THE BIG IDEA
This week we are going to review the ups-and-downs of the Roundhill Big Tech ETF, or MAGS, so far this year. Our aim is to show why it can be so hard to make money in the stock market, and what to expect next.
Let’s start with that V bottom in the spring. Trump’s war against Iran was the catalyst for the decline. But if you were waiting for his war to end before coming back to the table, you have missed a solid bull market.
It is not uncommon for prices to trace out a W pattern. This is what we got during the summer. It is not necessary to have a tidy, symmetrical W. For our money, we like to pay attention to the second half of the pattern. If prices don’t fall to the level of the first bottom, it is more likely that a robust rally is on the way.
But why sometimes a V and other times a W bottom? That is one of the mysteries of the market. And if you had guessed that another V-bottom was forming in June, you may have panicked and sold when prices rolled over in July.
Then there is that support/resistance barrier around $71. Twice in May, MAGS hit it and failed to push through. And again in early September. Finally, later in the month, it jumped through to the other side.
At that point, the resistance area becomes support and MAGS has already tested it twice. This is where we are now.
What will happen next?
There are three possibilities, two of which will generate losses for many traders.
First, there could be a textbook bounce of off that support line. This is probably what most traders are looking for.
Second, MAGS could slice through the support line as if it is not even there (which it isn’t!).
Third, the price could briefly undercut support, long enough to generate some panic selling and automated stop-loss selling. Then turn around and march higher.
We don’t have a guess about how it will play out, and we don’t want to guess. We just want to be prepared for any outcome and react accordingly.
SEEN ON THE INTERNETS
We have mentioned Jeff Hirsch in this space before. He publishes the Stock Trader’s Almanac. He also posts material on Tumblr, but don’t hold that against him (too much).
After the market close on Thursday, he posted Russell 2000 Seasonal Weakness Ends Now. The second of two charts included in that post is copied below.
Hirsch is telling us that smaller stocks usually underperform the rest of the market in Q3 into the end of October. The pummeling that those stocks have been getting lately is actually in line with historical tendencies.
He ended the post with this comment: “Remember, October is the best month to buy stocks, especially tech stocks and small caps.”
NUMBERS ONLY
1 | Some ugly action in the market on Friday, yet only one stock in the S&P 500 (MGM Resorts International) hit a 52-week low. |
$6.18 | According to the U.S. Energy Information Administration, the national average price for a gallon of diesel fuel is $6.18, up by $2.51 or 68.6% from a year ago. |
- 11.54% | Picking up on the theme of last week’s Big Idea, the Roundhill Humanoid Robotics ETF (HUMN), which debuted in June 2025, is down 11.54% for the month so far. |
SWINGEX INDEX
As of market close on: 16 October 2026
Swingy says: A little bit of panic means you should get to work finding stocks to buy.
Learn more about how the Swingex Index works here.
WATCHER
Trade ideas highlighted here each week have a timeframe of 3 days to 3 weeks in mind. They are not recommendations to buy or sell. Swing traders should follow up with their own research.
FUN (Six Flags Entertainment): With the recent death of a customer at one of its properties, concerns about the company’s capital structure, and seasonal headwinds for small-cap stocks, it might seem like a terrible time to buy shares of Six Flags.
But, sometimes, the situation can look so bad that it presents an opportunity for a trade. This is where FUN is now.
The last four days have seen daily losses of 14.43%, 12.35%, 4.36%, and 5.15%. All of it on heavy volume about 3X more than usual.
Prices have finished outside of their Bollinger bands for the last four days. RSI(2) is below 10 for the last three. Those two conditions don’t persist for very long and often generate a snap back in the opposite direction.
It may only bounce enough to meet the longer-term downtrend, but that would still be a solid percentage gain over the coming days.