Our top pick (after cash), short QQQ, paid dividends yesterday and helped many community members achieve a green day. QQQ dropped 2% right into our $635 to $665 swing target range. Our other top picks, ECHO and OXY also did well. Although ECHO closed red, there was a significant mid-day pop which gave traders an opportunity to reduce their position (as alerted in our Discord).

_{*This newsletter does not constitute investment advice. Past performance is not indicative of future results. StoryTrading contributors may buy, sell, or liquidate positions discussed at any time without notice. See storytrading.com/disclaimer for important disclosures. Our exclusive Discord Edition is delivered to Discord members before 7:00 AM ET every trading day.}

Yesterday, QQQ declined for a 6th consecutive day under our Red Alert into our $635 to $665 swing target range.

It was an eventful day with the FOMC decision and presser, followed by MSFT and META earnings.

First, the FOMC left rates unchanged but there were notably three dissenters who wanted to raise rates by 0.25%. Then, during the FOMC presser, Chairman Kevin Warsh clarified a statement from the prior meeting saying the inflation goal isn’t 2.99% or lower, it’s 2%. This was our signal to short IWM during our live stream. However, the market didn’t dive until towards the end of the presser after multiple questioners put Kevin Warsh into a corner where he was awkwardly unable to explain why the committee wouldn’t raise rates at this meeting when it seemed to match his own criteria he laid out moments earlier to raise rates.

This resulted in TLT collapsing in the afternoon (rates rising) which prompted us to short more IWM. As a result, IWM finally broke support yesterday, and closed below the 50 DMA for the first time, finally succumbing to the gravity which already previously took QQQ and SPY below that key level.

Then came MSFT and META earnings in the afternoon. While MSFT had a good report, neither raised AI Capex spend for 2026 and META missed earnings significantly, reinforcing the narrative started with GOOGL regarding impact on cash flow and return on AI Capex spend.

As a result of all these events, we have finally entered the START of the capitulation phase. It’s notable to remind our readers that the current drawdown is all about deleveraging due to forced margin selling and in our experience, when this starts, it doesn’t stop until you reach a crescendo and capitulation event at, or, more often, somewhat below key technical support levels.

As such, we believe QQQ will likely head towards $635 support over the next few days. Additionally, the continued downward move in TLT this morning gives us confidence that IWM will next move to $287 after breaking key support yesterday.

It is perhaps possible we have a reprieve today as the market waits for AAPL earnings tonight but given the recent parabolic move in AAPL, we believe the stock could sell off tomorrow even on a good report and catalyze the final leg lower towards our QQQ support levels by Monday or Tuesday morning. However, out of respect for AAPL, the better bet at this time might be short IWM due to the factors noted above.

Accordingly, we remain at Red Alert.

Today’s Signal: 🔴

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