EB Daily Market Report - Quick Update - Monday, April 24, 2023

The Final Bar

I'll be guest hosting StockCharts TV's flagship show, The Final Bar, today through Thursday, while host David Keller travels to and attends the CMT conference. The show begins at 4:00pm ET and runs through 4:30pm ET each day.

Market Update

This will be very brief as I will be working with StockCharts later this afternoon, prepping for The Final Bar.

Selling has accelerated a bit today, which isn't shocking to me at all. THE worst day for longs, historically, is the Monday after monthly options expire. That's today. Also, we know from history that the S&P 500's worst time of the calendar month runs from the 19th through the 25th of all calendar months. Today is April 24th. What we've seen over the past several days - slight move to the downside - is why I suggested being a bit more cautious at the beginning of last week. I didn't like using leverage then, but I am open to building a bit of leverage now as we've seen a reasonable amount of selling. The NASDAQ 100 ($NDX or QQQ) dropped more than 2% from its recent high, so I've begun adding a bit of TQQQ, which moves at a 3 to 1 clip on the long side, following the QQQ. Leverage increases both risk and potential return, so if you decide to trade using leverage, please understand and be comfortable with the additional risks inherent in these types of leveraged products.

My plan is to add leverage from the current price on the QQQ down to the 311-312 area and I'm considering filling out my leveraged position by Tuesday's close (even if the QQQ doesn't reach the 311-312 area) as Microsoft (MSFT) reports its quarterly results. After Wednesday's close, Meta Platforms (META) will be reporting. Both of these companies, in my opinion, could report blowout results based on how they've been performing among peers. META, in particular, has been a big part of the communication services (XLC) strength year-to-date. I'll likely sell all leverage if the QQQ were to close beneath 305-306. The 50-day SMA currently resides just above 306 on the QQQ. Personally, I believe the stock market is about to soar back to its August high - perhaps over the next 3-4 weeks. If I'm correct, I'll ride the leveraged position up to perhaps the 330-332 level on the QQQ, then consider taking profits there.

Of course, the market may not follow the path I'm expecting and I absolutely do not want to hold leverage long-term. That's why I'll keep my line in the sand around the 305-306 area on the QQQ.

Coca Cola Co (KO) reported solid quarterly results and the stock gapped higher at the open to 64.75. It has since retreated to yesterday's close at 64.05, so it's now flat for the session.

Later in the week, we'll get the Q1 GDP (on Thursday) and then personal income and spending on Friday. That latter report also provides the Fed more inflation data, the March PCE price index, which the Fed watches closely.

Anyhow, that's all I have for now. Join me after the close for The Final Bar.

Happy trading!

Tom