Seasonality & Oversold Bounces!

Hi folks!

Its been a very eventful last few weeks in the market and what I want to do today is take a closer look at what we're seeing, dive into some $NYMO and $NAMO charts, look at historic seasonal trends and then finish it off with a game plan going into next week!

Over the past 3 weeks $QQQ has been making new lows in the reversal that started on November 3rd. Each one of these new lows in the current trend has presented itself on the Friday of each week, November 7th, 14th and just the past Friday on the 21st. A new low is made followed by strong rallies to close the day out strong.

We can visualize these new trend lows and Friday reversals on a $QQQ daily chart

So far these new lows followed by strong intraday rallies on the Fridays haven't materialized in a reversal of the overall trend. They've been consistently faded 1 - 2 days afterwards. There are some key points to examine from just this past Friday (November 21st) that may be setting the market up for more then just 1 - 2 days of strength. Potentially a pivot in the trend stabilizing the market for a new leg higher.

On Thursday November 20th the market gapped up on strong $NVDA earnings. This gap up was almost faded immediately. The market made little attempt to hold any significant levels of price and closed down near lows on much higher then average volume. Trading 118 million shares on the day. For context the last time $QQQ traded more then 118 million shares on the day was on April 7th of this year. Which ended up marking the low of the correction.

$NYMO and $NAMO marked oversold on Thursdays close to top things off. $NYMO and $NAMO tend to only fall into an oversold state 3 - 4 times a year. Historically these oversold states have marked strong multi-week and multi-month lows to trade against.

We then move into Friday November 21st. Another small gap up open that gets quickly faded and taking into consideration how strongly the market was faded on Thursday it would be safe to assume Friday would follow lower as a risk off day but as we've witnessed Friday lows have been bought over the past few weeks with strength.

Now if you examine $QQQ from the past few weeks the general conclusion is probably "well, this is just another one of those bull trap Fridays that we've seen the last 3 weeks, I wouldn't be surprised to see the market continue lower again next week, trapping as many people as possible!"

From the technical side of things one could come up with a strong "recovery rally", bull case moving into the next few weeks. Here are several key points that I'm considering

• $QQQ Thursday volume highest since the 2025 April low

• A strong rally from a new trend low on a Friday

• The markets willingness to continue to put risk on over the weekend

• The extreme oversold state of prior momentum names and risk assets such as $BTC

• Seasonality characteristics going into year end.

Moving into the topic of seasonality historically November tends to be one of the strongest months of the year for the market. Since $QQQ returned over 10% from September through October of this year its unsurprising to see things cool down. November of 2025 has been the worst performing November dating back all the way to 2008.

If we look at $SPX trend data over the past 20 years, historically the market tends to rally out strong into year in. Especially when you take into consideration the strength of this years bull market.

This recent pullback paired with the characteristics we listed earlier:

• $QQQ Thursday volume highest since the 2025 April low

• A strong rally from a new trend low on a Friday

• The markets willingness to continue to put risk on over the weekend

• The extreme oversold state of prior momentum names and risk assets such as $BTC

• Seasonality characteristics going into year end.

sets us up for a solid multi-day and potentially multi-week rally as we approach the holiday season.

Where will I be looking for strength?

For the traders who like to trade MAG7 stocks $MSFT and $META are the most "oversold" in the group.

For the risk on type traders who enjoy trading leveraged ETFs $SOXL and $TQQQ could potentially produce strong multi-day and multi-week bounces.

The largest risk equities such as $IBIT, $BTC and $MSTR sit in technical oversold conditions. Names such as $CRWV and $OKLO can also fall into that category.

If you're looking for additional ideas you can use something as simple as Finviz Maps and look at past 1 week or past 1 month performance to highlight the strongest and weakest major stocks in the market.

From a 1 week perspective $AMD, $ORCL, $PLTR and $MU were some of the weakest names that could be potential bounce candidates moving forward.

How can risk be managed in a market like this?

Trading reversal setups is always a very volatile endeavor. The best risk defense is using the recent lows as an "established low" and assume anything under those price points is no mans land!

I hope you found this market review useful! Lets have a strong week in the markets!

Cheers and happy trading!