EB Daily Market Report - Quick Update - Tuesday, February 4, 2025

Annual Member Event

First of all, if you're not currently an annual member, we are running a very quick FLASH SALE, so please take advantage at a $200 discount right now! Current annual members whose membership will expire over the next 2-3 months should also consider taking advantage of this discount.

The event is designed to make you more aware of possible topping signals in the stock market. They've been building, but of course nothing is truly bearish until price action loses key price/moving average support and increasing volume confirms the decline. Preparing for a possible decline is very important, though, especially to short-term momentum/swing traders. I believe long-term buy-and-hold investors can ride this out as I expect any selling, if it should occur, to be fairly short-lived.

Room instructions for the event today, which begins at 5:30pm ET, have been provided in a separate email.

Market Update

I want to show you a couple key charts that I'm watching. Let's focus on technology (XLK) and its bullish vs. bearish arguments:

This is 32.5% of the S&P 500 and 51% of the NASDAQ 100, so what happens here is HUGE. I love the AD line and that lines up with what I believe for the longer-term, that prices are eventually going higher. The problem I have is with the short-term, so watch the key support levels identified above. Losing those could enable the bears to grab a much firmer control of market action in the near-term.

Here's an hourly chart of the XLK to look at the recent gap resistance levels and the trouble this has presented to the XLK bulls:

Price support at 225 seems rather obvious. But over the past week to 10 days, the hourly RSI 60 level has provided a sell signal. The gap down over a week ago relating to Deep Seek has not yet been filled. Yesterday's gap down as a result of the weekend tariffs has been filled, but not conquered. The hourly PPO has also been mired below its centerline during the recent selling.

The short-term course for the XLK likely depends on what happens with semiconductor stocks ($DJUSSC):

Once again, the AD line looks superb. There's accumulation taking place on Wall Street, so I cannot see any weakness ahead morphing into a major decline - like a cyclical bear market. I'm not even sure if we see a correction, but other warning signs do make me nervous over the next couple weeks to couple months.

Right now, I think this is our potential danger zone.

Happy trading!

Tom