📊 Score Holds at 5.06: EMA Override Still Active
The Edge Of Markets score remains at 5.06 (unchanged from Tuesday), within the 5.05-5.14 range (Cautious). Normally, that signals 40% SQQQ / 60% Cash—defensive positioning.
But QQQ closed at $619.25 today, still above its 70-day EMA of $603.73. The EMA override remains active, keeping us 100% long despite cautious economic signals.
Final Recommendation: 100% QQQ (EMA Override active)
The trend protected us all month. While the score warned of caution, staying invested through the uptrend (QQQ above 70-day EMA) outperformed defensive positioning. The override did its job.
📈 Black Friday Bounce: Fifth Straight Win
Markets returned from the Thanksgiving holiday for a shortened session Friday, and buyers showed up:
- S&P 500: Rose 0.54% to 6,849.09
- Nasdaq Composite: Climbed 0.65% to 23,365.69
- Dow Jones: Advanced 289.30 points (+0.61%) to 47,716.42
This marked the fifth consecutive daily gain for the major indices. After the brutal November 20 selloff (Nvidia earnings reversal), markets have recovered steadily.
A technical issue briefly halted futures trading at the Chicago Mercantile Exchange Friday morning, but it was resolved an hour before the opening bell. Trading volume was light—typical for Black Friday—but the direction was clear: buyers in control.
📉 November's Reality: Nasdaq's 7-Month Streak Ends
Despite this week's rally, November was rough for tech. The monthly scorecard:
- Nasdaq: Down nearly 2% for the month, snapping a 7-month winning streak
- S&P 500: Fell 0.6%, ending a 6-month run
- Dow: Slightly higher thanks to this week's rally, posting its seventh consecutive winning month
The divergence is striking. Old economy (Dow) keeps grinding higher while growth tech (Nasdaq) stumbles. The rotation we've been tracking all month—out of AI stocks, into industrials and value—played out exactly as the score suggested.
Megacap tech names cooled off sharply in November as investors questioned how quickly AI-driven businesses can turn hype into sustainable profits. That $80 billion quarterly AI capex spend by Meta, Microsoft, and Alphabet? Still waiting on the revenue payoff.
💰 Fed Rate Cut Odds Drive the Week's Rally
The catalyst for this week's recovery wasn't economic data or earnings—it was Fed expectations.
Markets are now pricing in an 80-85% probability of a 25 basis point rate cut at the December FOMC meeting. That's up sharply from mid-month, when uncertainty around Fed policy was dragging down risk assets.
Here's what changed:
- Inflation cooling: PCE (August) at 2.7% headline, 2.9% core—still above target but trending down
- Growth softening: GDP estimates revised lower, labor market showing cracks
- Fed rhetoric shifting: More dovish commentary from Fed officials signaling openness to further cuts
For stocks, especially growth names, the message is simple: lower rates are coming. That supports valuations and makes equity risk more attractive relative to bonds.
But here's the catch: the Fed is cutting because growth is slowing, not because everything is fine. Rate cuts in a decelerating economy aren't always bullish—they can be confirmation that things are worse than markets want to admit.
🎯 My Take: The Override Worked, But Don't Get Complacent
November was a perfect case study in why the EMA override exists.
The score sat at 5.06 (Cautious range) for most of the month, signaling mixed economic data and defensive positioning (40% SQQQ / 60% Cash). If we'd followed that signal blindly, we'd have been in cash and shorts while the market rallied 5 straight days into month-end.
The EMA override prevented that costly mistake. QQQ stayed above its 70-day EMA for most of November (briefly dipped below on Nov 20 during the Nvidia reversal, then reclaimed). The trend filter kept us 100% long through the volatility, and it paid off.
But let's not confuse a good outcome with an all-clear signal. The score at 5.06 is cautious for a reason:
- Nasdaq down 2% for the month despite this week's rally
- AI spending questions still unresolved—$80B quarterly capex with no clear revenue path
- Fed cutting into weakness, not strength—that's not always bullish
- Tech rotation continues—money flowing out of growth into value and industrials
The override works until it doesn't. On November 20, when Nvidia beat earnings and markets still crashed, QQQ fell below the EMA and the score was at 5.14 (Cautious). No override. The signal was clear: stay defensive. And it worked perfectly.
Right now, the override is keeping us 100% QQQ at $619.25 vs EMA 70 of $603.73. That's the right call as long as the trend holds. But if QQQ breaks below $603.73, the defensive signals will align with the trend, and it's time to move to 40% SQQQ / 60% Cash immediately.
⚠️ Bottom Line: Trend Won November, But Watch the EMA
Black Friday rally caps a volatile month. S&P +0.54%, Nasdaq +0.65%, Dow +0.61%—fifth straight win. But Nasdaq still down 2% for November, snapping a 7-month winning streak.
The score at 5.06 (Cautious) says economic signals are mixed. The trend (QQQ above 70-day EMA at $603.73) says stay long. The EMA override resolves this conflict by keeping us 100% QQQ while the uptrend holds.
November proved the override works. Staying invested through the volatility—despite cautious economic signals—outperformed going defensive. The trend protected us.
Final Rec: 100% QQQ (via EMA override) as long as price stays above $603.73. If QQQ breaks below the 70-day EMA, immediately shift to 40% SQQQ / 60% Cash per the score. December brings Fed decision (80-85% cut odds), more earnings, and year-end positioning—watch that EMA closely.