EB Daily Market Report - Quick Update - Wednesday, August 2, 2023

I've been watching the market closely this afternoon and wanted to wait before putting anything together. That's why I don't have a full DMR today. Anyhow, I don't like the action in the NASDAQ 100 and, more specifically, in semiconductors ($DJUSSC). Here's a quick chart of both:

$NDX:

I don't like 20-day EMA breakdowns with negative divergences, so I've sold all of my QQQ and will wait to buy back in. I believe there's a much stronger chance now that this bout of selling extends down to the 50-day SMA.

$DJUSSC:

The AD line's failure to move up with price action suggests we could use a little selling in semiconductors. Because they're one of the most influential industry groups, though, it's going to be difficult for the market to continue higher and enjoy "business as usual".

Also, I'm concerned about the XLY:XLP sustainability ratio moving down with price action. It suggests we could see further selling. If so, I'd rather sit it out and jump back in when the market re-stabilizes. Here's that intraday XLY:XLP chart:

This is not a good look near-term and this combined with the daily negative divergences tells me that the risks are likely tilting towards more short-term selling.

Finally, the Volatility Index ($VIX, +) is jumping the most we've seen since much earlier in 2023:

Based on all of this, I've lessened exposure considerably. I've sold all of my QQQ for now and but am holding steady with my IWM. I do like the relative rotation from the QQQ to IWM. Depending on my signals on any further weakness, I could begin building my TNA position and reducing my IWM position - for leverage purposes.

I sold my individual stock positions, including the EXAS bought during this morning's live trading room.

Happy trading!

Tom