Bifurcation & Breakouts
RLT Newsletter
This market simply will not slow down and is once again pushing into new all-time highs. The largest pullback we have seen so far lasted just three days and dropped only 2.4%. The price action is tracking very closely with the vertical rallies we saw in both 2024 and 2025, and if those analogs continue to play out, this market should keep grinding higher before any meaningful correction shows up.
The next major target on QQQ sits in the $765-$770 area, roughly another 4% higher from here. In a market moving like this, that kind of move could happen in four trading days, though it will more likely take a couple of weeks. On SPY, the next major level does not come in until around $810. That one will take longer, and you would expect at least some kind of pullback before a move like that fully plays out. At this point though, almost anything seems possible.
Thursday was a strong day for the indexes and several individual names, but there is still massive bifurcation happening under the surface, including within the Trillion Dollar Titans. Speaking of the Trillion Dollar Titans, MU is now one of the cool kids with a valuation just over one trillion dollars. It carries roughly a 4% weighting in QQQ and has become the ETF’s fifth-largest holding.
The path to higher prices is still very much intact. NVDA and GOOGL need to hold their key support levels, AAPL needs to keep grinding higher or consolidate, AMZN needs to break out in its most bullish 2020 patern, and MSFT and META both need to break out and continue higher. Throw in AVGO earnings potentially pouring gasoline on the AI trade again, and enthusiasm could accelerate quickly.
Across the mega caps, the risk-to-reward still looks solid on a number of the names. As long as $730 on SPY continues to hold, there is no reason the next several weeks cannot stay bullish.
SPY Daily Chart
MSFT
The last MSFT write-up was back on May 7th, “Patience” and that bullish thesis is still completely intact. The stock never violated the main support level and has now given us more than 20 days to accumulate. We have seen a very tight consolidation right around the 100-day SMA and near the point of control when anchoring volume all the way back to the 2021 highs.
Thursday’s candle finally gave us a strong push higher on volume with a strong close. That is the first time we have seen that kind of action since earnings, and it looks like the beginning of a move toward $443 and eventually into the $480 area where the major gap fill sits.
The protective put trigger is now moving up to any close below Thursday’s candle and below the 100-day SMA. If that happens, I buy puts and wait. Otherwise, I will stay patient, because MSFT is still doing exactly what I wanted it to.
If the stock runs into resistance at the anchored VWAP from the all-time highs, currently around $432, we could see this choppy consolidation continue for a bit longer. That would likely be an opportunity to keep adding, as long as the stock does not lose the 100-day SMA and Thursday’s low.
MSFT Daily Chart
GOOGL
GOOGL is a very interesting chart right now. After that clean inverted hammer and all-time high trap setup, I got short for a few days before closing this week for a small gain. The stock simply refused to break below key support, which told me everything I needed to know.
At this point the price action looks much more like a bull flag than a topping pattern, and given the overall strength of this market, GOOGL likely still has a path toward the $420 area and possibly higher
What makes this chart especially clean is how well-defined the levels are. A break below $382 likely sends the stock down into the earnings gap fill. But if it continues holding above that level, the odds favor continuation higher into the larger Fibonacci targets.
With GOOGL sitting roughly $8.00 above key support right now, it creates a solid setup for bullish swing trades while also giving a clear line in the sand to flip bearish if support eventually gives way.
From a longer-term perspective, any move back down into the $355 gap fill area, near prior highs and long-term moving averages, should set up a very compelling buying opportunity if it develops.
GOOGL Daily Chart
