Free Solo

Planning the next leg higher

Given Alex Hannold’s escapades over the weekend, revisiting Free Solo feels like the obvious choice for this week’s newsletter.

For those that haven’t seen it, the documentary follows climber Alex Honnold as he attempts the impossible: scaling El Capitan’s sheer 3,000-foot granite face in Yosemite without ropes or safety gear.

At various stages, he can’t move higher without first moving sideways — pausing, recalibrating, consolidating at key holds before committing to the next vertical push.

Sound familiar?

This week, big tech earnings become the next handhold. And right now, the trend is still up. If results deliver, the grip looks firm — giving indices a chance to pull into open air and extend to fresh highs.

Should this play out, my stance is that the move won’t occur in isolation. Everything from software to crypto - two areas of the market that haven’t been working for months now - could finally become the latest beneficiary of the bull market’s best friend: rotation, rotation, rotation.

QQQ: wen breakout?

Here’s what I’m looking at on the Qs.

After making new all time highs in October last year, price has coiled sideways. Not bullish, not bearish - just sideways.

At the time of writing, price remains above the 50dma as well as the AVWAPs from the ATH and the November low - offering a key support area between 614-616.

Whether this thing resolves higher or breaks down likely centers around the mega cap earnings that are set to be announced this week:

Wednesday (after the close): Tesla, Meta, Microsoft

Thursday (after the close): Apple

The setup undoubtedly favors the bulls right now, especially above 614-616. But that’s not to say that shenanigans won’t occur between now and the weekly close.

As I’ve been saying for weeks now, the bears have a great setup to work with here.

But so long as bulls keep price above the red lines on the chart above, my take remains that the sideways price action we’ve seen since October resembles that of healthy digestion rather than distribution.

How will be know for sure? Just take a look at XLP relative to SPY and how price has coiled between two clear areas of support and resistance over the last few months:

Should we see a breakout from the wedge, then I’ll take that as the clearest sign that tech is becoming the latest beneficiary of healthy rotation.

And if it breaks down - be sure to keep a weather-eye on the wider market, specifically SPY, which desperately needs its MVPs to step up if we’re to see a continuation of the uptrend that’s been in play since October 2022.

Speaking of MVPs…

Here’s how MAGS is set up heading into mega-cap earnings.

For weeks, the focus has been on a potential head-and-shoulders formation that began after November’s all-time highs — a structure that, on the surface, points to downside risk.

But price action has told a more resilient story.

Rather than rolling over, MAGS has held its range and carved out an inverted structure, keeping the broader uptrend intact.

From a risk-reward perspective, the market is still treating this as consolidation within strength, not the start of a meaningful breakdown. Should we see a break below 62.42, then sure - maybe the bears are onto something. But until that happens, aligning with the macro trend (up and to the right) becomes the obvious play.

Software: not dead yet

One area that’s likely to see a reversion to the mean should tech break higher is software (IGV, shown above).

For months this thing has been beaten up - with key holdings Microsoft, Palantir and Salesforce stumbling to multi-week lows since hitting fresh highs late last year.

But just look where buyers stepped in last week - note the green zone on the chart denoting the 161.80 and 178.60 ‘golden pocket’.

Should this area hold over the coming days, I’m not ruling out a rally here - with the obvious stop being last week’s low.

Should this rally play out as I’m expecting, then don’t be surprised to see crypto catch a bid too…

Over the past year, Bitcoin and software have moved in the same emotional lane — both behaving less like isolated assets and more like expressions of the same underlying force: liquidity and risk appetite.

If Microsoft’s earnings this week ignite a bid in software, the signal extends beyond a single stock or sector: reinforcing the idea that capital is once again willing to chase long-duration growth and future-facing themes.

In simple terms: strength in software can act as a green light for broader risk-taking.

If IGV pushes higher on the back of MSFT, Bitcoin’s relative strength suggests it may not be far behind — not because one drives the other, but because both respond to the same shift in market psychology.

The handhold, once again, is confidence. If it holds, the climb tends to continue.

Names to watch here are obvious: MSFT, BTC, COIN, BMNR, RIOT, MSTR - all of which have taken a swift and painful beating over the last few months.

Whether the beating ends this week or next, nobody knows for sure. But with big tech earnings offering the bulls a rare handhold this week, I’m not ruling out a comeback.

XLC - not a bad place to be?

Another area I’m monitoring for signs of life is communications, specifically XLC - which holds META, Netflix and Google as it’s three largest holdings.

Over the last few months, Google has held this thing up pretty much on its own, with both Meta and Netflix falling spectacularly from their prior highs.

But just take a look at the Meta chart heading into earnings:

To me, this thing looks primed for a big move - and after making a higher low on the daily timeframe last week, I wouldn’t want to be too bearish on this ticker - or XLC - heading into earnings.

Closing thoughts

When it comes to positioning, my preference is always to look where everyone else isn’t. Which may explain why areas such as energy and small-caps haven’t had much of a mention this week.

That’s not to say I’m bearish on either — far from it. Instead, it’s a reflection of where the immediate battleground lies.

Right now, the market’s attention — and its capital — is fixed on whether mega-cap tech can provide the thrust needed to lift indices into open air.

If that happens, leadership tends to broaden, not narrow. And when it does, the quieter corners of the market — energy, small-caps, and the rest of the supporting cast — often find their moment in the sun.

The same rings true for gold and silver — two areas that have already delivered spectacular moves over the past few months.

In Free Solo, the summit isn’t reached by following the crowd. It’s reached by choosing the next handhold with intent, long before anyone else sees it.

That’s where I prefer to climb.

Have a great week.

Best,

Alex

Disclaimer: This newsletter is for informational and educational purposes only and does not constitute financial, investment, or trading advice. Markets involve risk, and past performance is not indicative of future results. Always do your own research, assess your personal circumstances, and consult a qualified financial professional before making any investment decisions.