EB Daily Market Report - Quick Update - Tuesday, June 5, 2023

There is little news out this week in terms of economic and earnings reports as traders begin to look ahead to the Fed meeting next Tuesday and Wednesday. In the meantime, it's important to follow technical clues as we look for rotation and new leaders emerging.

To that end, I first want to point out that travel & tourism ($DJUSTT) is making the breakout that I pointed out in yesterday's DMR. Here's the chart I provided:

One stock that is benefiting from this breakout and renewing strength is Expedia, Inc. (EXPE), which is performing better than it has in a long, long time:

One other chart I'd like to share is another User-Defined Index (UDI) that I've created to track the intraday relative performance between the IWM and QQQ. The top panel shows this relative relationship IGNORING GAPS, while the bottom panel INCLUDES GAPS:

While both are downtrending, you can see that the INTRADAY IWM:QQQ ratio has turned much higher than the IWM:QQQ that includes gaps. I'm simply pointing this out as it appears that money is rotating intraday more heavily into the IWM than it might appear at first glance. This further supports the notion that small caps are in the process of enjoying a much more noteworthy advance.

I continue to stick with the TNA, a leveraged (3x) ETF that tracks the small cap Russell 2000 index. The whole idea with leveraged ETFs, however, is to be sure to take some profits. As the IWM (ETF that tracks Russell 2000) moves higher and higher, the downside risk on the TNA grows. So I wouldn't worry about exiting too soon. Selling half makes you half a genius no matter which way small caps trade. This has been an excellent trade thus far, so just consider a strategy that guarantees profits.

Happy trading!

Tom