Market Recap
Last week we highlighted how $QQQ had been trading in a tightly coiled range since mid-August, with the potential for a breakout following the FOMC reaction.
The week started strongly, with $QQQ rallying nearly 3% on Monday. However, the market came under pressure midweek as longer-term Treasury yields continued to rise, before yields finally pulled back on Friday.
Financials saw a sharp selloff on Tuesday as concerns emerged over the potential disruption from Meta’s new Muse AI agent. Analysts highlighted how AI agents could threaten traditional wealth management businesses by automating financial planning, comparing investment products and reducing the customer loyalty that allows firms to maintain higher fees. The broader financial sector finished Tuesday down 2%.
Watchlist
$BE showed notable strength on Friday, particularly after gapping down on Thursday following news of Oracle’s data centre delays. The stock quickly recovered and went on to make new highs.
$SMCI is also beginning to trend out of its recent consolidation range, supported by broader strength across the AI hardware group.
Following the launch and growing popularity of Meta’s Muse, attention is turning towards the hardware required to support AI agents, particularly CPUs and memory.
$AMD remains the undisputed liquid leader in the CPU space, while $INTC has also been performing well.
In memory, $SKHY looks to be consolidating near its highs and remains one to watch for a potential continuation.
$MSFT closed near the highs of its recent range on Friday, gaining 3.7% following the announcement of a major Copilot overhaul. The update introduces Code, which allows users to build applications using natural language, and Autopilot, a persistent AI agent capable of carrying out tasks autonomously.
$IONQ remains near the highs of its recent PR-driven gap, with quantum computing another group worth keeping an eye on.
$MRNA has been trending strongly since breaking above $150. While there is nothing particularly actionable at current levels, the sustained momentum makes it worth keeping on the radar.
$TEM continues to leg higher following its initial sympathy breakout alongside $MRNA, with momentum in the biotech group remaining strong.
Closing Thoughts
$QQQ broke out to test its prior all-time highs before consolidating over the last three sessions. Price action remains constructive, with technology leading the rally, as we would typically expect in a healthy bull market.
Meanwhile, $IWM remains under pressure as elevated interest rates continue to weigh more heavily on smaller, unprofitable companies.
The main concern with the current market is the weak breadth and overall lack of charts setting up to participate in the rally. However, things can change quickly from one session to the next, particularly if the broader market continues to hold up.
Until we see participation broaden, the focus remains on the stocks showing the strongest relative strength and momentum.
If you enjoyed this read, please consider leaving a like on the post, and let me know in the comments if I missed anything or what you’re watching for this week!
P.S.
If you haven’t checked out the Valhalla Portal yet, it’s where I track catalysts, setups, and market activity in real time - a live feed of everything that moves the tape, built for the community. I’ll be doing a dedicated post soon walking through all the features in detail, so stay tuned for that. In the meantime, you can check it out here: