EB Daily Market Report - Quick Update - Friday, February 24, 2023
Manipulation Continues
I'm a very firm believer that individual retail traders are being wildly manipulated by the big Wall Street firms. The latest "selling" is only adding to that belief. I want you to look at the action that has taken place thus far in 2023 on the QQQ:
During the huge rally that we saw from the January 5th close through February 2nd, accumulation was very apparent. Not only can we see in the lower panel, but my intraday analysis shows the exact same thing. The QQQ gained roughly 50 bucks during this 4-week period and only 3 dollars came from gap ups! The other 47 dollar increase came the old-fashioned way - via intraday buying.
Since the February 2nd close, however, the QQQ has lost approximately 20 bucks. Not surprising to me at all, the gaps have been -22 dollars!!!! Folks, Wall Street is manipulating the heck out of this action. There is little selling, it's all gap downs. Retail traders are selling due to panic. They see their account balances dropping and then watch all the inflation news and think we're heading back to the 1970s. I believe the exact and polar opposite. We're going higher, a LOT HIGHER. We need to work our way through February and March, but I honestly believe we are setting up to explode into April and the AD lines are a big reason why. But you certainly don't have to agree with me. I'm simply giving you my experienced opinion.
I've also been tracking the intraday relationship between the QQQ and SPY, ignoring all gaps. This helps to provide us a clue as to how the money is rotating. If Wall Street truly believed that equity prices would head lower due to higher inflation and higher interest rates, then this ratio would turn significantly lower. Check it out and you be the judge:
I see a ratio that's barely dropping from its recent high. In other words, where is all the rotation to safety that we should be expecting? It's simply not happening.
Sentiment Setting Up
Over a year ago at MarketVision 2022 in early January 2022, I said the BIGGEST issue in the stock market was sentiment. We were way too bullish and we needed sentiment to "reset". Well, we're just about there. Now everyone is bearish, believing we're reliving the 1970 inflation period. We're not, but spreading that message through every outlet possible is a great way for Wall Street to buy shares cheaper.
I continue to track the equity-only put-call ratio ($CPCE). My adjusted figures are still rising slightly, but the higher CPCE values from March and April 2022 are about to be replaced by lower CPCE values in 2023. Once that top occurs in the 253-day moving average of the CPCE, we are very likely to see the top on the following chart and a downtrend begin. History tells us that this process is accompanied by a significant move higher in the S&P 500. Prepare accordingly. Here's my adjusted chart as of today, but the values should begin reversing during March:
Remember, when this 253-day moving average rolls over, it has coincided with remarkable advances in the S&P 500.
I see higher prices coming very soon, but we'll need more patience to get us through the next 3-4 weeks. Then, I believe, we'll head into Q1 earnings season in April full speed ahead.
Have a great weekend!
Happy trading!
Tom