The U.S. stock market finally delivered the pullback we’ve been waiting for. After weeks of grinding higher on the back of AI narratives and heavy tech exposure, we’ve now seen a clean, orderly multi-day dip. This sets the stage for tomorrow’s action — with Jackson Hole and options expiration Friday right around the corner.
This is not a crash. It’s a healthy reset. The SPY has been marinating near the lower Bollinger Band, the stochastics are oversold, and the IWM just held its breakout retest beautifully. If we flush early into Jackson Hole and tag the 50-day moving average, probabilities favor a bounce. For active traders, that’s the spot to be ready.
What stood out today was the small-cap strength. The IWM outperformed, pulling back right into the “bone zone” breakout level. If that holds and pushes into the 230s, game on.
Stocks to Watch
- Rare Earths (MP, USAR, CRML): Rare earth names perked up into the close. MP and USAR both pulled back to support after strong runs. If MP clears $20, the move to $25 could come quickly. These trade clean and have real momentum behind them.
- PSKY (IPO name): One of the cleanest setups on the board. After a monster push on a UFC television deal, the stock has pulled back lightly on low volume for four days right into the 9 EMA. Volume was huge (48M), and this is setting up for another leg higher. Top of the watchlist.
- Chinese stocks (XPEV, PDD): XPEV broke out of a wedge and is clearing horizontal resistance. PDD trended all day today and has been one of the stronger China names. These actually had intraday range, not just gaps that faded.
- Mid-cap setups (BE, OkLO, SMR, JOBY, TEM): BE has been a trader’s stock lately. OCLO just pulled back from 85 to 60 and is holding at the 50-day. SMR pulled right back to its breakout level. JOBY is sitting at its 50-day. TMC retraced to its 200-day after a big run. All of these are in spots to be watched closely.
- Palantir (PLTR): This has been a tricky name. After multiple failed bounces, it’s best to leave the circle jerk and wait for a cleaner trend to emerge.
Trading Takeaway
The best part of being a day trader is flexibility. If the market flushes, you can try the bounce. If it rips, you can flip short intraday. This pullback has been orderly and sets up both directions. With Jackson Hole and OPEX on deck, expect volatility. Stick with the clean charts — PSKY, rare earths, and strong mid-caps — and avoid overtrading the chop.
For a deeper dive on trading principles, check out our post on 21 Principles of Trading.
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About the Author:
Kunal Desai is the founder of Bulls on Wall Street and has been actively trading for over 20 years. He has trained thousands of traders worldwide in risk management, momentum trading, and market psychology.
