EB Daily Market Report - Quick Update - Friday, December 16, 2022

I'll make this one quick as I spent the morning in a dentist chair. I'm not sure which was more painful - the dentist visit or watching the market action on my phone!

There's some good news and some bad news. Let's start with the good news. I don't know if you were watching in pre-market action, but I follow opens and closes VERY closely. I believe they're much more important than intraday action. The gap open on November 10th after the October CPI report was released was 276.01 on the QQQ and, after brief morning weakness, we took off and never looked back. Well, we never were able to clear 295 on a closing basis and earlier this week, after the November CPI report was released, we gapped up to 296.65. But that was all we could muster and then max pain kicked in, along with the Fed's policy statement on Wednesday at 2pm. We've been selling ever since. After moving below 276.01 yesterday intraday, the QQQ managed to finish at 276.89, avoiding the dreaded breakdown. Well, this morning we were trading down in the 274s (maybe hit 273s for a bit?), but in the final two minutes before the open, the QQQ spiked 1.50 rather quickly and we opened today at 276.20. In my experience, opening above key support is a major positive. So that was the good news - the open was where it needed to be.

Now for the bad news. Our major indices have been trading lower all day. Over the past 30 minutes or so, we've attempted to make a comeback, but we'll need to keep the rally going into the close. If we can finish back above 276 on the QQQ today, we will have held gap support with a long tail beneath it. That's been the mark of significant reversals in the past. Again, this is no guarantee, but if we can finish strong today, it could be the technical catalyst for a strong finish to 2022. Here's what the QQQ chart looks like right now:

I am VERY aggressively invested in the NASDAQ 100 right now, and I'll make a decision at the close how leveraged I remain. If we fly into the close, I'll likely hold everything over the weekend. If we're real close to 276.01 at 3:59pm, I'll likely lighten the load, not to take too big of a risk over the weekend.

Let me be clear about one thing. If the QQQ finishes the final 30 minutes on a weak note, that doesn't change anything for me from a long-term perspective. It simply makes me more cautious near-term until we can our legs under us again. It also would open up the BOTTOM of gap support from the close on November 9th at 263.32. I don't want to take any chances at being leveraged and holding down to that level.

Let's see how today ends.

Happy trading!

Tom