EB Daily Market Report - Quick Update - Wednesday, May 17, 2023
I'm beginning to prep for tomorrow evening's Portfolio Draft, so I want to make today's update a quick one. John Hopkins will likely provide you a quick update tomorrow as I continue in full draft prep mode.
The first thing that really stands out to me is that the QQQ has moved above 331 and is trading at 331.08 as I write this. Remember, the August 2022 closing high was 331.16. This is a VERY significant price resistance level as it's the key "lower high" on the weekly chart. A close above 331.16 eliminates the trend of lower highs and lower lows on that more bearish weekly chart. Also, the QQQ was already about 4% above max pain at yesterday's close. It's now roughly 5% above max pain with a major hurdle at 331.16. Can it break through? One part of me wants it badly for the long-term bullish call that I've made, but I firmly believe we'll get there eventually, whether it's today, this week, this month, or this quarter. But the other part of me would like a pullback first - perhaps to the rising 20-day EMA in order to build a bit of a leveraged position before the next breakout. I'd still favor the latter scenario based on probabilities. Let's see which way this goes over the final 2 1/2 hours today.
Secondly, remember it's "Opposite George" week. At last night's session, I indicated that energy (XLE) and financials (XLF) had the lowest SCTR scores among sectors and that we could see rotation move towards these two groups. The only "long" trade candidate I provided, for max pain purposes, was KRE, the regional banking ETF. KRE had a max pain level more than 7% higher than yesterday's close. KRE is up 7.63% today. I swear, you can't make this stuff up.
Getting back to the XLE and XLF, check out sector leadership today:
Opposite George week is a real thing. All of a sudden, the more value-oriented areas of the market have caught fire, while growth, though higher today as well, has taken a back seat.
Now it's all about today's close. If we get a confirmed breakout on the QQQ, it must be respected. I won't trade leverage, because of the continuing threat of max pain. But I also won't sit back and let the QQQ take off without me. I'll take on the risk of owning the QQQ with a confirmed breakout.
Happy trading!
Tom