Power Hour #38 Bearish

Power Hour #38: Regime Reversal: Purge Positions and Wait for the Waterline – Tuesday 5/12/2026

May 12, 2026

Tickers Mentioned

OABI CLSK EPHE UNH DBGI RAL AREN CVRX QCOM AIT

Episode Summary

Market breadth collapses and sentiment turns sharply bearish, signaling a definitive regime reversal. The hosts identify immediate exits for CLSK and AREN due to failed earnings, while outlining a defensive strategy focused on UNH for the next session.

Key Takeaways

Sentiment crashed to 4% Bearish with 71pp breadth drop.
Technology sector ATR hit 4.78, signaling extreme volatility.
OABI surges 11.7% while CLSK tanks on bad earnings.
Consumer Staples becomes the strongest sector at 0.36.
Action code ABC: Prioritize risk control over new entries.

Power Hour Brief: May 12, 2026

Regime Check — Where Are We Now?

The market regime has sharply deteriorated from morning, with sentiment collapsing to a 4% Bearish reading as breadth contracts significantly.

Breadth Direction: Market breadth is contracting rapidly, with the percentage of stocks above the 20 SMA plummeting 71.0 percentage points from yesterday’s 158% to today’s 87%.
Leading Sector Shift: Technology remains the highest volatility sector with an ATR of 4.78 (89th percentile), but Consumer Staples has flipped to the strongest performer at 0.36 with a rising trend.
Market Character: Today is a definitive reversal day characterized by a massive drop in participation, as the 40 SMA breadth metric slipped 2.8 percentage points to 57.03%.

Strategy Signals — Continuation, Reversal & SIP

Strongest Continuation (2LYNCH): OABI is the primary breakout candidate, surging 11.7% with a 1.3 RVOL despite a high risk score of 208.5%.
Strongest Reversal Setup: EPHE shows the most significant reversal potential with a -1.3% drop and massive 10.1 RVOL, suggesting a capitulation bottom forming.
SIP Leaders Failing: CLSK is a critical failure point, trading at $14.30 after reporting Worse-than-expected Q2 results with a -262.43% EPS quarter-over-quarter decline.
Relevant Action Code: ABC (Always Be in Control) is the priority today given the 4% Bearish sentiment and the 71.0pp collapse in 20 SMA breadth.

Closing Playbook — What To Do Now

CLOSE Positions: Immediately close any long exposure to CLSK ($14.30) and AREN ($2.63) as both reported Worse-than-expected results and are trading on negative sentiment.
ENTER Setup: Consider a small, controlled entry on OABI only if it holds above $1.87 into the close, targeting a continuation of its 11.7% intraday move.
Key Level Watch: With index data unavailable, monitor if Technology sector ATR stabilizes below 4.78; a drop below this level confirms the sector is losing momentum ahead of tomorrow.

Tomorrow’s Early Look

Overnight Catalyst: Watch for any overnight guidance updates from DBGI, which is down on guidance, and RAL, which raised FY2026 EPS and sales guidance.
Setup Forming: UNH is a key watch for tomorrow; if it holds $396.44 with 1.5x institutional interest, it could lead a defensive rotation into Medical.
Regime Outlook: The 4% Bearish sentiment suggests a cautious open; do not chase breakouts unless breadth above the 20 SMA recovers above 90% by midday.