EB Daily Market Report - Quick Update - Thursday, August 10, 2023

I wanted to watch the action late today to see if buyers returned, but they haven't. There still appears to be further downside possible. I do find our INTRADAY relative price action somewhat bullish. Before the market can rally, I believe we'll need to see the QQQ:SPY and XLY:XLP (ignoring gaps) ratios turn higher. Currently, they're struggling to do so.

QQQ:SPY

XLY:XLP

Note that the red arrows BOTH marked tops in mid-July, just as options expiration week began. Also, keep in mind that the TRUE "go away" period begins on July 17th and lasts through September 26th, based on my years of research. So as I continue to mention, we need to lower our expectations over the next several weeks. Furthermore, it'll be important to see what happens to these two ratios when we do see a meaningful bounce back through the 20-day EMA, possibly even back to the price high from mid-July.

Next is the intraday relationship between the IWM and QQQ, also ignoring gaps. Check out this continued strength:

This does not include today's action and neither do the two previous charts, but I think this chart shows that the IWM remains the market favorite throughout the trading day. That's one MAJOR reason why I'm sticking with the IWM/TNA trades.

I'll provide our regular DMR tomorrow.

Happy trading!

Tom