Is It Safe to Buy Stocks Right Now?
Sunday Letter #1 | July 20th, 2026
Welcome to the first Sunday Letter. Same format every week: the regime call first — is it safe to be long? — then the state of the leaders, where strength is rotating, and a handpicked watchlist with exact levels on every name.
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.