Escalator Down, Rocket Ship Up
RLT Newsletter
The market blasted higher on Tuesday, extending the gains from the past few days. Once again, it’s been an absolute rocket ship off the lows. Lately this market’s MO has been escalator down, rocket ship up.
At this point we’ve mirrored the March 2026 bottom almost perfectly. I don’t think we have quite as far to run this time, but I also don’t think this rally is finished. If I had to pinpoint where we are in that March 2026 analog, I’d say we’re somewhere around April 20, 2026. If that comparison continues to hold, we should see a period of consolidation over the next several days followed by another leg higher toward my upside targets.
One thing many traders struggle with is believing new all time highs are somehow bearish. I know we all want to buy low and sell high, but history shows that when markets break into new highs with strength, they tend to keep going. That’s especially true when the breakout is backed by expanding earnings and improving market breadth.
If this rally were only being driven by the Trillion Dollar Titans, I’d be a lot less bullish. But that’s not what we’re seeing. Strength is showing up across nearly every sector, including financials, transports, consumer discretionary, materials, industrials, and health care.
XLF Daily Chart
The percentage of SPY stocks trading above their 200 day SMA is now at its highest level since the start of 2025. That tells me this bull market is being powered by a lot more than one or two names, and that’s exactly the kind of participation you want to see if a rally is going to have staying power.
S&P Stocks Above 200-Day Average
That said, SPY just closed completely outside its upper Bollinger Band. It’s not an indicator I use often, but it can be useful for flagging when an extremely strong move is due for a pause. We saw exactly that on Wednesday, when the market pulled back and retested Tuesday’s huge bull candle. QQQ retraced roughly 50% of Tuesday’s move and closed with a large bearish candle.
Locking in Profits While Maintaining the Bull Thesis
I know March and April taught everyone that stocks only go up and you should never sell, but I'm not about to change my entire trading philosophy because of a once-in-20-years market move. I took partial profits on Wednesday's open and put a Super Collar on my QQQ position.
That means every share I bought around the 100 day SMA is now a guaranteed winner.
And yes, I posted early Wednesday morning inside the Swing Trade Channel at Real Life Trading that I thought it was a great time to take some profits and lock in collars.
When an index rallies 10% in five trading days and you've made what many investors hope to make in an entire year in just one week, taking at least some profits is simply the responsible thing to do. Don’t let the fear of selling too early stop you from locking in hard earned gains.
I still believe this market goes higher, and I still plan on adding on pullbacks. Those two ideas aren't contradictory. You can reduce risk after a huge move while still holding a bullish intermediate-term outlook. After all, with my QQQ Super Collar, my upside isn't capped until $770, which is the strike price on the covered calls I sold. That still leaves plenty of room for this market to run.
My current targets are: QQQ between $770 and $815 and SPY between $800 and $825 over the next six to eight weeks. As long as QQQ keeps holding above its 100 day SMA, my intermediate term bullish thesis stays intact.
I must note that one key detail of the QQQ chart which some have missed is the island reversal on QQQ. That makes the gap around $700 a very important support level.
If QQQ breaks back below $700 this week, my bearish spidey senses will start tingling. There’s not much reason for the bulls to give up that level so quickly after such a powerful breakout. A retest is perfectly healthy, but I want to see buyers step in aggressively if we get there.
QQQ Daily Chart
Apple Filling the Gap
The next piece of the puzzle may come from Nvidia and Apple. They’re the two largest companies in the world, and if both can move higher from here, they should give the broader market another tailwind.
Apple’s earning reaction has been especially interesting. Despite reporting solid earnings, the stock gapped lower. We’ve seen this play out recently in the big boys very recently. GOOGL, META, and TSM all had gap downs that got filled pretty quickly. Apple has also been trading decoupled from a lot of the other mega cap tech names lately.
If the market pulls back while stocks like GOOGL, MSFT, and AMZN keep recovering, we could see money rotate into Apple and help fill that earnings gap.
If Apple keeps sliding instead, I’ll be looking to buy closer to the 100 day SMA and the prior all time high around $290. That would be roughly a 15% pullback, which has historically been a very attractive spot to start building a position, assuming the broader technical picture stays healthy.
AAPL Daily Chart
