EB Special Report - Friday, September 30, 2022
This Special Report will be quick and is in lieu of today's Daily Market Report.
Sentiment has reached a very bearish level with the 5-day moving average of the $CPCE hitting .85. This, combined with the Volatility Index ($VIX) near 32, tells me that sentiment has reached a point where a significant rally could occur at any time. Also, we're now moving to within a couple week of earnings season. Historically, the stock market gets a lift as we approach earnings season.
Here's a quick update of the 5-day SMA of the $CPCE:
All of this is occurring with the S&P 500 at key price support (double bottom).
One more interesting development is the reversing candle that's printing on the 10-year treasury yield ($TNX) weekly chart. Throw in the negative divergence and it certainly appears that the TNX is due for a more significant drop. A very similar candle presented itself back in June. Check this out:
The negative divergence increases the odds of a 50-week SMA test and a weekly PPO centerline test. If that were to occur, the more growth-oriented stocks found on the NASDAQ 100 should perform well.
I've grown much more aggressive, using a leveraged ETF that tracks the NASDAQ 100 (QLD). I've filled out my position. These leveraged ETFs are obviously much riskier than just investing in the QQQ as they track the NASDAQ 100 on a 2 to 1 basis. You can make twice the amount, but you can also lose twice the amount. PLEASE understand the risk you are taking before placing any trades.
Happy trading!
Tom