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As we approach today's trading session, the backdrop is set with the release of Producer Price Index (PPI) data showing light inflationary pressure, paired with anticipation of tomorrow's Consumer Price Index (CPI) report. These developments have set a cautiously optimistic tone for the day, with notable indices signaling potential opportunities in a choppy yet promising market. For a deeper dive into today’s market setup, watch our pre-market prep video here.

Macro Review

Russell 2000 (IWM) 

The small-cap index stands out today, rebounding from its 200-day moving average (DMA) with an impressive pre-market climb of 0.7%. As one of the most inflation-sensitive indices, IWM's bounce highlights renewed risk appetite. This is reinforced by a corresponding uptick in Bitcoin, a key risk asset, which validates the resurgence of bullish sentiment.

NASDAQ-100 (QQQ) 

While the Nasdaq remains below its 50 DMA, historical patterns suggest limited downside before finding support. Light PPI data adds an encouraging layer, though the market remains cautious ahead of CPI.

Sector Focus Today’s spotlight is on battered high-risk assets, with sectors like drone technology and artificial intelligence poised for relief rallies. Stocks that demonstrated relative strength during recent declines are particularly compelling.

Top Picks:

Kratos Defense & Security Solutions (KTOS)
⚡ Catalysts: Two recent large contract wins and consecutive analyst upgrades.
❤️ Sentiment: Positive, driven by strong fundamentals and robust government contracts.
📈 Fundamentals: The company is well-positioned to benefit from long-term defense spending, showing resilience amid broader market volatility.
📊 Technicals: Persistent upward momentum with strong pre-market action signals potential for continued gains.

QuickLogic Corporation (QUIK)
⚡ Catalysts: New distribution agreement with Magenta Technology and potential quantum-related applications in the space sector.
❤️ Sentiment: Gaining traction as a speculative play on innovation and niche technology.
📈 Fundamentals: Solid history in niche markets, coupled with emerging narratives in space technology.
📊 Technicals: Trading near its 50 DMA, suggesting a compelling entry point for short-term gains.

Arbe Robotics (ARBE)
⚡ Catalysts: Oversold conditions paired with risk-on sentiment in pre-market trading.
❤️ Sentiment: Positioned for recovery following sharp declines, with warrants and institutional interest providing support.
📈 Fundamentals: The company’s potential in advanced robotics and automation underpins long-term value.
📊 Technicals: Strong relative strength near key support levels indicates a favorable risk-reward setup.

Palladyne AI Corp (PDYN)
⚡ Catalysts: Recent Air Force AI contract and resilience at its 20 DMA despite sector-wide weakness.
❤️ Sentiment: Favorable due to continued institutional support and contract wins.
📈 Fundamentals: Positioned to capitalize on AI-driven defense solutions, aligning with macro trends.
📊 Technicals: Low RSI and a clear bounce off the 20 DMA make this a standout in a recovering market.

Trugolf Holdings Inc (TRUG)
⚡ Catalysts: Oversold bounce potential in a risk-on market environment.
❤️ Sentiment: Speculative but promising for short-term gains as market sentiment improves.
📈 Fundamentals: Small-cap play with strong recovery potential under current conditions.
📊 Technicals: Trading at key support levels with favorable risk-reward dynamics for swing traders.

Swing Trade Opportunities:

Nebius Group NV (NBIS)
⚡ Catalysts: Continued momentum from recent breakouts and positive community sentiment.
❤️ Sentiment: A "Godfather pick" within the StoryTrading community, signaling high confidence.
📈 Fundamentals: Strong growth narrative and sector positioning.
📊 Technicals: Trading above resistance levels, with RSI signaling additional room for upward momentum.

Root Inc (ROOT)
⚡ Catalysts: Anticipated earnings re-rating and potential sentiment shift.
❤️ Sentiment: Strong, as ROOT has consistently demonstrated relative strength compared to peers.
📈 Fundamentals: Solid positioning with upcoming earnings providing a clear catalyst.
📊 Technicals: Low RSI and favorable risk-reward ratio make it an appealing swing trade candidate.

Geo Group (GEO)
⚡ Catalysts: Upcoming inauguration and rumors of a strategic partnership.
❤️ Sentiment: Buoyed by speculative catalysts and potential shifts in government contracts.
📈 Fundamentals: Strong revenue streams with opportunities for growth in a politically sensitive sector.
📊 Technicals: Trading above key moving averages, GEO offers both short-term swing and long-term potential.

Honorable Mentions

• Teladoc Health (TDOC): Early signs of turnaround with a new Amazon partnership, though profitability concerns linger.
• Mind Technologies (MIND): Continued relative strength driven by favorable sentiment in speculative sectors.
• OpFi (OPFI): Surprising after-hours activity suggests further upside, solidifying its place as a community favorite.

Final Thoughts

Today’s trading environment underscores the value of leveraging relative strength, macro awareness, and sector-specific catalysts to identify opportunities. The market’s renewed risk appetite, driven by light PPI and a hopeful CPI outlook, presents a fertile ground for nimble and informed trading strategies.

To dive deeper into these picks and gain access to real-time alerts, join our StoryTrading Discord community. Use code TALKMARKETS for 50% off your first month: Join here.

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