software broke to new all time lows relative to semis.

Sounds pretty good if you’re long semis and short software, right?

Not for me. I’m seeing this move differently to most.

Sure, picks and shovels have definitely been the trade for the last six weeks, but given the extreme levels we’re now seeing on the RSI - as well as the clear divergence that’s now in play on the daily and weekly timeframe - I’m willing to allocate some capital into software in anticipation of favorable rotation.

Return of the Bid: Bottom Fishing Software Stocks

As any Storm Trooper could tell you, charging blindly into battle usually ends badly.

That’s the danger with bottom fishing software stocks. After months of underperformance, crushed sentiment and “SaaS is dead” narratives, it’s tempting to start swinging at every oversold chart that flashes green for a day.

But that’s not how to play this thesis - not in my book anyway.

Instead, I prefer to enter trades with a tight, pre-defined escape route. And in this particular context, anchored VWAPs are my go-to weapon of choice.

So long as price is holding the AVWAP from the prior low - I’m happy being in the trade. As is the case here with INTU. I’ve also added two bars: green for support, red for resistance, to help identify other potential areas of supply/demand when entering the trade.

Down here, we’re right on the AVWAP from the prior lows, hovering just above support. That’s limited downside risk, and solid upside potential. Risk. Reward.

Another way to play these potential bases is to stick a Fibonacci Retracement from the prior low to the former swing high. When price retraces into the golden pocket - as shown on CRM above - wait to see if buyers show up and take it from there.

Honestly, so many tickers look like the examples shown here from VEEV to PLTR - but that’s not to say every software stock is built equally, far from it.

Already we’re starting to see names within the cybersecurity space lead to the upside - take note of PANW below:

Here you can see the exact setup I’m looking for on other software names right now - price retracing down into the golden pocket with the reclaiming of the prior low’s AVWAP providing the signal to add a long position. Take out the prior highs and up she goes. Lovely stuff.

One that’s setting up right now…PLTR

What I need to see here is price recapturing $140 and progressing towards the upper resistance line - see the purple, diagonal line on the chart. A breakout above $150 confirms the move and likely drags the wider software space higher with it.

If Software’s Going, Crypto Ain’t Messing About

Once the X-Wings launch, subtlety tends to disappear pretty quickly.

That’s crypto whenever software starts catching a bid. No shit, they’re correlated.

Which begs the question - if software gets going here, which crypto-adjacent assets do I want to be adding to my watchlist?

First up, HOOD…

If in doubt, zoom out.

What we have here is a stock trading at a really interesting level - the prior highs from February 2025 - which right now, is offering valid support above $65 a share.

Zoom in and things look even more interesting. Golden pocket, check. Earnings AVWAP, check. Prior low AVWAP…pending.

Should price get above $78 over the coming days and weeks, then I’ll likely add more to my existing position. And if it doesn’t? No sweat. I’ve got the AVWAP from the earnings gap as a potential stop, with the 78.6 fib below that. Risk. Reward.

And how’s about COIN…

Just look at the cluster of AVWAPs bunched together down here!

And the golden pocket too? Come on, too good!

Sure, she’s a spicy (and expensive) high beta beast - but the risk/reward is there for those willing to take a shot…

Revenge of the SaaS?

Not every rebellion succeeds. And that’s the key point here.

Just because key support levels are holding doesn’t make any of the stocks detailed in this post a sure thing, far from it. Markets don’t hand out guaranteed wins simply because a chart looks tidy and an AVWAP lines up with a fib level.

But where there’s a tight stop, there’s a favorable opportunity.

That’s the whole game. Defining risk before the trade even begins.

If support fails, I’m out quickly with manageable damage. If it holds and momentum returns, the upside can massively outweigh the downside.

Trail those stops and let’um ride, young Jedi.

Best,

Alex

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In The Lord of the Rings, power flowed through one object: the ring. Whoever held it shaped the fate of Middle-earth.

Markets aren’t quite that dramatic. But there is one chart I keep coming back to when I want to understand what kind of tape we’re dealing with: SPY relative to GLD.

When it trends higher, advances tend to be impulsive - especially above key moving averages. But when it doesn’t, and price rejects off those same levels, what appears to be impulsive can soon turn out to be sinister…

…the market discovering the Ring wasn’t in friendly hands after all.

One Chart To Rule Them All

Here’s what we’re looking at - the black line is SPY relative to GLD on the weekly timeframe dating back to late 2015. The blue line is the 50WEMA and the purple bar is a key pivot which has consistently held as support dating back to 2016.

Let’s start with the purple bar.

V-shaped recoveries from this area have proven to be great buying opportunities (not one of these bottoms annotated on the chart have been revisited btw) but things get really fun when price breaks and holds above the 50WEMA.

What’s happening right now?

Price is staging a dramatic ‘oops’ reversal below the pivot, echoing the adage that from failed moves, come violent moves. In this case, a lock-out, face ripper of a rally that’s seen SPY gain over 14% in one month.

“It is a strange fate that we should suffer so much fear and doubt over so small a thing”

Before we get too giddy, like a hobbit kicking through the shire, it’s important to note that whilst the first part of the bargain has been upheld - SPY/GLD holding above the key pivot - the mission to Mordor remains incomplete at the time of writing.

As the chart above warns, when price rejects the 50WEMA from below and trends lower, corrective moves typically follow. Here’s how this relationship has translated on the weekly chart dating back to 2016…

“The Wise Speak Only Of What They Know”

So which one is it?

Are we going to reject off the 200DEMA and lose our freaking minds or rip straight through it like Aragon’s sword?!

Well, markets rarely roll over on a whim. And for a corrective move or bear market to play out, a few essential ingredients are required.

A sprinkle of volatility. A helping of deteriorating breadth. Widening spreads etc...

But why tell you when I can just show you?

See those red bars on the chart?

They show instances where spreads were widening, vol was climbing and breadth was deteriorating - all pieced together in my primary risk composite indicator. Notice how we flipped from green, to orange to red prior to each of the corrective moves mentioned earlier?

But here’s the real interesting part - especially if you’re bullish. None of those things are present right now. So unless things take a severe turn over the coming days/weeks, don’t be surprised to see SPY/GLD reclaiming the 200DEMA - at which point, thanks to this handy post, you should know what to do.

Best,

Al

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Whenever I think of the movie Drive, three things immediately spring to mind.

1. Ryan Gosling’s scorpion jacket

2. Carey Mulligan

3. That elevator scene

Let’s revisit the latter - just in case you missed it.

Entering a lift, the driver (Ryan Gosling) realises a hitman has followed him and Irene (Carey Mulligan) inside. Pulling Irene behind him to protect her before sharing a quiet, slow motion kiss, the driver then turns towards the attacker, launching a violent assault before stomping his head in, leaving nothing more than a mangled face and bloodied corpse on the floor.

When the doors open, the driver doesn’t step out with Irene. He stands alone, knowing he is separate from the world outside.

Which is precisely how I’ve felt for the last few weeks…

Cashing in on Chaos

As has been the case for the best part of three weeks now, a significant number of traders still - somewhat shockingly - find themselves on the wrong side of the tape.

Fixated on oil and the Middle East, said traders remain sidelined by a market that simply refuses to let them in. Every day they speak of a dip that’s yet to come - and if that fails, they don’t hesitate in turning to the old adage of ‘MaNiPuLaTiOn’ to justify their poor decision making in what has been a hugely profitable couple of weeks.

For those of you that opted to join the paid tier of Al Trades Charts, congratulations.

If you only took one contract per trade in the live chat, my math shows you’ll be up a not-too-shabby $3,714 on closed trades. Not bad for a month’s work.

Risk-On Remains In-Play

Rather than switching between Risk Models 1 and 2 in each post, I decided the most efficient route would be to build a composite of both models on one clean chart.

And what does that chart show at the time of writing? Clean air.

What you’re looking at here is a composite model blending five signals that historically shift when markets transition from healthy trend conditions into fragile environments:

• VIX vs its 50-day average → volatility pressure rising or easing

• Credit spreads (BAMLHY) vs 50-day average → stress in corporate debt

• % of S&P 500 stocks above their 50-day average → internal market participation

• TLT/SPY ratio vs 50-day average → defensive positioning vs growth exposure

• XLP/XLY ratio vs 50-day average → staples outperforming discretionary (risk-off behavior)

When these start flipping either unison or isolation, it typically signals a shift in market tone. To help make it clear what kind of regime we’re in at any given moment, I simply applied a color-coded overlay to the chart:

🟢 Aligned risk-on → dips are usually buyable (present setup)
🟡 Mixed regime → selective exposure only, trade with relative strength
🔴 Aligned risk-off → capital preservation matters more than conviction

As you can see on the chart we are currently in the ‘green zone’ - signaling that dip buying remains the dominant strategy - something that should theoretically continue so long as SPY and QQQ trade in positive gamma.

Should this change, all subs will be notified. But until it does, I’m looking at areas of the market which continue to lead - and those which may just be emerging.

Pick Your Winners

Not all areas of the market trade the same relative to the regime that’s in play. Just because we’re in clean air doesn’t mean something like MSTR is automatically destined for new ATHs, for example. I think this is a common misconception - so it’s worth remembering.

One of the easiest ways to stay aligned with what’s actually working is by tracking relative strength using data.

To help do this, I typically start by comparing sector ETFs relative to the broader index (SPY) on a weekly chart, overlaid with a simple 10/21wma ribbon to help visualize the trend that’s in-play. If that proves too janky, I switch it up to the 21/50wma combination instead. Pretty simple stuff.

Here’s a great example - IGV/SPY.

What’s noticeable here is that despite the market flipping from ‘risk off’ to ‘risk on’ - software still looks like hot trash - trading below a rapidly declining 10/21wma ribbon having flipped prior support into resistance.

Whereas semiconductors, on the other hand…

Upwardly mobile, stretching wayyyy above the inclining 10/21wma ribbon, smashing through prior resistance and flipping it to support. Pure, unadulterated leadership.

So What’s Next?

If you caught the generational run in semis, great work. Subs were alerted a few weeks ago that I was buying INTC which turned out to be an awesome trade. AEHR was another that worked well, climbing from $42 to $90+.

But with semis looking overextended and overbought, my attention is turning to areas of the market that are showing renewed, or existing strength, relative to the wider market.

If we’re staying true to the parameters detailed above, the natural place to start is tech - XLK/SPY - the thing that’s been leading the bull market since its inception in 2022. The only thing that’s concerning me here is the RSI - which is nearing the overbought zone on the weekly chart - something which has typically preceded corrective moves.

Notable tickers in this space include:

GLW

SATL

RIOT

Quantum stocks look pretty similar too - note QTUM/SPY and its healthy relationship with the 21/50wma moving average ribbon, but similarly overbought conditions on the RSI.

Don’t Sleep on Energy

So tech is leading and dips are buyable - no shit, Al!

Ok hear me out. How about a little…energy.

If we’re being objective - the bear minimum as traders - then you’ve got to admit that XLE/SPY looks OK at this level.

Sure, it’s taken a swift beating over the last few weeks as geopolitical tensions have eased, but there’s definitely a bullish setup here so long as price holds above the 21/50wma ribbon and the 61.8 fib retracement level in my view.

Notable setups in this space:

NOG

OKLO

UUUU

What About Crypto?

Despite broader indices hitting new highs, the bounce that’s played out in crypto has been pretty muted, with Bitcoin, Ethereum and Solana way off prior highs - despite threatening to breakout from their respective ranges.

Bitcoin - the crypto market’s MVP - looks OK here. But if I’m being honest, I expected more given the moves we’ve seen across broader risk assets, namely semis and tech. Could we breakout over the coming weeks? Maybe - I certainly hope so.

On the weekly chart, here’s how IBIT/SPY looks. Still below a declining 10/21wma ribbon, despite price reclaiming the shorter term 10wma (orange line).

In my view, this signals a potential bottoming formation - but nothing more at this stage. Should we see a progressive burst higher - likely driven by Bitcoin reclaiming the key $80k level - then I’ll start to get aggressive on names like COIN and MSTR.

Until then, I’m trying to avoid front-running the move too much.

A Predictable Setup

Right now we’ve got semis closing in on 18 straight green days while the S&P 500 prints another all-time high. No shit - it’s a bull market. But just because it’s a bull market in semis doesn’t mean it’s a bull market everywhere.

As this post points out, leadership still matters when picking which trades to enter and which to avoid. It’s a stock pickers market - don’t go picking the wrong ones!

And yet despite this irrefutable truth, there’s a predictable amount of noise on X and Substack as traders hoover up calls on every speculative name going.

To be fair, it’s worked incredibly well this month.

And I won’t pretend otherwise - I’ve played more speculative tickers than usual myself. If there’s money on the table, I’m interested.

But looking ahead, I’m not leaning too heavily into anything right now.

Parts of the market are stretched, and I’d rather stay selective while some of the more overbought areas cool off.

Boring. Maybe.

But just like Ryan Gosling in that elevator scene, when the doors open, you don’t always walk out with everyone else. Sometimes a little space to think, gather your thoughts and compose yourself, is the right move to make.

Best,

Al

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There’s a scene in American History X that everyone remembers. The curb stomp.

It comes after Derek’s car is broken into by three black men late at night. Fueled by rage and his deep involvement in a local neo-Nazi gang, he confronts them outside his house. He shoots two of them as they try to flee, then drags the third to the pavement.

What happens next is truly violent.

Derek calmly orders the man to bite down on the curb, pauses long enough for the audience to understand what’s about to happen, and then stomps on his head. The scene is filmed in stark black-and-white, heightening a sense of moral coldness and inevitability.

The reason the scene sticks isn’t just the violence. It’s the finality of it. One moment where resistance disappears and the outcome becomes obvious to almost everyone watching.

And over the last two weeks, markets delivered their own version of that very moment.

Here’s SPY.

And the VIX? Stomped. Blood on the streets.

Here’s what that moment actually looked like under the hood:

• SPY −10% correction → +11.2% in 11 sessions

• VIX: 45 days above 50dma → sub-18 in two weeks

• The third largest two-week vol compression on record

Stomp, Stomp, Stomp

We all know what commentators said the catalyst was.

If price action was Derek dragging the thief across the pavement, the de-escalation in the Middle East was the curb the bears were forced to bite down on.

That might sound overly neat. Maybe even a little narrative-heavy.

But let’s be honest - that’s exactly what many bears were doing in the weeks leading up to it. Taking a single storyline - oil up = stocks down - and running with it as if the rest of the tape didn’t exist.

And it wasn’t just wrong.

It kept them wrong long enough to miss the entire move that followed.

Because in the run-up to the de-escalation, the real warning signs weren’t only coming from oil. They were coming from the market’s internal risk gauges - the stuff that quietly flips long before positioning does.

The exact metrics I’ve been pounding the table on for weeks…

• The VIX was holding above its 50-day moving average

• TLT/SPY was trading above its 50-day moving average

• XLP/XLY had pushed above a rising 50-day moving average

Even before a bomb was dropped on Iran, these classic risk-off signals were firing like an IED - clear enough for anyone willing to look.

And when those signals started to unwind, the outcome shouldn’t have surprised anyone paying attention.

Being Wrong ≠ Staying Wrong

I’m not going to sit here and tell you that I played the move perfectly.

But what I will say is that when my risk models gave the all clear - something which was communicated the day it occurred - I dropped the bearish thesis immediately, because when the data changes, the job is to change with it.

That’s just my approach.

I don’t build risk models for fun. I build them to help visualize the environment we’re trading in at any given moment - and more importantly, to stop myself getting anchored to a narrative once the tape has already moved on.

And that’s the difference.

Because while some traders were still leaning on the oil up = stocks down storyline, the market had already started switching regimes under the surface.

Risk signals were unwinding. Volatility was compressing. Leadership was stabilizing.

If you stayed short because the headlines still sounded bearish, you weren’t trading the market anymore - you were trading the story. And as anyone holding puts over the last fortnight will tell you, stories don’t pay. Only price does that.

What Happens Now?

Whilst bearish takes relating to inflation, negotiations or a single weak bond auction will likely crop up like mines in the Strait over the coming weeks, I’m happy following the same system that helped me tighten up in March and push down hard in April.

Should risk models flip to the downside, then you’ll be first to know - and most of the below will be invalidated in an instant. But until that happens, I’m comfortable buying some long dated positions in some of the market’s more beaten-up - and if we’re being honest, mispriced - names here.

Software

Few sectors have been hit as hard as software over the last six months. The sell-off hasn’t been selective, dragging revenue machines like MSFT down alongside weaker, story-driven names like ASAN - which is precisely where the opportunity sits.

When markets de-risk in a hurry they rarely separate quality from speculation, which means the same move that punished fragile balance sheets also reset entry points in the companies most likely to lead when conditions stabilise.

Names I like in this space: VEEV, MSFT, CRWD, INTU, PAYX

Crypto

Like software, the crypto ecosystem found itself in the grips of a brutal winter sale during Q4 2025 and Q1 2026. If risk-sentiment returns to the space - likely lead by Bitcoin resolving above $80k - then there are a good number of names to keep an eye on.

There’s still work to do, but if COIN breaks $225 and MSTR recaptures $150, it likely means game-on as far as crypto is concerned. Keep an eye on SOL and ETH too.

Semis

TSMC reported earnings before today’s open, once again smashing estimates and raising guidance. Sure, we’re early into earnings season - but if this sets the tone for what’s to follow from the likes of AMD and ALAB, there’s reason to remain optimistic when it comes to semis.

Data Centers

Some of my favorite names right now exist in the data center space - areas which held up surprisingly well during a turbulent Q1. Names to watch out for here include RIOT, CIFR, IREN and NBIS - just a few that are staging breakouts at the time of writing. Well worth a look in my opinion.

Financials

What if private credit fears were a nothing burger and financials - I’m talking big banks here - continue to show solid earnings growth and forward guidance? What if credit spreads remain tight and rates fade from the highs - helping the likes of JPM and C to maintain healthy balance sheets?

It’s a move I’ve been keeping an eye on for some time and it probably won’t happen overnight, but with long-dated calls locked and loaded, I’m not betting against a KBE comeback here.

Homebuilders

Homebuilders love low interest rates given the obvious correlation them and mortgages. Should rates calm a little - which could occur in lockstep with fading growth fears as a result of Middle Eastern de-escalation - then I think the likes of LGIH and PHM will resolve higher from key support levels.

FOMO, Here?

When stocks rip higher like they have over the last two weeks, it’s easy to look at charts up 10–20% - or even 50% (Ascent Solar Technologies, anyone?) - and feel like you’ve missed the move.

I know the feeling well. But the reality is that even in strong impulsive advances, pullbacks are part of the process. And as long as those setbacks happen while the under-the-hood metrics - and most importantly, my risk models - remain in the clear, I’ll treat them as opportunities to add as opposed to reasons to step aside.

Because that’s the thing about moves like this - they don’t just change price, they change positioning.

And in American History X, the curb-stomp scene isn’t the end of Derek’s story. He’s the one who ends up paying for it, and he’s the one who eventually walks out of prison seeing the world differently.

Markets have a way of doing the same thing.

Sharp regime shifts punish the narratives that overstayed their welcome. And if the last two weeks have done anything, they’ve forced a rethink from anyone still anchored to the idea the bull market is over.

Best,

Alex

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As a quick follow-up to this morning’s newsletter, I wanted to reiterate a point that probably didn’t come across too well.

Whilst risk models remain in the ‘clean air zone’ - so that’s spreads behaving themselves, TLT fading relative to SPY, XLY catching a big against XLP, you get the picture - there’s no shame in swinging the bat at some of the tape’s more speculative names.

The charts I posted this morning, whilst offering solid entries with tight stops, are just common plays - not the type of charts that’ll send blood to your nether regions but solid picks for the port regardless.

But they aren’t the only charts worth paying attention to.

If you’ve got the stones for it, there are a handful of more speculative setups starting to look interesting just beneath the surface - the kind that tend to move faster and further - and they’re very much in play so long as the tape continues to behave itself.

LGIH

Yes I see the bear flag. But I also see price hovering at critical resistance and refusing to die - despite the apparent end of the world looming large. If rates reverse their aggressive ascent, this thing moves. I’m in December calls on this one.

COIN

I don’t particularly like this one below the purple pivot - but as a speculative trade, I’m comfortable throwing a bit of change at it so long as the green zone (golden pocket) holds as support.

CIFR

Another speculative crypto play. Price coiling for the best part of six months with a breakout pending. Upwardly mobile 200dma acting as support is a good sign, but desperately needs BTC to break higher.

ASTI

Another one sitting in the golden pocket. ASTI is a nice solar play that’s quietly carved out a higher low on the weekly timeframe. So long as it sticks above the 200dma, I’m happy sitting in commons.

NBIS

NBIS breaking out and climbing higher intraday. Last week’s perky volume was the tell. Missed this one personally, but the chart looks good if you’re looking to sell at higher prices.

APH

Another breakout play with perky volume during last week’s session. Would like to see the 10/21ma climb back above the 50dma - but unsure if this happens before or after new highs.

MAGS

So long as MAGS sticks above the green line (AVWAP from April 25 lows) then markets remain ‘risk-on’ in my view.

ARKK

ARKK has a pulse above the two purple bars (key pivots). Lots of work to do below a number of key moving averages - but worth keeping on the radar.

CRWV

CRWV breaking out on record volume. Either the most obvious long going - especially above the 200dma - or the biggest trap I’ve ever seen. Time will tell.

Best,

Alex

Disclaimer: As always, these are simply the setups I’m watching and trading myself — not recommendations. Make the trade your own, manage your risk appropriately, and do your own research.