REGIME

MARKET REGIME: RED/DEFENSIVE, but improving

• QQQ cleared its 21-EMA yesterday.

• The next test for the Qs will be the confluence zone around ~714-715 where the down trendline and the 50-day meet.

• We still need a follow-through day to get aggressive.

• What a day yesterday was, and it mattered. Not one or two names but the whole tape leaned green. We haven’t seen a risk-on rally like that in weeks. That’s the kind of action that lets us get incrementally more positive and start putting money to work, one name at a time.

• Speculative themes all moved up together: Uranium , Solar , Software , , Copper Miners , Silver Miners , Gold , Industrials , Technology .

• We saw the Magnificent 7 , have a +2% day, and hold above all key moving averages.

What I find most interesting is that Semiconductors barely participated & was a notable laggard. I assume traders are waiting for AMD & ALAB earnings tonight. Software led, and cybersecurity gave us the strongest stock on the tape in CRWD.

THE RTL BOOK | 8/3 RECAP

THE BOOK, Tuesday morning.

CRWD | +4.7% gain | ER 9/1

The leading cybersecurity stock and one of the largest holdings in CIBR and HACK. Bought 189.70, added through the day high at 197.13. The stop has been raised twice and the trade now risks roughly breakeven while sitting at +2.4R.

Everyone says it’s expensive. Every real leader I’ve ever owned was expensive. Nothing to do here except keep raising the stop.

NBIS | +5.3% gain | ER 8/12

Trade of the day, and it all started with a 7% gap down at the open that got reversed. I bought the 21-day reclaim; 199 was the line that mattered. The stop got raised twice and now sits above my entry.

Now the trade cannot be a loss. That’s the whole system in one line. I’ll decide before earnings on 8/12 if we want to hold into the print.

SNOW | +0.2% gain | ER 8/26

Did nothing wrong. Bought the breakout today, it retested the level and held it, closed up 4.9% on the day and flat to my entry. Cleanest chart in software right now.

If yesterday’s follow-through confirms, this is exactly the kind of name that should lead it.

HPE | (−0.3%) | half size | ER 9/2

Half size here. The first breakout attempt failed on light volume, so I wasn't interested until real volume showed up yesterday afternoon. AMD reports tonight, which matters for the entire AI infrastructure trade.

If HPE holds after the print, I'll likely complete the position.

WHAT WE’RE WATCHING TODAY

A Follow-Through Day (1%+ on rising volume) along with a recapture of the QQQ’s downtrend line and the 50-day.

• DELL | Seeing strength with HPE. Reclaimed its 10/21-day Monday and closed 429.23, below Friday’s high. Through it on real volume and it’s potentially the next add.

• GDX | The rotation idea from Friday, 76.05 vs the 76.91 trigger. Needs the 10/21-day bullish cross and volume on the break.

• RNG | Strong momentum, thinly traded. Watching 59.10.

• FTNT | Cleared 162.70 Monday but volume never confirmed, so we passed. Want to see participation here before adding.

• STX | Still 7% below its 890.50 level. Needs a few more days.

NEXT

1. The follow-through day ideally today but certainty this week. QQQ up 1%+ on volume higher than yesterday. That’s the green light to get aggressive.

2. The QQQ reclaims the ~714 confluence zone (down trendline + 50-day).

3. Stops honored, no exceptions. NBIS rides risk-free into 8/12; CRWD, SNOW, HPE work or they don’t, and the stops/charts decide, not me.

If the follow-through comes, you’ll hear it from me the minute it does. If it doesn’t, we hold what we’ve got and stay patient. Either way, the levels are set and the risk is known.

See you in the chat.

— Nick

We want to see the Qs hold and then reclaim its 50-day for a signal an intermediate-term bottom is in.

July’s chop is finally behind us. We sat most of it out on purpose, and the one trade we did take, $CRWD on Friday, closed the week above our entry. Cybersecurity has been leading the Software sector off the lows and is starting to show some serious follow through while the AI trade sold off in July.

But the market has to prove itself this week. The QQQ just reclaimed its 10-day, and the first valid follow-through day window opens Tuesday. This week tells us if the bottom is real. I cover our trading game plan so we’re prepared for all scenarios.

Here’s what’s inside:

• A review of our current portfolio & this week’s focus list.

• A breakdown of the Software leaders by sub-group: enterprise, cloud, cybersecurity, inference. The group closed Friday a quarter percent under its 200-day.

• The rotation back into the Hyperscaler Mega-Caps now that these earnings reports are finally showing real ROI on the AI spend. The market is laser focused on AI profitability. Watching AMZN MSFT GOOGL.

• Two concerning topics that could derail the rally: the 30-year yield just broke a trendline that held since 1988, and energy prices are creeping toward the danger zone.

• Also watching Leopold’s top holdings: NBIS, SNDK, MU, CRWV, BE. Friday’s first tag of the 21-days got sold hard, which is exactly why we are just watching for now. Attempt one at resistance usually fails, and we’re interested in what holds after it.

• Earnings I care about this week: SNDK, HUT, LLY, TXG, AMD, AAOI, STRL, ALAB, DDOG, NET

WHERE THE INDEXES SIT

For now, the QQQ daily chart just reclaimed its 10-day moving average, closing at 687.99 with the 10-day sitting at 687.75. That’s a very important first step in the right direction. Importantly, the QQQ also just put in its first higher low. The QQQ’s 21-day EMA is right above at 697, then the 50-day at 715.

Let’s see if this week can give us a follow-through day (index up over 1% on higher volume signaling a new uptrend). If we can reclaim that 50-day moving average, we will start to get more aggressive.

The S&P has held up a lot better than the QQQ. It’s now above all of its key moving averages, and it looks like this thing just wants to keep going.

Worth watching $GOOGL as it sits at 356 against its 50-day at 359. If the generals start reclaiming their institutional lines, the whole bottom thesis gets easier to trust.

THE RTL BOOK

CrowdStrike is a top holding in the cybersecurity ETFs. We took our position Friday as it broke out above its downtrend line, got knocked back, then reclaimed and broke out again the same day. That’s exactly what you want to see. Serious relative strength in this name, on a day the group had every excuse to stay down. Earnings September 1st, so this one has room to work.

We are waiting for the Qs to reclaim their 21-ema and 50-dma before getting more aggressive in adding exposure.

THE INSTITUTIONAL LINE: THE 50-DAY

William O’Neil looked for leading indexes and leading stocks to repeatedly find support at or just above their rising 50-day moving averages. He called this the institutional line. A decisive break below the 50-day on heavy volume that can’t recover was a major red flag: it means the mutual funds and pension funds are aggressively selling.

The moving averages tell you where the index sits now. O’Neil used distribution days to predict when an index was about to break those lines. To spot a top, he tracked sessions where a major index closed lower than the previous day on higher volume.

Four or five distinct distribution days inside a two-to-three-week window was his tipping point, a warning that the trend is topping even while the index still sits above its 50-day.

One more O’Neil rule that matters right here: don’t buy the dip, and never average down, while the major indexes trade below a falling 50-day or 200-day moving average. He waited for a confirmed follow-through day to signal a new valid uptrend before putting money to work.

THE TWO BLACK SWANS

Our two biggest concerns that could derail a rally are longer-dated Treasury yields breaking out to new highs and higher oil prices. We think this is a potential black-swan issue for markets and we are watching it closely. Friday morning was the live demonstration: the 30-year probed its highs and every long-duration software name got hit at once, before the indexes clawed it all back by the close.

1. Yield risk. The breakout in longer-dated treasury yields is concerning. The long-term trend line that hasn’t broken resistance since tracking started in 1988 broke out. Fibonacci levels point to over ~7% yield if the breakout keeps running.

   1. A lot of what’s turning up is rate-sensitive: financials, real estate, homebuilders coming out of stage 1 bases. And every long-duration growth name on our list lives off the same yields. All of it depends on the bond market behaving, and the bond market is not cooperating. $TLT closed 36 cents off its 52-week low, below every falling average. Long yields are pressing their highs.

   2. If yields spike from here, the new leadership gets cut down before it matures. Homebuilders may already be feeling it, $XHB closed below its 50-day while $KRE sits 2.6% off highs. Watch $TLT. A break of 81.89 and the rate-sensitive names on our list get a shorter leash.

2. Oil risk. Brent pushed higher again Friday and closed near 88. Energy is a group we’d trade long but the risk is what crude at these levels does to everything else. Oil up here feeds the inflation prints, inflation feeds yields, and yields are the thread this whole rotation hangs by. Somewhere above 100 it stops being an energy trade and becomes a market problem. Until then energy stays a group we trade long, and crude stays a number we check every morning before trusting the rest of the list.

THE HYPERSCALER PRINTS: ROI IS THE NARRATIVE NOW

Big tech earnings finally showed us what this market cares about. All three hyperscalers are growing cloud faster than last quarter. Google Cloud grew 82%, Azure 43%, and AWS 37% against 31% expected, its fastest growth since 2021. They are all spending historic amounts too. Amazon guided 2026 capex to 220 billion and called out higher memory prices as part of the reason.

Here’s how the market sorted them out. If the spend is clearly driving revenue, you got bought.

• $AMZN gapped up 15% Friday and closed at 271.58, 2.5% off all-time highs. That’s now the strongest big-cap chart in the market.

• $MSFT gapped up midweek on the Azure number and closed the week at 464.72, repairing nicely.

• $GOOGL actually got sold on its capex guide despite growing cloud 82%, then spent the rest of the week rallying back to its 50-day at 356.

• $META spent like the others but doesn’t have a usage-based revenue line to point at, and it gapped down hard. The market is grading AI capex print by print now, and it only cares about ROI.

The read-throughs are what matter for us. Consumption is accelerating at all three clouds, and that’s the tide behind the software names on our list. $SNOW, $DDOG and $NET all bill by usage, same as AWS. And Amazon calling out memory costs inside a 220 billion capex guide tells you the demand behind the memory trade is real, even while $MU and $SNDK are broken charts. Demand intact and charts dead can both be true at once. We trade the charts.

Every AI name below the hyperscalers gets asked the same question next. The neoclouds and data center names either show the revenue line the spend maps to or they get sold. One more thing worth noting: if this correction repairs, the generals lead it. $AMZN sitting 2.5% off its highs is showing you the right side first.

SOFTWARE: ONE WORD, FOUR DIFFERENT BUSINESSES

$SNOW, $NET, $DDOG, $CRWD, $PANW, $RNG, $MSFT

Software $IGV started showing legitimate follow-through this week, the first group to do it since the top. $IGV closed Friday within a quarter percent of its 200-day. Through that line and this group is back in Stage 2 territory.

Most investors treat software as one group. It’s actually four. Enterprise apps are the tools companies run on, sold per seat: $MSFT, and the comms names like $RNG. Cloud and data infrastructure is the layer underneath, billed on usage: $SNOW, $DDOG, $NET.

Cybersecurity ($CIBR) is its own animal with an incredibly strong looking chart. We are focused on leaders $CRWD, $PANW. And inference is the new fourth bucket, the business of actually running AI models, which is where the next wave of spend goes after the buildout.

The AI angle splits the group in two. Usage-billed names get paid more every time an AI workload runs. Per-seat names have to prove AI doesn’t shrink the seat count. The market is already grading this. $NOW, the old textbook enterprise leader, sits more than 40% off its highs. Every name on our list is on the right side of that split.

The charts agree. $SNOW closed 3.6% off highs, still the best chart in software, reports 8/26.

$DDOG closed at 268 with its 200-day back at 167, that’s the kind of year it’s having, and it monitors the AI apps everyone is shipping.

$NET is 5% off highs into its Thursday print. I covered the inference thesis Wednesday and nothing has changed: they handle close to 20% of the web’s sites and are the clear early leader in serving AI at the edge.

Security is quietly just as strong. $CRWD closed up 3% Friday, 12% off its highs, and $PANW is 10% off, now a $200B+ company. Both are consolidating dozens of point products into platforms, which is why the group compounds through everything. When CIOs get nervous about AI, security is the first check they write.

$MSFT is the tell for the whole complex. It corrected 16% off the 555 high, then reclaimed the 50-day and closed up 3% Friday. Azure is the biggest inference business on earth, so when $MSFT talks AI demand, the entire group moves. Watch it as the group’s regime gauge as much as a stock.

$RNG is the flyer on the list. A $4.8B phone-system company everyone left for dead, now up more than double off its 52-week low on an AI voice turnaround, 6% off highs. It is a different class of trade than the rest of this list. Thin, high beta, the momentum is the story. Size with respect.

What would change my mind: $IGV losing its relative strength against $QQQ, or the August prints getting sold. Four of these report this month, and $CRWD follows 9/1. We don’t chase into reports. The post-print pullbacks are where this list gets actionable.

THE BOUNCE TRADE: OVERSOLD PRIOR LEADERS

The other side of the tape is the old AI leadership. Memory took heavy red volume all week into earnings, and the forced liquidation of a major AI fund put massive reversal candles under $BE, $NBIS, and $SNDK. That’s the kind of flush that usually marks a tradeable low.

$MU is the cleanest example. At 823 it sits 34% off its highs with the 10-day up at 870 and the 21-day near 910. That’s a 6 to 10% bounce sitting right there if the market cooperates.

$NBIS and $BE are the same trade a step further along. Both already reclaimed their 10-days on the flush volume. $NBIS at 190 has the 21-day at 199, and its 8/12 report caps how long the trade gets. $BE at 206 has the 21-day near 220 and the real level at 230, and with no report until late October it’s the one bounce candidate with a clean calendar. Same terms for all of them: capped expectations, fast exits.

We’ll play these, but with expectations capped and exits fast. These are pullback trades in poor conditions, quick in and out, exactly the class our rules save for tapes like this. Broken charts carry overhead supply: every rally runs into holders waiting to get out at breakeven. The moving averages above are the target, not the launch pad.

Don’t expect to get very far. A bounce in $MU or the semis is a trade measured in days, not the start of new leadership. New leadership looks like $SNOW at highs, or $TER pushing through a rising 50-day. The oversold names earn their way back onto the real list the slow way: base for weeks, reclaim the 50-day, hold it. Until then these are rentals. And the calendar guards the door anyway: $AMD reports Tuesday, $SNDK Wednesday. Nothing before the prints.

THE LIST

$SNOW is the one we think could lead the market into this new rally IF it’s sustained. Very encouraging action all week.

⭐ $SNOW — the leader. All-time high Friday at 304.17 on the group’s biggest volume. ER 8/26.📍 Ideal: 292–296, holding the breakout zone · 🚀 Aggressive: 304.30, through Friday’s high · 🛑 Stop zone: 283–285

⭐ closed 331.83, through the 326.40 level and above every moving average. ER 8/17. 📍 Ideal: 326.50–330 on the hold · 🚀 Aggressive: 334.10 · 🛑 Stop zone: 319.50, Friday’s low

⭐ $FTNT — earnings behind it, failed gap repaired, closed stacked. ER not until November. 📍 Ideal: 158–160 retest · 🚀 Aggressive: 162.70 · 🛑 Stop zone: 153.60, Friday’s low

⭐$AMZN (leveraged vehicle: $AMZU) — the ROI rotation in one chart: +15% on its report, triple volume, 2.5% off all-time highs. Earnings pivot forming. 📍 Ideal: 265–268, first orderly pause at the gap zone · 🚀 Aggressive: 273.35, fresh highs · 🛑 Stop zone: 262, the gap-day low

⭐$STX — basing under the 50-day inside the memory theme. Wild Friday (921 to 837 and back to 856) but the range held. ER 10/28. 📍 Ideal: 850–860 base · 🚀 Aggressive: 890.50, the 50-day reclaim · ➕ Add: 921.90 · 🛑 Stop zone: 837, Friday’s low

WATCHING, NOT READY

• $MU — needs its 10-day back, ~870, before anything

• $NET — post-earnings only, reports Thursday. 291 is the line after the print

• $DELL — needs to reclaim the 10/21-day around 408–410 first

• $TER — 380, the rising 50-day

• $BE — 230 is the real level

• $NBIS — the 21-day at 199, reports 8/12

• $HUT and $AMD — both report Tuesday. After the print

• $RNG — quiet base 6% off highs, 59.10 is the door

• $GDXU — only if GDX holds 72.18

TRIGGERS THIS WEEK

1. Tuesday: the follow-through-day window opens. A 1%+ index gain on strong volume and we scale up, one position at a time, from the one name we hold toward four or five.

2. The QQQ ladder: 697, then 715. Reclaim the 50-day and we will be very happy.

3. The veto: 30-year yields or oil breaking out puts everything above back on hold, no matter how good the charts look.

4. The earnings gauntlet: $AMD and $HUT Tuesday, $SNDK Wednesday, $NET and $DDOG Thursday. $NBIS follows on 8/12. We don’t front-run prints. We trade what they leave behind.

FINAL THOUGHTS

July was a bad month for the market and a good month for the process. We sat out the chop, took one trade on the last day, and it’s already working. That patience wasn’t fun. It rarely is.

This week the market gets to vote. If Tuesday gives us a real follow-through day, we start pressing, one name at a time, right down the list above. If it doesn’t, we keep doing what we did in July and wait.

Either way, you’ll hear it from us the minute it happens.

See you in the chat.

— Nick

If you’re new here: the complete system behind every level in this letter posted yesterday. Ten minutes, eight rules, nothing held back. Read it here: THE RIDE THE LEADERS TRADING SYSTEM

On Friday morning I bought CrowdStrike (CRWD) at 189.70. Subscribers had the alert immediately: the entry, the stop at 184.16, the reason. That’s the whole service in one trade.

We hunt the strongest stocks in the market’s leading groups and swing trade them off the daily chart, holding winners anywhere from a week to a couple of months. Risk comes first: losses stay small, stops get honored, and winners get sold into strength with the moving averages keeping us in the biggest ones. Some weeks the best position is cash. We’re fine with that.

Below are the eight rules that run all of it, starting with the one that governs the others: market direction.

Rule 1. Market Direction.

Our most important rule, market direction, the “M” in CAN SLIM. As William O’Neil would say, going against the market trend is the easiest way to lose your capital.

We always respect when an index breaks its 50-day, and we pay even more attention when it’s unable to reclaim it shortly after.

History shows you do not want to own stocks when the indexes are trading below and unable to recapture their 50-day moving averages. We save breakout buying for the best conditions, i.e. when the market is in a healthy uptrend above its key moving averages. We save pullback buying for poor market conditions.

Every issue starts with our market regime. It comes from three things:

• The trend. Where the index sits against its 50-day and which way that line is sloping.

• Institutional selling. Distribution days in the last 5 weeks: sessions where the market falls on rising volume. That’s big money quietly unloading, and it shows up here before it shows up in headlines. A handful of these inside a few weeks has preceded almost every serious correction.

• Breadth & the average stock. How many stocks are making big up moves versus big down moves, and whether that’s improving or fading. The indexes can be held up by a few giants while the average stock breaks down. We trust the average stock over the index every time. Our own research on 22 years of breakouts found they get paid when breadth is resting, not racing.

RED doesn’t mean nothing can work. History’s biggest winners often emerge before the indexes fully recover. But in RED, we’re only interested in exceptional leaders breaking to new highs from proper bases or a new leading sector waking up from a long base. Those start small until the trend proves itself. Everything else goes on the watchlist until the market improves.

Rule 2. We buy leaders, not laggards.

Our process leads us to the strongest leading stocks in the leading industry groups.

We have learned over time that expecting a laggard to catch up to the leader rarely works. Our chips go on the leader, never the runner-up.

We watch for clues institutions are getting involved, typically months before the average investor catches wind. They leave clues behind. So understanding how to read price action and volume is imperative as it can help you spot these minor changes.

We’re also not looking for the cheapest stock in the group or the one that hasn’t moved yet. We’d rather own the company attracting the biggest institutional demand than hope money rotates into the rest later.

Rule 3. We buy strength because institutions buy strength.

Most people are taught to buy weakness. We do the opposite.

Large institutions don’t build positions all at once. They accumulate over weeks and months. That’s why the strongest stocks often keep getting stronger.

We’d rather pay a little more for a stock proving itself than a little less for one that still has something to prove.

Rule 4. Price has to prove it.

We don’t predict breakouts. We wait for them.

Every setup includes an exact trigger. Until price proves buyers are in control, we do nothing.

No trigger. No trade.

Rule 5. Every trade starts with a plan.

Every setup publishes with a trigger, a stop, and a chase line.

You’ll know exactly where we’re interested, where we’re wrong, and when a move has become extended.

If we take the trade, you’ll know how we’re managing it. Winners get trimmed into strength, and the stop moves up behind them, never down. The rest rides a moving-average trail. Steady institutional leaders earn the 20-day. Faster movers answer to the 10-day. Which line governs depends on how the stock is acting, and when a stock breaks its line, we’re done with it.

If we ever hold through earnings, that’s decided in advance, at reduced size, and you’ll know before the report, never after.

If we pass, you’ll know why.

Rule 6. Cash is a position.

You don’t have to be invested every day to outperform.

Some of the best trades are the ones you never take.

When conditions aren’t there, we’ll happily sit in cash and wait. Protecting capital isn’t avoiding opportunity. It’s preserving it for when the odds are back in our favor.

Rule 7. Small losses are part of the business.

Taking small losses and getting stopped out is a common occurrence in this business.

Investors tend to become emotionally attached to their stocks. O’Neil said it best: there are no good stocks unless they go up in price. That leaves very little room for bias. The strongest stocks, the ones with real velocity and momentum, are usually moving because the market is repricing something fundamental about the business. So when a stock doesn’t go up pretty much right out of the gate, we want to get out and go find one that does. If you hold on to a stock with a loss, hope and ego tend to take over. A tight stop is the reminder that this isn’t a game of hope. Ignoring the market has devastating consequences.

The stop also does our filtering for us. A stock that passed every fundamental and technical test but still won’t go up is telling you something. The stop gets us out while the lesson is still cheap.

Think of it this way. In an ideal world, you buy a stock and it goes up immediately. The price would never come back down to the price you paid for it. Buying low-risk entry points on the strongest stocks in the market makes that a real possibility. So we take our shots at what looks best, knowing plenty of them won’t turn out to be true leaders.

After being in this business for over a decade, I can tell you the true leaders act like leaders right out of the gate. You know the feeling when you’ve caught one, because it’s up 10-20% before you can even add more.

The best traders aren’t right as often as people think. Peter Lynch said that in this business, if you’re good, you’re right six times out of ten. William O’Neil put it closer to half, and Mark Minervini won a U.S. Investing Championship with a batting average right around 50%. Study any great trader’s record and you find the same thing: they weren’t right more often than everyone else. They lost less when they were wrong.

That’s the whole trick of this system. One of my favorite quotes:

Fall in love with your stop losses, not your stocks.

Our stops cap the downside at a few percent per trade. The leaders we’re hunting can run 20, 30, even 50% in a matter of weeks. Do the math on that trade-off: five small stops cost less than one caught leader pays. You can be wrong more often than you’re right and still finish the year well ahead, but only if the losers stay small.

We’re not trying to be right all the time. We’re trying to keep the losers small and give the winners room to grow.

A stopped-out trade isn’t a mistake. Ignoring the stop is.

Rule 8. We tell you what happened.

You’ll never see a highlight reel.

Every week we’ll tell you what triggered, what worked, what failed, what we passed on, and what we learned.

A great process matters more than a great week.

This is the system. Next Sunday: the Playbook. The five setups we trade, with charts, and exactly how winners get sold.

Ride The Leaders is for educational purposes only and should not be considered investment advice. All investing and trading involve risk, including the possible loss of principal. The author may hold positions in securities discussed, as well as other positions not mentioned, and may enter or exit them at any time. Past results do not guarantee future returns.

Market Regime: DEFENSIVE. The Book: 100% cash.

What changes this? QQQ price action above a rising 5-day moving average or a reclaim of the 10/20-day avg with a rising 10-day. All eyes on the Fed today. Nothing about this week has changed the defensive read.

This week AI Memory & Semis continued to sell off on news China’s cheaper LLM models are taking away market share from US providers. The Tech sector as a whole has suffered, but Software appears to be setting up with great relative strength — scroll down to see names with levels we’re watching for entry.

Our updated focus list today is dominated by names in Software, Healthcare, & Industrials. Are these the next AI market leaders?

THE BOOK

The RTL Model Portfolio launches with this issue: 100% cash.

From here forward this section tracks a model portfolio that only takes trades at levels published in these letters, per the letter’s own rules. Every entry and exit gets recorded when it happens and graded in print.

It starts flat. In this tape, that is the position.

We don’t mind not catching the exact bottom. We prefer to stay in cash.

MID-WEEK READ

Sunday’s letter said expect a rip, and don’t trust it. That is exactly what printed. Monday gapped up and got sold. Tuesday the previous leaders got taken apart: $MU down 8.9%, $STX down 8.5%, $DELL down 8.2%, $AMD down 8.1%, $NBIS down 9.7%, $BE down 11.3%.

There is a debate going on about whether semiconductors have peaked or not. We don’t care to debate as nobody can tell the future. We are only focused on reacting to price action, and right now price is headed south, so we are not participating.

The massive derisking in tech is actually encouraging. The sharper down we go, the sharper the rally will be, and that lets us momentum folks take advantage of sharp rallies in leading stocks.

Under the hood this is a different market. $SPY has held up remarkably well and refuses to break down, closing 740.86 Tuesday while $QQQ lost 1.0%. You can see the broader market strength and rotation via the breakout in $RSP.

The rotation beneficiaries have been AI software, energy, financials, real estate, homebuilders and healthcare as the AI bottleneck trade continues to falter. Many of these rate-sensitive names are just coming out of stage 1 bases, and they are low PE type names, not your typical momentum plays. We view this as bullish for the overall market and are watching for signs it can be sustained.

One daily routine that has helped my trading tremendously: checking the top performing industry groups on the IBD Industry Groups report. The list updates daily and it is an easy way to spot new emerging themes and leaders early.

The $QQQ 20-day, published Sunday at 708, has rolled down to 703 and sits 27 points overhead. Same first domino. The repair sequence has not started.

LIST DELTA

Sunday’s five, graded.

Killed.

• HUT never triggered and broke the 102 shelf Tuesday, trading as low as 91.60 before closing 101.14. Off the list until it rebuilds. Reports 8/4.

• MU closed 820.53, well below the 858.90 line in the sand. That is the market’s current answer on memory.

• HPE lost the 46 shelf, traded 43.30, closed 45.59.

• DELL, its bigger twin, closed 392.10, far below the 417 line. Both dead.

No entry.

• ANET never gave the 174-172 hold. Tuesday it traded down to 159.27 and closed at 169.71, back above the 50-day (164.9). It reports Tuesday 8/4. Nothing to do before the print.

• NVDA never printed the 214.40 trigger.

• CIFR never flagged, it just kept pulling back. Reports 8/4.

Worked.

• LLY held the 10-day and turned Monday, exactly the published zone, and closed Tuesday at 1220.66. It ran through the 1207 aggressive level, but that level was published as post-print only. Reports Wednesday 8/5. I don’t chase into a report.

• STLD held its 50-day reclaim and went, closing 259.74 after a 3.8% Tuesday, through Friday’s 247.68 high.

• KRE is still live at 76.79, above the 10-day, trigger untouched at 78.10.

The Updated Focus List

• 📍 Ideal Buy Zone: post-print, the 10-day (~1,189) holds and turns

• 🚀 Aggressive: >1,207 on volume, post-print only

• ➕ Add-on: tight day above the range break

• 🛑 Stop Zone: ~1,175, below the 20-day. Character changed

• 📍 Ideal Buy Zone: 299-301 retest holds

• 🚀 Aggressive: >306.20 on volume

• 🛑 Stop Zone: ~294.25

• 📍 Ideal Buy Zone: first 10-day touch (~51-53)

• 🚀 Aggressive: >56.50 on volume

• 🛑 Stop Zone: ~48.85

• 📍 Ideal Buy Zone: 268-269 holds

• 🚀 Aggressive: >279.60 on volume

• ➕ Add-on: >285 (ATH)

• 🛑 Stop Zone: ~263.90

• 📍 Ideal Buy Zone: 10-day pullback (~20.60)

• 🚀 Aggressive: >22.25 on volume

• 🛑 Stop Zone: ~20.90 (breakout day low)

• 📍 Ideal Buy Zone: 168-170 retest holds

• 🚀 Aggressive: >175.70 only on ≥ 20% RVOL

• 🛑 Stop Zone: ~163.35

The Groups Behind the List

Software (SNOW, NET, DDOG, PANW). An interesting group to be watching, and a potentially new group of leaders forming. Many investors describe software as one group, which isn’t the case. Cloud software and data management is SNOW and $DDOG. The edge network and security layer is NET and PANW. IGV closed green Tuesday while QQ fell 1%.

NET continues to be on my radar as the next potential bottleneck beneficiary with their focus on the inference market. It reports 8/6. Cloudflare handles close to 20% of web traffic. When you visit a website it loads incredibly fast because it’s pulled from one of their nearby servers. You’re going to hear quite a bit about inference in the coming months as we head into 2027, and NET is the clear leader there. I look at NET a bit like what BE was for data centers last year. Beth Kindig has been watching NET for years.

DDOG previously led this group and looks ready to get going again. It also reports 8/6.

We have seen an inverse correlation between AI software and AI memory/hardware. It’ll be interesting to see if both groups can lead at the same time.

Retail electronics ($BBY). Another top IBD group showing relative strength as a broadening beneficiary. Names like $BBY are breaking out as investors hide in safer low PE names. Stage 1 breakout.

Telecom ($AAPL, $OOMA). $AAPL leads the group. Institutions treat the stock as an alternative to treasuries or a proxy for cash, a true safe haven stock, if that exists. It does carry a better credit rating than the United States government, so I get it. Is the whole group just benefiting from temporary inflows, or does this rally have legs? With lesser known names like $OOMA breaking out this week, it has my attention. $RNG also printed a good earnings reaction with follow-through, in a weak market.

Semiconductors ($SOXL). Within AI hardware our focus moves to the networking suppliers like $ANET, with a 28% return on equity, and $NTAP at 94% ROE. I would expect the memory names to benefit from sharp rallies on earnings since they are solidly oversold.

With $QQQ still below its 50-day I would not expect a sustained rally. Institutions continue to sell. Nothing to do but watch.

The one exception: we may take a quick $SOXL mean reversion trade if it tests the 200-day, now at 97.50 (Tuesday’s low was 101.53), or reclaims the 50-day in short order. Quick trade, not a position. We went to 100% cash in June after being heavily invested in this group.

Also on watch: Financials ($WFC), insurance ($OSCR), regional banks ($KRE). Healthcare and biotech ($IBB, $XBI, $XLV, $DVA, $LLY). Metals ($STLD). The April AI leaders ($SNDK, $MU, $HUT, $BE, $NBIS, $AMD, $STX) are breakdowns we watch, not dips we buy.

Reporting soon from the watch groups:

• $AMD 8/4

• $DVA 8/4

• $SNDK 8/5

• $NBIS 8/6

• $OSCR 8/6

NEXT

1 · FOMC decision at 2pm today, $AAPL reports Thursday. A leader that gaps up on its print and holds the gain is telling you about the next leg. The prints that hold are the next list.

2 · $SOXL, only on the conditions above. The 200-day test at 97.50 or a fast 50-day reclaim. If neither prints, no trade.

3 · The $QQQ 20-day, now 703. Step one of the repair sequence. Until it starts, the regime stays DEFENSIVE and the list is for watching, not buying.

See you Sunday.
— Nick

Educational content only. Nothing in Ride The Leaders™ constitutes investment advice or a recommendation to buy or sell any security. Levels (”ideal buy zone,” “stop zone”) are analytical reference points describing each chart, not instructions, provided without regard to any individual’s circumstances. The Book section tracks a model portfolio, not a brokerage account. The author may hold positions in securities discussed, as well as other positions not mentioned, and may enter or exit them at any time. Trading involves substantial risk of loss. Past performance does not guarantee future results. Always do your own research. © Ride The Leaders™ · ridetheleaders.com

The AI selloff continued last week. The AI leadership that carried this bull market is finally breaking, as price levels for key semiconductor stocks broke this past week.

Leading stocks like NVDA, STX, & MU all rallied and then failed to stay above their 50-day — a very weak sign for the AI trade. That being said, we could see a bounce this week as the previous leaders try to reclaim their moving averages if we get good earnings or a dovish Fed meeting.

Eight distribution days shows institutions are likely to sell into any strength.

• AI leadership is clearly cracking while capital rotates toward broader sectors of the market like energy, steel, industrials, financials.

• I remain mostly cash until we get some resolution one way or the other.

Set Up for a Rip Next?

Everything a sharp bounce needs is now on the table. QQQ filled the gap it left in early May and approaches oversold levels. Oil prices are down this weekend along with long-dated treasury yields. The 10-year yield looks ready to head lower, oil prices are lower over the weekend, while FOMC this week is stacked with data and the biggest earnings reports of the quarter.

Breadth quietly improved all week underneath the falling index: the equal-weight S&P finished the week flat while QQQ lost 1.6%.

Something I’m watching closely — the bitcoin miners. They led this entire decline, and this week they stopped going down and reversed hard: HUT +20% on the week, CIFR +32%.

When the weakest group stops acting weak, the bounce is usually close.

So expect strength this week. Possibly violent strength. Good megacap prints into an oversold tape are exactly how face-ripping rallies start.

Eight Distribution Days Say: Don’t Trust It

Here is the other half, and it is the half that pays. Eight distribution days in a month is institutions selling rallies, systematically. That supply doesn’t disappear because the tape has a good week. It sells into it.

Wednesday’s letter said the leaders were rallying into resistance. Thursday was the rejection. The same logic now applies one level up: a rip runs straight into the 20-day near 708, then the 50-day near 718, with sellers layered at both.

The honest odds favor a strong bounce and then trouble, before any straight shot higher. What converts a rip into a rally is a sequence, and it hasn’t started: reclaim the 20-day, hold it, then take the 50-day on above-average volume without adding a distribution day. Until that sequence prints, I use rallies to grade the leaders. I don’t chase them.

Are active/institutional managers bearish? The most recent NAAIM print last week showed close to a 12% decrease in market exposure week over week (from 96% to 84%). Lets see how the next print on Thursday looks but were starting to see the beginning of what looks like some profit taking.

The Rotation Is the Real Story

The week’s defining stat — RSP finished flat while QQQ fell 1.6%. The AI trade is suffering while Industrials, aerospace and defense, homebuilders, steel, commodities, and financials all firmed while tech bled.

Rotating in: Energy ($XOP $USO $ERX, and they look like they want higher) · Regional banks ($KRE undercut its 20-day and a multi-month trendline and reclaimed both in the same week; strongest chart in the group, 3% from new highs) · Steel ($STLD) · Pharma and biotech ($PPH $IBB) · Copper ($COPX)

Cracking: Software. $IGV held up through July’s damage and finally got sold this week, down 5.2%. $DDOG fell all week before buyers stepped in Friday, 0.7% above its 50-day, before the line was even tested. $HACK gave back 5.3% after leading all month.

Still broken: AI memory and networking. No reclaims, no setups.

When corrections resolve, the next leg’s leaders come disproportionately from the groups that refused to go down. If the AI-trade disappointment continues through earnings, this list is where the money goes.

$HACK (cybersecurity) and $KRE (regional banks) are both looking incredibly strong here if they bounce here. Both beneficiaries of the rotation away from AI:

What I’m Watching Now

1 · The 20-day, ~708. The first domino of any repair. A close above it on volume starts the clock. A rejection there confirms the rip-and-fade read.
2 · Volume on the rip. A light-volume bounce into resistance is exactly what gets sold. Above-average volume through the levels is the only thing that changes my mind.
3 · Who holds their earnings gaps. The megacaps report this week, FOMC lands Tuesday and Wednesday, AAPL prints Thursday. A leader that gaps up and holds the gain is telling you about the next leg. A gap that gets sold by the close is the 8 distribution days talking.

This Week’s High Conviction Watchlist

The regime gate, stated plainly: in DEFENSIVE these are for watching, not buying. Levels are prepared in advance so the decision is already made if the market earns it.

📍 Ideal Buy Zone: higher low into the 10/20-day (~107) that holds, then the 50-day reclaim (~111.5) on volume
🚀 Aggressive: none. Not at 9.4% ADR with earnings days away
➕ Add-on: not before the print
🛑 Stop Zone: ~102, below the 10/20-day shelf

📍 Ideal Buy Zone: higher low at the 10/20-day (174–172) that holds and turns
🚀 Aggressive: >189.60 on strong volume, only with the regime improving, and not inside the final pre-earnings sessions
➕ Add-on: first tight pullback after a range break, post-earnings
🛑 Stop Zone: ~164, the 50-day. Setup wrong below it

📍 Ideal Buy Zone: the 10-day reclaim (~942) that holds and turns up
🚀 Aggressive: none. Repairs don’t get aggressive entries
➕ Add-on: reclaim of the 20/50-day cluster (955–958)
🛑 Stop Zone: ~880 zone; 858.90, the week’s low, is the line in the sand

📍 Ideal Buy Zone: the 10-day (~1,178) holds and turns, early week only
🚀 Aggressive: >1,207 on volume, post-print
➕ Add-on: tight day above the range break
🛑 Stop Zone: ~1,165, below the 20-day. Character changed

📍 Ideal Buy Zone: tight hold of the 10/20-day (47–46.5), then the break
🚀 Aggressive: >50.31 on high RVOL only. No volume, no trade
➕ Add-on: first tight pullback after the break holds
🛑 Stop Zone: ~46, below the 20-day shelf

More conditional charts I’m watching….

NVDA closed Friday right on its 10-day, still under the 50. It wants to move and the whole world is watching it. Only interesting through 214.40 on 200%+ RVOL; anything less is the crowd’s chop. Friday’s weak close came on light volume, noted, not damning.

· DELL is HPE’s bigger twin: >463.50 on high RVOL, wrong below ~417 (the 20-day).

· STLD closed Friday back above its 50-day, 247.11 vs 246.17. Now it has to hold it, with volume expansion through Friday’s high at 247.68. Weak-volume drift above the line doesn’t count. Wrong below ~238.

· CIFR printed the sharpest V in the miner group, +32% on the week, back above every key MA. Let it flag first, then the flag high on volume. It reports 8/4, same clock as HUT.

· KRE is the rotation’s strongest chart: holds the 10-day (~75.7) and pushes through 78.10 into new-high ground. The hiding place if AI keeps selling.

Watching, Not Ready

DDOG · buyers defended 0.7% above the 50-day (~240) before the line was even tested. First test in months, if it comes, probably fails. Watch the defense, don’t join it. Reports 8/6.
SNOW · closed Friday on its 10-day with volatility and volume compressing. Watching for the turn.
AAPL · the safety trade, 0.6% off all-time highs while the rest of the MAGS wobble. Reports Thursday. The 10-day (~324) after the print. Never the chase into it.
VG · rotation beneficiary marching up its 10-day (~13.9). The dip that holds the line is the context.
DPC · screens top-decile RS, recent UK IPO, earnings in two weeks. Strong fundamentals
NBIS · higher low intact, but Friday’s candle was loose, down 15%, and the shorts keep winning the close. Needs weeks of tightening, not days.
BE · an ugly chart that trades ugly. Sits under the key moving averages for weeks, then breaks out in one massive pop that headfakes every momentum trader watching. Friday it gave back 15% in a session, with earnings Monday. Same personality as NBIS. No setup exists here, in either direction, until after the print.
MXL · the week’s cautionary tale. The earnings pop ran to 94.55 and got sold for a 24% loss in a single session, Friday close 71.59, 44% off its highs, below every moving average. That candle is what “one massive pop” personalities do. Dead until it rebuilds, and rebuilds take months.
PENG · killed at the published 59 on Wednesday, now trying to build a higher low in the 52–54 zone. The repair runs THROUGH the 50-day overhead at 62, not off it. Earning its way back.
AMD · Wednesday’s five-star, and here is what changed: it lost its 10-day Friday with the rest of the semis and it reports 8/4. Structure is fine above the 505–507 zone, but there is no setup inside earnings week. Back on this list after the print.
ERX / oil · the frozen-rope trend is working until it isn’t, and ropes break fast. Ride it, respect the exit.

Final Thoughts

This week has rally written all over it. We’re oversold, the gap is filled, yields are stretched, and the biggest earnings of the quarter are on deck. Wouldn’t surprise me at all to see a lot of strength this week.

But I don’t trust it yet. We may make a few quick trades, but eight distribution days means institutions have been selling every rally for a month. One good week doesn’t change that. Real bottoms follow a sequence: reclaim the 20-day, then the 50-day, on strong volume. We haven’t even started step one.

So the plan is to let them rip. Watch which names hold their earnings gaps and which get sold into the close. The ones that hold are your next leaders, and I’d bet they come from the list above. That’s who I want to be buying when the sequence starts.

Last week I sat on my hands into the weekend. In this tape, that’s the trade.

See you Wednesday.
— Nick

Educational content only. Nothing in Ride The Leaders™ constitutes investment advice or a recommendation to buy or sell any security. Levels (”ideal buy zone,” “stop zone”) are analytical reference points describing each chart, not instructions, provided without regard to any individual’s circumstances. The author holds no positions in any security discussed as of publication. Trading involves substantial risk of loss. Past performance does not guarantee future results. Always do your own research. © Ride The Leaders™ · ridetheleaders.com

Despite the momentum rally this week, QQQ remains below its 50-day moving avg (705 vs 719). Until that changes, I continue to view this as a defensive tape.

Still no new buys for me. I spent most of the week in cash.

QQQ and Semis (SOXX/SMH) are already running into obvious resistance overhead here. We’ll likely need strong earnings to power us higher through these levels. If not, the rally risks becoming another failed attempt ahead of a broader correction.

The Tape Finally Changed

Yesterday and today’s action in momentum stocks was the first meaningful character change we’ve seen in weeks.

Earlier in the month, every rally attempt was sold almost immediately. This time buyers responded well to the gap down on Wednesday morning only to sell into the close. It’s a small change worth paying attention to.

If you’ve tried buying breakouts over the past few weeks, you’ve probably been chopped up. That’s the environment we’ve been in. As much as I love buying breakouts, this hasn’t been the market for it. Until the indexes repair themselves, I'd much rather buy constructive pullbacks.

The best breakouts usually appear right after everyone stops believing in them. We’re not there yet, but this is the first week that feels like we’re moving in that direction.

Earnings Will Decide Whether This Rally Has Legs

Analysts continue raising estimates into this week’s reports. They have underestimated the earnings impact of AI over the last few quarters, so I wouldn’t be surprised to see additional strength as earnings are released.

That said, I would still be quick to trim into extended rallies here…

My intermediate-term view hasn’t really changed. I think we’re going to need either greater geopolitical clarity or a more favorable macro backdrop before this becomes a sustained advance.

The other chart I’m watching closely is the 10-year Treasury yield. Yields remain in a stubborn uptrend and are approaching another important resistance level that could lead to a breakout. If they break higher again, that would likely create another headwind for technology and other long-duration growth stocks.

Leadership Is Starting to Improve

One of the more encouraging developments this week has been the return of several of the April leaders.

NVDA is starting to show real strength at exactly the same time the semiconductor group is testing major resistance. If NVDA can continue to lead from here, it has a chance to pull the rest of the group with it.

That doesn’t guarantee a sustained move, but it’s exactly what you’d want to see if the AI trade is going to reassert itself.

The next test is whether semis can actually push through resistance rather than stall here. If they can, it would be a meaningful step repairing the broader growth complex.

Memory Stocks Continue to Stand Out

Micron ⭐⭐⭐⭐⭐ continues to be one of the strongest names on my screen.

The stock reclaimed its key moving averages on strong volume and has held those gains well. That’s the type of action I want to see from potential leaders. Now has the 20-day moving avg as next level of resistance.

AMD, MXL and several other semiconductor names are beginning to tell a similar story and are perking up. They’re not all buyable today, but they’re getting much closer.

What I’m Watching Now

The market still hasn’t given the all-clear, but it’s finally giving us names worth paying attention to.

Over the next few days, I’m focused on these three things:

• QQQ reclaiming its 20-day moving avg as the first step toward a full repair.

• Semiconductor leadership continuing to strengthen instead of fading into resistance

• Earnings confirm the improving price action rather than reversing it.

If those pieces come together, I’ll become more aggressive. Until then, I’m happy keeping cash as a position.

This Week’s High Conviction Watchlist

📍 Ideal Buy Zone: $526–532 — the 10/20-EMA confluence on a quiet first pullback after the V

• 🚀Aggressive: >$561.50 (5-day high) with 20%+ RVOL. Day-of chase → 0.3% size.

• ➕ Add Above: $574.20, then ATH $584.73.

• 🛑 Stop Zone: $498–516 (under the 50-day at 505 from the ideal zone)

• R/R: From 528 vs 500 stop → ATH retest 585 = 2.0R; through ATH ~640 = 4R.

  ---

Neocloud leader saw a −45% crash to 164.31, then the monster U&R — three straight recovery days to 228.67, now 218. Above 10/20-EMA, under the 50 (226).

📍 Ideal Buy Zone: $200–210 (20-EMA / breakaway retest holding 195).

• 🚀Aggressive: >$228.70 w/ RVOL.

• ➕Add: >$235. Stop: $195–197.

• R/R: ~5R to the prior high.

  ---

−41% flush, violent V, now above the 10/20-EMA cluster, 50-day at 111 right overhead — that’s the next fight…

📍 Ideal Buy Zone: $103–106 (10/20-EMA hold after the 50-day rejection resolves).

• 🚀 Aggressive: >$114.60 with 20% RVOL — that clears both the recovery high and the 50-day in one move.

• ➕Add: $126.50 (20-day high).

• Stop Zone: $96–98 (under the round 100 and the last shelf; 8% from the ideal zone).

• R/R: 104 / 96 stop → 126.5 = 2.7R; to 140 = 4.3R. Spec sizing (9.5% ADR).

  ---

469.47 ATH → 368.15 Monday → today +9.3% to 442, reclaiming the 10- and 20-EMA in a single bar. Weekly bull flag, 7-week count, intact.

📍 Ideal Buy Zone: $415–425 — the 10/20-EMA breakaway retest after 2–3 days of digestion. Not today: this bar has consumed >100% of ATR; buying +9% is the definition of the chase.

• 🚀Aggressive: >$451.40 (today’s high) on a later day with 20% RVOL, or the $463.50 pivot.

• ➕Add Above: $463.50 → ATH $469.50.

• Stop Zone: $398–403 (under the round 400; the gap-day low 413.77 is your early-warning line).

  ---

📍 Ideal Buy Zone: Post-ER only: $205–215 if it holds 194.60 and prints a higher low on results.

• 🚀Aggressive: Post-ER PEG through the 20-EMA (~$246) on massive RVOL.

• ➕Add Above: $276 (10-day high).

• Stop Zone: $193–195 (under the 5-day low / 150-day).

• R/R: 210 entry / 193 stop → 276 = 3.9R.

Final Thoughts

This was the first week in a while that gave me some optimism.

I’m still not ready to get aggressive. The indexes are running into important resistance, and we’ve seen too many failed rally attempts over the past few weeks to assume this one will be different.

That said, the watchlist is getting better. More stocks are starting to reclaim key moving averages, and some of the leaders from earlier this year are beginning to wake up again. That’s exactly what I want to see before putting more cash to work.

Now it’s up to the market. If earnings can push the indexes through these resistance levels and leadership continues to improve, I’ll start getting more aggressive. If not, I’m perfectly happy staying patient and waiting for better odds.

Cash is still my largest position—and for now, I think that’s the right trade.

Every night I flip through hundreds of charts. Most get a few seconds, if that. The pattern should hit your eye instantly. When you look at this many charts daily, the good ones jump out at you before you even think about it.

The instinct comes from repetition. You repeat your process on a daily basis and you will develop a sense for what’s ready to move and what isn’t. Build this habit early.

The broader market always comes first.

Before I look at going long in a stock, I first look at the broader market. When the indexes are under distribution and trending lower, even the best setups fail. I don’t waste time hunting for longs in a bear market.

If the market isn’t healthy, nothing else in this lesson matters yet. That was Lesson 1.

Starting out

The best investors I know filter out mediocre setups fast so they can focus on the handful that actually matter. That’s the goal of this lesson.

When I open a chart, I’m not asking, “Should I buy this?”

I’m asking: “Is this even worth another minute of my time?”

Most of the time, the answer is no. Not because the company is bad, but because out of thousands of stocks, only a tiny percentage become true market leaders. You aren’t looking for “good enough.” You are hunting for the exceptional few.

The first filter

Before I read earnings, look at valuations, or listen to anyone’s opinion, I look at the chart. Institutions leave clues behind that show what big money is actually doing. Institutions can’t just buy their whole position in a day like retail traders do. Institutions can take days, weeks, even months to fully size a position. That buying and volume leaves footprints. Your job is just to spot them.

One question tells me almost everything: Is the stock making higher highs and higher lows?

• If yes, it’s worth a look.

• If it’s drifting lower, making lower highs and lower lows, I close it and move on.

Could it recover? Sure. But I’m not here to guess. I want stocks that are already proving themselves.

Look for orderly action

Not every uptrend is wearable. Some charts are just messy—huge swings, violent reversals, wild daily gaps.

The best stocks usually look surprisingly orderly. That’s rarely an accident. Big funds can’t buy millions of shares in one afternoon. They build positions over time, and that process creates smoother, cleaner price action.

Once I find a clean chart making new highs, I ask: Why are institutions buying this?

• Are earnings accelerating?

• Is revenue growth picking up?

• Did they launch a game-changing product?

The story doesn’t have to be perfect, but there needs to be a fundamental catalyst driving the business forward.

Filtering is the process

Passing on stocks is the hardest part for beginners. You don’t need to fall in love with everything you research. In fact, you shouldn’t.

Every chart you eliminate gives you more time to study the one that actually deserves it. Filtering isn’t missing out—filtering is the process.

My trading changed completely when I stopped asking, “What can I buy today?” and started asking, “Which stocks have actually earned my attention and hard earned capital?”

Try it this week

Open ten random charts. Spend 30 seconds on each and ask:

• Is it making higher highs and higher lows?

• Does the price action look clean and orderly? Wide and loose or tight like a coil?

• Is there a new fundamental catalyst that the market is excited about or isn’t pricing in correctly?

You aren’t trying to become an expert overnight. You’re just training your eye to recognize the behavior of a true market leader in real time.

Educational content only. Nothing in Ride The Leaders™ constitutes investment advice or a recommendation to buy or sell any security. Levels (”ideal buy zone,” “stop zone”) are analytical reference points describing each chart, not instructions, provided without regard to any individual’s circumstances. The author holds no positions in any security discussed as of publication. Trading involves substantial risk of loss. Past performance does not guarantee future results. Always do your own research. © Ride The Leaders™ · ridetheleaders.com

Learn to name the stage in ten seconds and you'll never again buy a stock that's quietly dying.

That alone eliminates half of most traders' worst losses.

The framework comes from Stan Weinstein's Secrets for Profiting in Bull and Bear Markets — the closest thing technical analysis has to a law of nature.

You need exactly two things on your chart:

• Price

• A long-term moving average (the 30-week line on a weekly chart, or the 200-day on a daily — either works)

1️⃣ Stage 1 — Basing

The stock has stopped falling but isn't going anywhere.

Price chops sideways, back and forth across a flat moving average, on quiet volume. Nobody's talking about it. This can last months or years.

Not a buy — a stock waiting for a reason to exist.

2️⃣ Stage 2 — Advancing

The only stage you buy.

Price breaks out of the base on a clear jump in volume and now lives above a moving average that has turned up.

• Higher highs, higher lows

• Pullbacks find buyers at the rising line

• This is the institutional accumulation from Lesson 02 — visible on one chart

The great growth stocks spend a year or more in Stage 2.

The entire job of a momentum trader: be long Stage 2 stocks in a Stage 2 market — and essentially nothing else.

3️⃣ Stage 3 — Topping

The advance stalls. Price starts whipping violently in both directions — big up days, big down days, no progress. The moving average flattens.

News is usually still great. That's exactly the trap: the story peaks after the stock does.

Volume on down days starts to swell. This is distribution — the institutions who bought in Stages 1 and 2 handing shares to the public.

4️⃣ Stage 4 — Declining

The mirror of Stage 2: price below a falling moving average. Lower highs, lower lows, every bounce failing at the line.

This is where "it's cheap now" destroys accounts.

A Stage 4 stock down 40% can go down another 60% — and the moving average overhead acts like a ceiling the whole way.

You never buy Stage 4. Not because the company is bad — because the supply of sellers hasn't been exhausted, and no one can tell you when it will be.

⏱️ The ten-second read

Two questions, in order:

1. Where is price relative to the long-term moving average? Above or below?

2. Which way is the moving average itself pointing? Rising, falling, or flat?

Above a rising line → Stage 2.

Below a falling line → Stage 4.

Tangled up with a flat line → Stage 1 or 3 (basing if it fell to get there, topping if it rose to get there).

That's the whole exercise. Ten seconds. No indicators, no opinions.

🎯 Why this matters so much

Because it's a filter that runs before everything else.

Earnings analysis, chart patterns, entry tactics — none of it matters if the stock is in Stage 3 or 4.

The stage check is how you make sure every hour of research is spent only on stocks where research can actually pay.

Our weekly watchlist enforces this mechanically: a name can't get near it unless it's above a rising long-term trend, near its highs — Stage 2 by construction.

📝 Try this yourself

Open charts for ten stocks you know — winners, losers, whatever you own now.

• Weekly view

• Add the 30-week moving average

• Write down each one's stage using the two questions above

Then the uncomfortable part: if you're holding anything in Stage 3 or 4, write down the reason it deserves your capital more than a Stage 2 leader does.

"It'll come back" is not a reason. It's a hope — and Stage 4 is where hopes go to compound in the wrong direction.

Educational content, not investment advice. Ride The Leaders is an impersonal research publication.

Why would you buy something that’s already gone up? Wouldn’t the smart move be to buy what’s cheap and beaten down with a low PE?

That’s what most people instinctively believe. I believed it too.

Then I read How to Make Money in Stocks by Bill O’Neil, and I couldn’t believe what I was seeing: everything I had ever learned about stocks, proven mathematically incorrect. The biggest winners in history almost never begin their biggest advances from 52-week lows. They begin them near 52-week highs.

The evidence

Momentum — the tendency for stocks that have outperformed over the past 3–12 months to continue outperforming — is one of the most thoroughly researched phenomena in finance. It has persisted across decades, countries, and asset classes. Researchers who spent their careers believing markets were perfectly efficient eventually described momentum as the “premier anomaly.”

In plain English: it shouldn’t work, but it stubbornly does.

You don’t need academic papers to see it.

Pull up the biggest winners of the past twenty years — NVIDIA, Apple, Tesla, Amazon, Monster Beverage, Netflix. Every one of them spent much of its biggest advance near 52-week highs, looking expensive almost the entire way.

More recently, same story. NVDA, SNDK, BE, PLTR — all reached all-time highs before going on record runs.

Why it works

A stock doesn’t go from $50 to $300 because you or I bought a few shares. It takes billions of dollars. And billions of dollars mean institutions — mutual funds, pension funds, hedge funds, insurance companies.

So they hide their purchases — spreading the buying over days and weeks to get a better price before the idea gets out to retail.

And it’s rarely just one institution. When a company’s fundamentals improve, dozens of large investors independently reach the same conclusion, each building a position over weeks or months, each supporting the stock on every pullback.

That slow, persistent accumulation is what an uptrend really is.

It’s also why people underestimate how important it is to study volume. Volume is one of the few signs a retail trader has that an institution is buying. When you see a stock making higher highs and higher lows for months on above-average volume, you’re looking at the footprint of buying that’s too big to finish in a single day.

That’s why momentum works. You’re riding a wave that can’t complete quickly.

Why great news keeps working

A company reports incredible earnings. The stock gaps up 12%. Most people assume the opportunity is over.

Often, it’s just beginning. The headline is known in a minute — but the institutions that suddenly want meaningful positions still need weeks or months to build them. Momentum isn’t driven by the news. It’s driven by the buying that follows it.

What momentum is not

Momentum doesn’t mean buying anything that’s going up. A stock that jumps 40% in three days on a short squeeze isn’t showing institutional accumulation — nobody is building a position, and there’s no floor under it.

Real momentum means sustained relative strength over months, in liquid names big money can actually own, with the volume signature of accumulation behind it. That’s the difference between a leader and a lottery ticket.

One important caveat

Even the strongest stocks struggle when the overall market breaks down. Momentum tells you what to buy. It does not tell you whether you should be buying at all. That’s the job of market regime — we’ll cover it in Lesson 5.

The takeaway

Fish where the institutions are feeding.

Don’t spend your time searching for broken companies that might recover someday. Look for the businesses institutions are actively accumulating today. That’s where the biggest winners have always been — and it’s where I spend my time looking every week.

Try this yourself

Pick ten of the biggest stock market winners from the last decade. Open a weekly chart and find the beginning of the largest advance. Then ask one question: was the stock closer to its 52-week high, or its 52-week low?

You’ll get the same answer again and again.

Educational content only. Nothing in Ride The Leaders™ constitutes investment advice or a recommendation to buy or sell any security.

💸 Leak #1: Chasing

A stock has an avg. daily trading range of 6% and you buy it up 4–5% on the day. The next day it’s down its typical 6%, and you’re down 4% right out of the gate. The stock did nothing unusual — it just moved its normal range. You paid for it.

If you know how this feels all too well, just know I was in your shoes — until I got serious and put together a system.

🗺️ Leak #2: No plan

Having no plan is the second biggest leak.

I don’t believe in soft stops. I always trade with a stop, because when I don’t, I start making excuses for why this time is different. So I eliminate that temptation completely; always a stop. Which then forces you to have a plan.

The plan covers what you buy, too. I make sure I’m always in the leaders within the leading industry groups — not the third-best name in a group. Why waste time hoping for a stock to catch up to the leader? I’d rather find a low-risk entry point into THE leading stock in its respective industry group.

🌊 Leak #3: Fighting the market

You need situational awareness — knowing when conditions just aren’t right to be trading stocks.

Be highly mindful of distribution days versus follow-through days. Always watch what the indexes are doing, and be quick to go to cash — and stay in cash.

Most of the strongest parts of the market happen in just a few days. It’s knowing when to be in cash that makes the difference between a mediocre trader and an excellent trader.

🎯 Try this

Pull up your last five losing trades. For each one ask yourself if you were chasing. Did I have my stop written down before entry? Was the general market in an uptrend that week? Most people find one leak explains the majority of their losses. That’s your homework.

Educational content, not investment advice. Ride The Leaders™ is an impersonal research publication.

Executive Summary

Market Regime: DEFENSIVE—the market broke its first structural level this week.

Best Groups: Healthcare, Financials

Avoid: AI Hardware, Memory, Networking

Best Opportunity: Build the watchlist and the alerts now — don’t force entries into a broken tape.

What Changes My Mind: QQQ reclaims the 50-day (~719) on strong volume — and holds it.

🚦 The regime — read this first

📊 The market, marked up

• QQQ — 3% under the 50-day, eight distribution days. 719 is the line. The coil is broken for now but holding June lows.

The tape. 8 distribution days in a month. That’s institutions selling every rally.

The damage. QQQ is ~3% under the 50-day. First structural break of this correction.

Under the hood — rotation, not death. The memory/AI leaders are broken. Healthcare and financials keep making higher lows right through the weakness. 6 of our top 8 ranked names are healthcare now.

The split tape. SPY sits 2% off all-time highs, right at its 50-day. QQQ is 7% off and broken. Same market, two stories — because the damage is concentrated almost entirely in AI hardware. That's not a market call, it's a rotation map.

The tell of the week. AAPL broke to new all-time highs — a $4.9T name at ATHs while the index sits under its 50-day. Big money isn’t leaving. It’s hiding in quality.

The job this week. Not buying. Knowing every level cold — so when the index earns it, you’re first instead of flat-footed. The homework’s below, done.

🔍 The previous leaders — status check

The generals of the last leg, reviewed honestly. Broken leaders repair and lead again more often than people think — but a downtrend isn’t a setup. The repair sequence on every one: a low that holds → a higher low → the 50-day reclaimed on real volume. O’Neil’s old axiom applies to every name here: oversold can always get more oversold. That’s why the sequence matters — and why we don’t guess at bottoms.

SNDK — still broken. ~20% below the 50-day (~1,720). The general of the memory cycle; nothing to do until the sequence starts. Back on the page the day it completes.

MU — same story, better shape. 9% under the 50-day (~934) after a 32% correction, +197% YTD still intact. Likely the first memory name to repair. Watch the reclaim.

WDC / STX / INTC — the rest of the memory complex, same story: below their 50-days, wide and loose. The reclaim is the tell, not the bounce.

AMD — the closest to home: 3 points under the 50-day (~499). A higher low Mon/Tue plus the reclaim on volume and it’s the first semi back. Watching closely.

DELL — the strongest of the group: never lost its rising 50-day (~365). Weekly chart is a high tight flag; dailies are wide and sloppy, not tight. Two ways in: a tight higher low holding the 50-day area, or through ~470 out of the chop. Still a leader candidate.

NBIS — what a broken leader looks like: -41% off the highs, 21% below the 50-day (10% ADR). Textbook trendline break on the way down. Nothing to do — but this is the class of name that leads the NEXT cycle if it repairs, so it stays on the review.

CRDO — the AI-networking general, now -34% off the highs and 11% under the 50-day (~229). Still +41% YTD — the run isn’t erased, the trend is. No earnings until September, so the chart gets to speak for itself.

ALAB — CRDO’s partner in the breakdown: -39% off highs, 10% under the 50-day (~339), 9.6% ADR. Wide, loose, and heavily traded — when this pair starts basing, it’ll be loud. Reports 8/4; nothing to do before it regardless.

NTRA — not broken at all: +18% YTD, riding the 10/20-day, 6% off its high. Promoted to the watchlist below — the healthcare tailwind earns it a spot.

🔥 Rotation

Leading: Healthcare — 6 of our top 8 (LLY, CORT, GH, HNGE on our screens)

Strengthening: Financials — SEZL with the group finally behind it; regional banks basing

Deteriorating: AI memory/storage — see the review above

Groups move first, stocks follow. Next leg’s leaders come from the groups that refused to go down.

🎯 The watchlist — levels on every name

In DEFENSIVE, triggers are for watching, not buying. Breakouts need the market at their back — the data’s in the regime section. This list is the homework for when it turns.

Reading the levels: trigger = strength confirmed, through it on volume the setup’s live · stop zone = the setup’s wrong below it, dead, Wednesday says so · chase = you’re late. Not buy orders. Earnings dates on every name — a trigger right before a report is a different trade.

Post-earnings watch — all setting up, all reporting July 29–30. Setups resume with the reaction in hand:

AAPL — new all-time highs in a correcting tape (the tell of the week), but sitting at its chase line (~333). The entry was never a chase here anyway — the 10-day (~320), after the print.

FTNT — true leader, surfing the 10-day the whole move. The 20-day test (~156) is the spot — if it’s still standing after the report.

NET — riding the 10-day (~268), 5% off highs while the market corrects. Relative strength doing the talking.

ASX — first 50-day test since April, tagged Friday and closed back above. Higher low forming.

The setups

BB · Software · $5.3B · +137% YTD

Huge run, digesting for weeks — now testing the 50-day at 8.99. 5-star shape.

• Want: undercut-and-reclaim through 9.60 on volume.

• Dead below ~8.75 — move on.

SEZL · Finance/Payments · $5.9B · +175% YTD · reports 8/6

Clean 20-day bounce and the financial group finally moving with it.

• Want: 10-day reclaim >176 — leader + sector at its back is the combination.

• Bounce failed below ~166.

CORT · Pharma · $9.7B · +160% YTD · reports 7/30

Higher highs and higher lows straight through a red tape — bounced off the 20-day like nothing happened.

• Want: holds the 10-day above 90.60, stays in rhythm.

• Loses ~87 = first broken higher-low in months, done.

PENG · AI hardware · $3.1B · +209% YTD · 12% ADR — spec size

Corrected 33%, now sitting right ON the 50-day (60.77) — the first big test of the line.

• Want: the bounce — reclaim >62 that holds, then a higher low. Wide, needs to tighten.

• Below ~59 the line failed — repair project.

RVMD · Healthcare · $39.6B · +134% YTD · reports 8/5

Top-5 name on our screens all month — riding the 10-day, 4% off highs, in the leading group. Low drama (3.9% ADR).

• Want: the 10-day hold (~184) that turns, or the tight flag through 193.80 after the market repairs.

• Below ~176 = first real trend break in months.

GH · AI med-tech · $20.7B · +53% YTD · reports 7/30

Healthcare leader, fresh highs two weeks ago, now testing the 10-day — normal digestion in the leading group. $549M/day traded.

• Want: tight higher low at the 20-day (~152.60) that holds and turns.

• Below ~149.50 the test failed — and a late-week trigger is buying the print.

NTRA · Healthcare · $38.9B · +18% YTD · reports 8/6

The quiet one — riding the 10/20-day near highs straight through the correction, big healthcare tailwind, $451M/day traded.

• Want: the 10-day hold (~272) that turns, or the tight range break >288 once the market repairs.

• Below ~261.50 the trend test failed.

⏳ Also watching

LLY — riding the 20-day, higher highs. Range break ~1,250 would print extended off the 10-day — prefer one more tight day or the ~1,170 dip. The calm one (3% ADR).

FSBC — regional-bank strength is real, but it reports Wednesday 7/22. Nothing publishes as a setup into a report. Back Thursday if the reaction holds.

HNGE — higher high in, testing the 10-day. Tight higher low first, or it’s off the page.

DFTX — biotech, high tight flag, 49.20 the top. HTFs: highest-odds pattern in our 21-year study — 66% resolve up, median 4 days (3,146 flags; hypothetical research). Binary risk — size like it can gap against you.

FSLY — above every MA but the pattern’s going megaphone. Wide and loose is the opposite of what we pay for.

PANW — only on a breakout with serious volume. Friday’s wide bar didn’t have it.

📬 How this works right now

Everything is free while we build in public. The Sunday Letter and the Wednesday update land in this inbox — that’s the whole delivery, for now. Real-time alerts will live in the members’ Discord, which opens to founding subscribers in the coming weeks — founding pricing gets announced here first, and early subscribers lock it for life. Nothing to do today except stay subscribed and know your levels.

📚 The lesson

Every name on this list is the same setup at a different stage: big move → multi-week pullback → bounce off the 10/20/50-day → higher lows, sometimes an undercut-and-reclaim → tight range → breakout. 120+ years of repetition. Livermore traded it, O’Neil systematized it, Qullamaggie compounded it. Know which stage each name is in — and let the regime tell you when watching becomes buying.

My Plan This Week

I will NOT:

- Buy breakouts

- Add aggressive exposure

- Chase strength

I WILL:

- Build alerts at every level in this letter

- Update the watchlist as the repair sequence plays out

- Focus on Healthcare leadership

- Wait for confirmation — the 50-day reclaim on volume

One Thought Before Next Week

Great investors don’t make money because they’re always invested. They make money because they’re aggressively invested when conditions deserve it.

See you Wednesday.

— Nick