The Road to the Summer Rally
Premium Section: American Express (AXP), Bank of America (BAC), Carvana (CVNA), Toll Brothers (TOL) Setups
NOTE: Our Q3 2025 Cycle Forecasts are available now on cyclesedge.com. Cycle Forecasts combined with a trend-following system are an excellent way to trade or invest in stocks, ETFs, commodities, or cryptocurrencies.
Despite the unsettling events in the Middle East, the stock market seems to be ignoring the news, as the Volatility Index (VIX) dropped almost 4% today. The VIX found resistance at the 50 EMA (red). We also believe that institutions are adding equity exposure before the Summer Rally, which usually begins around June 27th.
Investors went shopping for stocks on their watchlists today, as evidenced by the NYSE Advance/Decline Line ($NYAD), which spiked sharply. The RSI made a higher low, giving it a bullish configuration. The MACD Histogram formed a bullish divergence, further reinforcing the market’s bullish tone. We appear to be setting up for the Summer Rally, which we discussed here.
The S&P 500 (SPY) held the 21 EMA (yellow), making the recent weakness a very normal, buyable dip. The Slow Stochastics and RSI have reset from overbought levels, providing fuel for new equity positions. The MACD Histogram shows waning bearish momentum, which often marks a good time to buy. Finally, the Cumulative Volume Delta (CVD) indicates there were a solid number of market buy orders today, signaling a return of buying appetite. According to the Price Cycle System, the past month formed a “Base and Break” buy pattern, suggesting higher prices from here. A stop-loss set below the 21 EMA around $593 could serve as effective risk management.
The Nasdaq 100 (QQQ) has a similar look. It is also held the 21 EMA and formed a “Base and Break” pattern, where higher prices are expected. A stop could be set below the 21 EMA around $524.
Smart Money appears to be buying the dip heavily and provided support at the 21 EMA. Dumb Money got a bit spooked by the headlines; however, when they buy back in, the market could go much higher.
To keep a balanced view, the Fear and Greed Model is still heading lower, reminding us that this is still a headline driven market.
As the market appears to be ignoring the news in the Middle East, we believe that the Summer Rally may be starting a bit early this year. In the Premium Section we’ll go over a few setups that can help you profit from the upcoming rally.
Disclaimer - All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.
Find our membership cost/benefits below. If you’re serious about Making Money (our primary goal at Cycles Edge), then the Premium Sections are key for you!
