🚨 I’ll be live at noon ET🚨
Kane is joining the show today to discuss a mistake in the options market that helps us anticipate stocks likely to move in the next couple of days, plus fast-moving stocks and more [tap to join us for the VIP Trade Room]!
I need to talk about something that’s been bothering me over the past 24 hours, and it’s not the geopolitical headlines everyone’s celebrating. The market had a massive gap-up rally Wednesday on the Iran ceasefire news, which is great.
Semiconductors look strong and traders are excited, but there’s a deeper problem beneath the surface that could limit how far this rally can go.
My biggest concern isn’t the war — it’s MAGS, an ETF that tracks the Magnificent Seven stocks. While SMH, the semiconductors ETF, is approaching new highs, MAGS is not even at the 50-day moving average.
That divergence is exactly what I warned about earlier. This is why I keep hammering home the importance of market internals and sector rotation. You can’t just look at the headline index and assume everything’s great.
You need to see what’s happening under the hood.
The Divergence That Has Me Worried
Look at where SMH is compared to MAGS — we are not even close to key moving averages. MAGS is still not above any key average, and they are going to hold this market lower unless they start to move higher.
Institutions aren’t going to come in until we’re above key levels. Without that institutional support in the largest market cap stocks, we have a sustainability problem.
This is not just about tech. Even gold is showing similar behavior. Gold is not above the 50-day line yet, and we need to get back above it. Moving averages matter across the board because they show where real money is willing to step in.
Over one month ago, I drew a line and noted that the war would be assimilated within the market after VIX drops below 20. That is exactly what we are seeing now, though VIX is ticking up again this morning, sitting just above 21.
But even with volatility fading, the internal market structure still is not aligned for a durable move higher.
What’s Behind the Weakness
It’s not just technical levels that concern me. There is a lot happening inside MAGS companies right now — layoffs, restructurings, AI shifts, pressure on margins.
These are structural shifts and they take time to work through. This is why I stress studying which sectors are leading and which are lagging. You cannot assume everything is healthy just because one part of the market is rallying.
Take profits on gaps — gaps are gifts.
If you’re holding stocks that gapped up, take your profit and be happy. Then wait. We need to be careful and keep our eyes on MAGS. Until it starts participating and breaking above key moving averages, the upside is going to stay limited.
Stay disciplined. Watch the divergences. Do not let feel-good headlines override what the charts are telling you.
I hope that helps!
Roger Scott
Roger Scott Trading
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram:https://t.me/+_vmfwkeP8fA5YWQ5
- YouTube:https://www.youtube.com/@Roger-Scott/videos
- Instagram:https://www.instagram.com/thetradingpub/
- Facebook:https://www.facebook.com/TheTradingPubOfficial
- Twitter: https://twitter.com/Rogerscott1970
Important Note: No one from The TradingPub team or Roger Scott Trading will ever message you directly on Telegram.
P.S. Kane’s Joining Us for a Sigma Masterclass in the VIP Trade Room
You’ll see how this “mistake” in the options market helps us anticipate stocks likely move in the next couple of days…
Giving us the chance to front run Wall Street!
Are you interested?
