NASDAQ’s Winning Streak Hits “Lucky #7”!

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This week's market commentary will be published tonight, but don't wait to review the Big View Bullets, Actionable Ideas, and Keith's Market Analysis below now.

The commentary will cover:

• The broader earnings season results
• NASDAQ’s monthly winning streak – bullish or bearish?
• The monthly indicator to watch out for that’s better than fearing a streak may be too long
• The seasonal trends to expect in November
• Why the Chair Powell's comment that a December rate cut "is not a forgone conclusion - far from it." may be bullish.
• and more.

 

 

Every week we review the big picture of the market's technical condition as seen through the lens of our Big View data charts. The bullets provide a quick summary organized by conditions we see as being risk-on, risk-off, or neutral.  The video analysis dives deeper.

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Market Summary

Markets surged to new highs this week led by the Nasdaq, with strong seasonality, improving volume, and a full risk-on reading from the risk gauge—even as sectors and the Economic Modern Family showed mixed participation and retail lagged. However, internal weakness emerged beneath the surface with a negative McClellan Oscillator, a Hindenburg signal, rising volatility, and softening breadth indicators, warranting caution despite the bullish momentum.

Risk On

• Markets were up strong this week with Nasdaq leading the way +4.29% (+)
• Volume flipped back to risk-on with more accumulation days than distribution, with the exception of the Russel, confirming concerning price action in that index. (+)
• Risk gauge flipped to 100% risk on with the weakness in gold. (+)
• Growth stocks continue to lead value while making new highs and both are still in bull phases. (+)
• Foreign equities were down to flat on the week, though still in bull phases. (+)
• We are entering one of the strongest seasonal months, November. (+)

Neutral

• Sectors were more mixed, with strength in technology and biotech though retail was particularly weak. (=)
• The Economic Modern Family is giving a mixed read, with semiconductors and biotech pushing to new highs, while regional banks are flirting with a distribution phase and grandma retail got mugged and moved into a warning phase. (=)
• Gold put in a new low from its most recent peak in October, though it is still in a bull phase. (=)
• The Federal Reserve cut the rate by a quarter point this week, though they cast doubt on a potential December cut. Rates were up slightly on the week. (=)

Risk Off

• Despite the market making new highs, volatility rose and the cash vix closed in a strong recovery phase. (-)
• Market internals weakened with the McClellan Oscillator back into negative territory. (-)
• Wednesday saw a Hindenburg signal. Risk-off. (-)
• The color charts (moving average of stocks above key moving averages) have weakened collectively, particularly on 20 and 50 periods. (-)

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Actionable Trading Plan

✅ Primary Bias: Risk-On, Trend-Following With Tactical Risk Controls

The market remains in a strong bullish phase, reinforced by a full Risk-On reading, strong seasonal tailwinds, and leadership from growth/tech/biotech. However, weakness in internals and a Hindenburg signal suggest tightening stops and maintaining tactical hedges while leaning into strength.

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📈 Equity Exposure

Target Exposure: 85–100% of equity allocation
Add exposure on strength & dips in leadership areas

Focus Longs

• Large-cap growth & AI tech (QQQ, SMH, XLK, leading megacaps)
  
• Biotech momentum continuation (XBI, IBB)
  
• Semiconductors new highs breakout (SMH)
  

Entry Tactics

• Add on pullbacks to 20-day moving averages OR breakouts from consolidation highs
  
• Use partial scaling: enter 50% now, add 50% on next confirmation day
  

Stops

• Initial stops: 2–4% below breakout level or 20-day MA
  
• Tighten stops if internals continue weakening
  

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🛑 Risk Management / Hedges

Given rising volatility & Hindenburg trigger:

• Maintain 5–10% hedge exposure via:
  
  • Inverse index ETF (e.g., PSQ/SQQQ for QQQ, IWM puts given Russell weakness)
    
  • VIX calls as an inexpensive tail hedge (30–60 days out)
    

Trigger to Increase Hedges

• McClellan stays negative > 3 days, OR
  
• 20-day MA breaks in SPY/QQQ, OR
  
• Major sector leaders break trend
  

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🏦 Rotation & Weakness Areas

Avoid/underweight:

• Retail (XRT) until strength returns — “Grandma” is weak
  
• Regional banks (KRE) near distribution phase
  
• Emerging markets tactically (momentum pause)
  

Hold tactical gold only if above 200-day; otherwise stay sidelined.

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🌬️ Volatility Strategy

• Sell premium selectively until VIX stabilizes (credit spreads preferred)
  
• Avoid oversized leveraged positions given volatility recovery
  

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🎯 Targets & Signals to Watch

Upside continuation signal

• New highs with improving McClellan + VIX stabilizing/down
  

Risk-Off trigger to reduce equity exposure

• SPY/QQQ break 20-day AND internals stay weak
  
• Semiconductors lose leadership