According to my risk summation system, the days this coming week with the highest risk of seeing a turn in or acceleration of the current trend in the DJIA are Tuesday May 30th and Friday June 2nd.
In last week's note I made two mistakes in labelling the risk windows. First, the Monday thru Tuesday morning risk window was part of a larger risk window that should have included Friday May 19th which I had noted the previous week but failed to correctly mention last week. Secondly, the Friday the 26th risk window should have included Thursday afternoon since the system had 4 votes for Thursday and 5 votes for Friday. So, the system was working fine, just my clumsy reporting of it was flawed. My only lame excuse for this lousy performance is that I'm in the process of moving, so not enough time to do things properly.
My contention last week that the few big techs in the QQQ would succumb to the drag of the lagging many in the index appears to also have been flawed. I was correct in projecting that the QQQ would test the trend line it just broke as you can see below, but it just bounced off the trend line hard and headed skyward defying the diverging breadth seen in the index's AD Line at the bottom below. I suppose the FOMO around AI is just too strong to fight. It will be interesting to see if the focus of the triangle this past Friday has any significance. This coming Tuesday or Wednesday should tell that tale.
I mentioned above that I'm moving, from little coastal Lyme Regis to larger, inland, bustling Bath. Based on my experience buying the home and all the new junk required, inflation is real and fearsome. The prices I'm paying for everything are just silly and no one is trying to compete, it's take it or leave it. This moving experience has even further convinced me that the BOE/ECB/Fed have their work cut out for them trying to stamp out this inflation fire. Pause, skip or whatever at the June Fed meeting, I don't care, but they are not done raising rates, or draining the masses of liquidity from the system. The QQQ's currently may be on a FOMO rocket to the moon, but sooner or later the inflation gravity and the tightening required to whip it will change that parabolic QQQ missile trajectory.
Regards,
Douglas
