📊 Score Still at 5.04: EMA Override Keeps Us Long
The Edge Of Markets score remains unchanged at 5.04, sitting at the top edge of the High Risk range (4.95-5.04), which would normally signal 50% SQQQ / 50% Cash.
But QQQ closed Monday at $618.45, well above its 70-day EMA of $600.48. The spread widened from Friday's $10.33 to $17.97 today—giving the override more breathing room.
Final Recommendation: 100% QQQ (EMA Override active)
The fundamentals say be cautious, but the trend says stay long. Today's rally proved why the EMA filter matters—fighting the trend would have cost you this entire move.
🎢 From Panic to Party: Monday's Relief Rally
What a difference a weekend makes. After Friday's choppy, uncertain close that capped the Nasdaq's worst week since April, Monday opened with aggressive buying:
- Nasdaq Composite: Surged over 1.5% at the open
- S&P 500: Climbed around 1%
- Dow Jones: Rose 0.5%
This wasn't a slow grind higher. This was a gap-up opening driven by a single catalyst: hope that the 39-day government shutdown could finally be ending.
The rally continued through mid-morning, with tech stocks leading the charge. Airlines also rallied sharply—United and Delta each gained around 2% in premarket trading—on optimism that air travel would improve heading into Thanksgiving.
🏛️ The Catalyst: Senate Advances Shutdown Deal
So what changed over the weekend? Politics.
Late Sunday night, a new bill was released to end the record-breaking 39-day government shutdown. Early Monday morning, the Senate held a key procedural vote—and enough Democrats joined Republicans to avoid a filibuster.
That vote signaled real progress. For the first time in weeks, there's a viable path to reopening the government. The bill still needs to pass both chambers and get signed into law, but markets are pricing in a resolution within days.
Why does this matter so much?
- Economic data blackout ends: The shutdown has frozen key government reports (CPI, unemployment, GDP). Investors and the Fed have been flying blind. Once the government reopens, that data starts flowing again.
- Consumer confidence improves: Last week, University of Michigan consumer sentiment crashed to 50.3—a 3-year low. The shutdown was a major drag on sentiment. Ending it removes a massive source of uncertainty.
- Fed can act: Fed Chair Powell cited the data blackout as one reason the Fed was hesitant to cut rates further. With data returning, the Fed has the clarity it needs to make decisions.
In short: The shutdown ending is a big deal. And markets are celebrating the prospect of that happening.
📉 Last Week's Context: Why This Rally Feels So Good
To understand why Monday's move matters, you have to zoom out and look at last week's carnage:
- Nasdaq: Down 3.2% for the week (worst since April)
- S&P 500: Lost 1.8%
- Dow: Fell 1.4%
AI stocks got hammered. Nvidia, Microsoft, Google, Meta—all sold off hard on valuation concerns. The Nasdaq dropped 1.9% in a single session (Thursday), and intraday volatility was brutal (2% swings within hours).
By Friday's close, sentiment was dark. The score was frozen at 5.04 (High Risk), and QQQ was clinging to its 70-day EMA by a thread. One more bad day, and the EMA override would have turned off.
But Monday's rally changed everything. Instead of breaking below the EMA, QQQ surged higher—widening the gap from $10.33 to $17.97. That's a meaningful cushion. It gives the override more room to work.
✈️ Airlines and Travel Rally on Thanksgiving Optimism
Airlines were among the best performers Monday, rallying sharply on the prospect of the shutdown ending before Thanksgiving:
- United Airlines: Up around 2% in premarket
- Delta Air Lines: Rose approximately 2% premarket
The logic is simple: the shutdown has created chaos for air travel. TSA agents working without pay, FAA staffing issues, delays at security checkpoints. With Thanksgiving just two weeks away (the busiest travel week of the year), investors are betting that a reopened government means smoother operations and stronger revenue for airlines.
Travel and lodging stocks have been relative bright spots lately. Last week, Airbnb surged 5% and Expedia soared 15% on strong earnings. Consumers are still spending on experiences (vacations, dining, events), even as broader sentiment weakens.
That said, these names aren't big enough to drive the market on their own. Tech still dominates the indices. But it's encouraging to see parts of the economy staying resilient despite all the macro uncertainty.
🎯 My Take: This Is Why the EMA Override Exists
Let's talk about what just happened here, because it's a perfect example of why the EMA override is so critical.
If you were following the score alone, you'd have been 50% SQQQ / 50% Cash (score at 5.04 = High Risk). That position would have cost you money today. The SQQQ position would have lost value as the Nasdaq surged 1.5%, and your 50% cash allocation would have missed the entire rally.
But the EMA filter kept you 100% QQQ. And that position captured the full upside of today's move.
Here's what I want you to understand: The score isn't wrong about risk. At 5.04, it's signaling that fundamentals are shaky (consumer sentiment at 3-year lows, government shutdown dragging on, AI stocks under pressure). All of that is true.
But the EMA override says: "Don't fight the trend until it definitively breaks."
Backtesting proves that trying to anticipate trend reversals costs money. You whipsaw in and out, getting stopped out at the bottom and missing the recovery. The 70-day EMA acts as a trend confirmation tool—it keeps you in the trade until price action clearly shows the uptrend is over.
And today proved it works. QQQ stayed above the EMA, and the rally materialized. The override did exactly what it's supposed to do.
⚠️ Bottom Line: Rally Feels Good, But Don't Get Complacent
Monday's rally was a relief after last week's brutal selloff. But let's be clear: one day doesn't erase the risks.
The score is still at 5.04 (High Risk). The government shutdown hasn't ended yet—only progress has been made. Republicans still need to agree to the bill, pass it through both chambers, and get it signed. That could take days or longer.
AI stocks are still under pressure. Consumer sentiment is still at 3-year lows. The economic data blackout is still ongoing. These are real, structural headwinds.
But here's the thing: markets don't move on fundamentals alone. They move on changes in expectations. And today, expectations shifted from "this shutdown will drag on forever" to "maybe this ends soon."
That shift sparked buying. And as long as QQQ stays above its 70-day EMA at $600.48, the final recommendation stays 100% QQQ.
- Watch the 70-day EMA: QQQ at $618.45, EMA at $600.48. If that gap closes and QQQ breaks below, the override turns off. You'd shift to 50% SQQQ / 50% Cash (assuming score stays at 5.04).
- Monitor shutdown progress: If the bill stalls or Republicans reject it, sentiment will reverse fast. The rally is fragile.
- Track the score: If it drops below 4.95, recommendation shifts to 100% SQQQ regardless of price. That's a full defensive pivot.
Today was a win for the stay-long-until-the-trend-breaks philosophy. The EMA override worked perfectly. But don't confuse a relief rally with the all-clear signal.
Volatility is still elevated. The score is still defensive. And the shutdown isn't over yet. Stay disciplined, watch the EMA, and be ready to pivot if the trend breaks.