MU Shows Classic Relative Strength: How I Spotted the Move Before the Market

 

Today was a perfect example of how relative strength can give you an edge and even tip you off to a trade before most people notice it. Above is a 5-minute chart of MU, and in the lower pane I’ve plotted the SPY for comparison. Just after the open, the SPY began selling off, forming a series of lower highs and lower lows that continued until roughly 12:30 ET. While the market was clearly moving lower, MU was doing something very different, it was consolidating at the highs, barely giving back any ground.

This is exactly what I look for when scanning for relative strength. The stock that can hold up while the market is weak is often the one being quietly accumulated by strong hands. In my book, Master The Market With Relative Strength, I call this a classic setup: a stock that shows resilience during a market sell-off is often preparing for a move higher.

Notice how MU made higher lows relative to the SPY during this period. That’s the key clue for me, it signals under the-radar accumulation. When the stock finally broke out to a new high, it didn’t just drift up, it rallied all the way to the close, finishing at its high of the day. That’s exactly the kind of move I’m looking for, a stock that holds up while others are weak and then continues higher once the accumulation phase is complete.

What I love about today’s action is how clear-cut it was. Relative strength isn’t about guessing or hoping; it’s about observing which stocks are leading or holding up while others are lagging. MU was under accumulation by strong hands, and the breakout confirmed it. Traders who recognized this relative strength early would have been positioned for a solid edge.

This example reinforces a core lesson I talk about repeatedly, watching for relative strength versus the market can highlight stocks that are poised to move even when broader sentiment looks bearish. Today’s MU action is a textbook illustration of using relative strength to find stocks that give you an advantage and one that reminds me why this strategy has been so powerful over the years.

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BNAI Surges 108%: Why the $2.50 Level Matters

 

What a big day for BNAI, with the stock surging 108%. Looking at the daily chart, I drew a resistance line at the $2.50 level, and it’s interesting to see how often this stock held $2.50 as support in the past. Earlier this month, we broke below that level, which now makes it a potential area of resistance.

Even though BNAI rallied as high as $2.91 today, it closed right at $2.51, just above resistance. When I look at it, I’m not convinced we’ve fully cleared this key level yet. The close tells me the rally encountered selling pressure right at that resistance line, and that’s something I want to see resolved before committing.

One notable aspect of today’s action is the massive volume bar, which topped 149 million shares. That’s significant because it shows there was a huge amount of activity, but it also highlights that sellers stepped in around the $2.50 level.

My plan for trading this stock is simple: I want to see $2.50 cleared decisively, which in my mind means the stock needs to rally at least toward $3.00. Once that happens, I’ll look for a pullback to the $2.50 area, which should now act as support. Until I see that confirmation, I’ll remain on the sidelines.

Patience is key here. BNAI’s volatility makes it tempting to jump in early, but waiting for the level to flip from resistance to support gives me a higher probability trade and keeps me in control.

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TLRY and the Cannabis Sector: Watching the Sixth Lower High for a Potential Long Entry

 

Another down day in the cannabis sector, and once again we’re seeing a lower high. Lately, my posts have been focused on these lower highs, stalking them for a potential entry, but so far nothing has triggered. I like to wait for the setup to align perfectly, and patience is a big part of my strategy. Right now, one of the setups I’m really watching closely is TLRY. Looking at the daily chart, you’ll notice this is the sixth lower high, which is significant. It tells me the stock has been in a controlled pullback, and that control is exactly what I like to see when positioning for a potential turn.

Another detail that stands out is today’s narrow candlestick body compared to previous days. The smaller range signals a slowing of momentum, which in my experience often precedes a reversal. When the volatility contracts and the selling pressure eases, it can set the stage for an upward move once the right trigger occurs. That’s what I’m looking for here,  a clean, controlled pullback that sets up for a long entry.

My game plan is simple: I want to watch for today’s high to be taken out before committing. For TLRY, that means a break above $9.79. If that happens, I’ll not only enter but also look to add to my position. It’s all about waiting for confirmation rather than jumping in prematurely.

While TLRY is my top watch, several other cannabis stocks are showing similar setups. MSOS, ACB, and CGC to name a few, all have pullbacks that are worth monitoring for the same type of entry. But there’s something about TLRY that makes it stand out, the clean structure of the pullback, the clear sequence of lower highs, and the contracting range all give me a level of confidence that’s hard to ignore.

I’m not forcing a trade. I’m simply watching for the trigger, letting the market show me the path, and being ready to act when the setup confirms itself. That discipline, waiting for the right signal  is what keeps me in control and allows me to trade with the odds in my favor. TLRY could be the first to move, and when it does, I’ll be ready

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IWM Relative Strength vs SPY: How the Ratio Line Predicts Price Moves

 

Above is a 60-minute chart of IWM, and in the lower pane I have the ratio line comparing IWM to SPY. This is a great example of how the ratio line can often act as a leading indicator, tipping off potential moves before price makes them obvious.

Let’s start with point A. At this point on the chart, the ratio line had already broken down to a new swing low even though price had not yet done so. On the surface, IWM still looked relatively stable, but under the hood it was already starting to underperform the broader market. Shortly after that breakdown in the ratio line, price gapped lower and then proceeded to trend down over the course of the following week. The weakness was signaled in advance by the ratio line, long before most traders would have reacted to price alone.

Now look at point B. Here we see the opposite scenario. The ratio line broke out to a new swing high well before price followed. I’ve drawn vertical dashed lines so it’s easy to see where price was at the exact moment the ratio line was already breaking out. While price still appeared range bound, relative strength was quietly improving. Not long after, price exploded to the upside. Once again, the ratio line led the move and gave an early heads up that conditions were shifting.

Now let’s fast forward to where we are now at point C. A few days ago, the ratio line once again broke down to a new swing low, but price has not yet confirmed it. This divergence suggests pending weakness. It doesn’t guarantee that price must move lower, and it certainly doesn’t tell us when, but it does tilt the odds in favor of the bears.

From here, what matters most is confirmation. If we start to see key support levels taken out in the coming days, I would expect price to eventually follow the ratio line lower, just as it has in the past. This is exactly why I rely so heavily on relative strength. It doesn’t replace price, but it often whispers the story before price shouts it.

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RDW: Watching a 6-Day Cycle and Support Confluence for a Potential Bounce

 

Above is a 60-minute chart of RDW, and what has my attention is an interesting cycle rhythm that has been developing over the past several weeks. Markets often move in cycles, and in this case RDW appears to be respecting an approximate six day rhythm. If you step back and look at the swings, you can see that rallies have been showing up roughly every six days, almost like a pulse running through the chart.

That’s important because we are now right at the point in time where if this cycle continues to assert itself, a rally could be due. Based on the prior rhythm, the window I’m watching most closely would be Monday, or Tuesday at the latest. Timing alone is never enough to take a trade, but it does tell me when I should be paying closer attention.

From a price perspective, we also have some interesting confluence. RDW is currently sitting near the bottom of a channel, an area where price may find support. Just below current levels there is also an open gap, which can act as a support zone. When time and price line up like this, it gets my attention. It doesn’t mean a trade is guaranteed, but it does mean the risk-reward may soon become more attractive.

At this point, there are no buy signals. I want to be very clear about that. I’m not anticipating blindly or trying to predict the market. Instead, I’ll be watching for the market to tip its hand. That could come in the form of a bullish reversal candle such as a hammer or an engulfing pattern, a trendline break or possibly signs of improving relative strength versus the overall market.

For now, RDW is simply on my radar. If the cycle rhythm holds and price responds to these support areas, I want to be ready to react. As always, the goal is to stay patient, let the market confirm the idea, and only act when the evidence is there.

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