Next Day Prep #212: Two and a Half Points: Bull Trap or Conviction Buy? | WaveRider NDP – Tuesday 2/24/2026

Welcome to Wave Rider NDP, Next Day Prep. Get ready for tomorrow's momentum plays. Let's dive in. Monday was the panic. Tuesday was the punchback. But the S&P 500 missed reclaiming its most critical technical level by just two and a half points. So the question heading into Wednesday is simple. Was Tuesday a conviction buy or a bull trap? Two and a half points. Oh, man. Two and a half points. I mean, we closed at $6,893. The 50-day moving average is sitting right there at $6,895.59. You literally couldn't get closer to… And here's what makes this interesting. We did trade above the 50-day intraday. Right. Mm-hmm. Bowles had the level and couldn't hold it into the close. That's not a failure, but it's not a confirmation either. It's a warning. Yeah, yeah. It's like a warning shot. Right. Look, exactly. And closing above a level is the only thing that counts in technical analysis. Intraday breaches are noise. Wednesday's close is the signal. OK, before we look forward, let's score the tape. What actually worked Tuesday, what didn't, and what the breadth numbers are telling us about whether this bounce was real. So we had S&P up 0.8 percent, NASDAQ up 1.0 percent. Mm-hmm. Yeah. But here's the kicker. Russell 2000 leading at 1.2 percent. Honestly, small caps leading, that's the part that surprised me. Yeah, totally. Always a good sign. Sector-wise, consumer discretionary was the widest gainer at 1.6%. BKNG and EXPE each up 5.1%. WSM up 3.5%. Tech up 1.2%. And healthcare? Here's the thing. The lone loser, down half a percent. But here's the breadth number that really matters. 71% of S&P stocks closed above their 20-day moving average. Wait, 71%? That's not a bounce, that's a stampede back in. Wow, I mean exactly. And the direction of the move matters as much as the number. We went from distressed breath levels to 71 in a single session That not short covering that genuine risk appetite But I have to ask about health care Is there any scenario where managed care weakness bleeds into the broader market? No, and this is the key distinction. MOH down 5.1%, Hume down 3.6%. That's a regulatory overhang story, completely isolated from the macro picture. I mean, think of sectors like lanes on a highway. Tech and discretionary are in the fast lane with Clear Road Ahead. Healthcare is stuck behind a regulatory roadblock. These are separate stories. Right. And healthcare is the one lane that's just completely blocked. Yeah. Here's the thing. And here's the thing about the buying. It was targeted. IGV software ETFs surged 1.9% after falling 5% Monday. Semiconductors up 1.5%. Investors went straight back to the names that got hit hardest. So fundamental recalibration, not dead cat bounce. Mm-hmm. Honestly, exactly. And the reflex bounces look different. They're narrow, they fade by noon, volume drops off. This had legs all day. And the fundamental case got a major boost from earnings, including one company you've probably never heard of that just posted the single best proof that AI infrastructure spending is actually accelerating. Keysight Technologies, up 23% in a single day. Wow. Wait, Keysight? The test equipment company? Record revenue of $1.6 billion, up 23% year over year. Wait, 23% revenue growth on test equipment? That's not supposed to happen. I mean, think of Keysight as the company selling hard hats and steel-toed boots during a construction boom. You don't notice them, but they prove the building is actually happening. Q2 guidance well above consensus. And then AMD up 8.8% on the Meta-AI partnership. Two sides of the same coin. Keysight proves the spending is real. AMD shows where it's going. What about Home Depot? Because that beat felt like it mattered beyond just the earnings number. After three consecutive misses, a beat is a psychological relief valve. It doesn't have to be great. It just has to stop getting worse And it did That changes the narrative on consumer spending Right Okay so we got real fundamental support and a market sitting two points below a critical level Walk me through the watch list Four setups with defined risk for Wednesdays open Think of this like having four different fishing rods in the water. Different risk profiles, different catalysts. I like that. So which one do you actually want to bite first? Mmm. AMD at $213.84. The momentum continuation play. Meta Partnership gives it fundamental fuel, watching $215 resistance for a breakout to $225 target. The bobber is already twitching on this one. What's the stop? Tight. Under $208. That's 2.7% risk. Yeah. You know what? Okay, PayPal. You're really putting acquisition rumors on the watch list? That feels like gambling, not trading. Fair pushback. But here's the difference between gambling and trading a rumor. The stop. Entry above $48, stop at $45. That's 4.3% risk on a defined position size. The rumor is the catalyst. The stop is the discipline. If it breaks down, you're out before it becomes expensive. That makes sense. Right, right. BKN at $4,068, the oversold travel recovery. Reversal signal active, entry above $4,100, risk to $3,950. Today's consumer discretionary strength gives this fundamental backing. And Keysight? This is the patience play, and I want to be emphatic, do not chase a 23% move. Don't chase. And look, the discipline to not chase is what separates traders from... Gamblers. Yeah, I've learned that one the hard way. So basically, watch for three to five days of consolidation, volume drying up near the highs, and then it becomes a trade. Right now, it's a story, not a setup. So how do you frame what Wednesday actually means for all four of these? The 50-day MA is the market's lie detector test. You can talk a big game, but if you can't close above it, the bounce doesn't count. Mm-hmm. Give me the scenarios. Bullish first. S reclaims and holds above NASDAQ pushes through BRETH sustains above 70 That the green light for aggressive positioning in AMD and BKN You are stepping on the gas And if it fails? Exactly. So honestly, if you see failure at the 50-day, BRETH drops below 65%, VIX spikes above 18, you're out. Full stop. Yeah. Cut to 30-40% exposure immediately. The watchlist stops are your first line of defense, not something to negotiate with. 30 to 40 percent. And one more thing, the bull 4 percent reading. 356 stocks in short-term overbought territory versus only 83 bears. Almost everyone is already positioned long. That means very little buying power left in reserve if something goes wrong. So one bad headline and one bad headline can trigger a stampede. And the State of the Union tonight is exactly that kind of wildcard. Any tariff, AI regulation, or trade commentary could move futures hard. So check futures after the speech, not in the morning. Right. That's when you'll know what tape you're walking into. 60 to 70% exposure heading in, selective, aggressive, precise, not passive, not reckless. All right, let's bring it home. The most important thing you can do tonight is not predict which scenario plays out. It's to have a written plan for both. The market doesn't reward the most confident trader. It rewards the most prepared one. The 267 reversal signals from Monday's panic created real opportunity. Don't let impatience turn a great setup into a bad trade. Yeah, watch 6,895 like a hawk. That number is burned into my brain at this point. Tuesday was genuinely encouraging. Broad breath, fundamental buying, Keysight proving AI CapEx is real, Home Depot stopping the consumer bleed, But encouraging isn't confirmed. Trade the setups with the find risk and we'll see you on the other side. That's your Wave Rider NDP. Ride smart, trade prepared. And we'll be back tomorrow with the next day's playbook. Let's go. That's all for today's episode of Wave Rider NDP. Next day prep. Get ready for tomorrow's momentum plays. See you next time.