EB Daily Market Report - Special Report - Friday, May 19, 2023
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Last Night's Portfolio DRAFT
We have selected the 10 equal-weighted stocks in each of our 3 portfolios. We have clearly shifted heavily into growth stocks. I believe the current breakout in the S&P 500 and NASDAQ 100 is an indication of more gains to come. We're also in the heart of the best seasonal period for growth stocks - from May through August. The Portfolio ChartLists are on our website and can be viewed/downloaded at your leisure.
I want to reinforce that we are NOT Registered Investment Advisors. We do not "recommend" or provide "advice". We're not licensed to do so. We provide education and you should view our portfolios as further education. We created them to demonstrate how we would attempt to outperform the benchmark S&P 500. While our performance will be based upon the closing prices of these stocks today, May 19th (BUY PRICE) and the closing prices of these stocks on August 19th (SELL PRICE), our members are free to (1) buy and hold, (2) trade, or (3) ignore these stocks. Because these stocks are generally leaders within their respective industries, many are currently overbought. We do not consider that. We simply buy at the Friday close. But members should consider buying and/or selling these stocks at whatever price you're comfortable.
Current Market Update
If this isn't an indication of how bull markets can ignore EVERYTHING as they trend higher, I don't know what is. The biggie short-term obstacle, in my opinion, is options expiration. There was plenty of net in-the-money call premium when we held our May Max Pain event on Tuesday afternoon. Well, those numbers have only ballooned. Don't grow complacent, however. We know that the absolute worst week of calendar months is from the 19th through the 25th. Today is May 19th. So we're by no means out of the woods just yet. I believe a reversal and pull back could take place at any time. I love the market to move higher, but short-term is always much more dicey. I've updated my key INTRADAY ratios on the QQQ:SPY and XLY:XLP as of yesterday's close and both help to illustrate why I remain so bullish:
QQQ vs. SPY:
XLY vs. XLP:
If you look at the bottom panels on both charts, you can see that the QQQ:SPY and XLY:XLP ratios were falling during recent stretches, but the INTRADAY versions of both charts held up much better. That's a perfect illustration of how market makers use gaps to manipulate prices lower at the opening bell. Then all the bears, listening to the "news of the day", pile on, only to see intraday reversals and mostly strong afternoon action.
The INTRADAY ratio charts have both broken easily to new highs. Wall Street continues to accumulate the higher risk areas of the stock market. This "risk on" mentality is what drives bull markets higher. We'll have pullbacks from time to time, but my key signals overwhelmingly support higher stock market prices ahead.
Happy trading!
Tom