📊 Score Unchanged at 5.04: Still Walking the Tightrope
The Edge Of Markets score remains at 5.04—unchanged from yesterday and sitting at the absolute top of the High Risk range (4.95-5.04), which normally signals 50% SQQQ / 50% Cash.
But QQQ closed Friday at $609.74, still holding above its 70-day EMA of $599.41. The gap narrowed slightly from yesterday ($609.74 vs $599.41 = +$10.33 spread), but it's still enough to keep the override active.
Final Recommendation: 100% QQQ (EMA Override active)
The score is frozen at the danger line, one tick away from shifting to Extreme Risk-Off (100% SQQQ). The EMA is the only thing keeping us long right now. If QQQ breaks below $599.41, everything changes.
📉 Friday's Close: Modest Gains, Brutal Weekly Losses
Friday's trading session was choppy but ultimately closed slightly positive for the Dow and S&P, while the Nasdaq continued its slide:
- Dow Jones: Up 74.80 points (+0.16%) to 46,987.10
- S&P 500: Gained 0.13% to 6,728.80
- Nasdaq Composite: Fell 0.21% to 23,004.54
But here's the thing: daily moves don't tell the full story. Zoom out to the weekly chart, and the picture gets ugly fast.
The week was brutal across the board, with all three major indices posting significant losses:
- Nasdaq: Down 3.2% for the week—worst weekly performance since the week ending April 4, 2025
- S&P 500: Lost 1.8% for the week
- Dow: Down 1.4% for the week
The worst single day was Thursday (Nov 6), when the Dow plunged 398 points, the S&P fell 1.12%, and the Nasdaq crashed 1.9%. Friday's modest gains barely put a dent in the weekly damage.
🎢 Intraday Volatility: The Rollercoaster Returns
Friday's session wasn't just choppy—it was violent. At their lows of the day:
- Nasdaq: Down 2.1% intraday
- S&P 500: Down 1.3% intraday
- Dow: Down 400+ points (roughly 0.9%)
Then, late in the session, stocks reversed sharply off their lows after Senate Minority Leader Chuck Schumer offered a new plan to Republicans that could enable the record-breaking U.S. government shutdown to end.
That last-hour bounce saved the day from being a total bloodbath. But make no mistake: volatility is back. The calm, steady grind higher that characterized most of 2025 is over. Intraday swings of 1-2% are the new normal.
🏛️ Government Shutdown: The Crisis That Won't End
The government shutdown—now in its record-breaking duration—continues to weigh on markets and the economy. Here's why it matters more than most people realize:
1. Economic Data Blackout
With key government agencies shut down, critical economic reports aren't being published. We're flying blind on:
- Labor market data (jobless claims, nonfarm payrolls)
- GDP reports and revisions
- Housing starts and permits
- Trade balance data
The Fed relies on this data to make policy decisions. Without it, they're hesitant to cut rates further. Remember Powell's hawkish comments Thursday? He cited the data blackout as one reason the Fed is being cautious.
2. Consumer Sentiment Collapse
The University of Michigan's Consumer Sentiment Index posted a reading of 50.3 for November—the lowest level in more than three years. That's a 6.2% decline from October and 30% below where it was a year ago.
When consumers lose confidence, they stop spending. And consumer spending makes up 70% of U.S. GDP. This is a massive red flag.
3. The Political Stalemate
Schumer's proposal late Friday gave markets a glimmer of hope that the shutdown could end soon. But Republicans haven't agreed to it yet. If this drags into next week—or worse, into the holidays—the economic damage compounds.
💻 AI Stocks Get Crushed: Valuation Reality Bites
One of the biggest stories this week was the AI stock selloff. After dominating headlines and driving the market higher for most of 2025, AI names finally hit a wall.
The selling was relentless:
- Nvidia: Down sharply, leading the AI trade lower
- Microsoft, Google, Meta: All pulled back on valuation concerns
- Take-Two Interactive: Tanked 7% after Rockstar Games delayed Grand Theft Auto VI from May 2026 to November 2026
Why the sudden reversal? Valuations. AI stocks have been trading at nosebleed multiples for months. Investors finally started asking: "Are these companies actually delivering profits that justify these prices?"
The answer, for many, is no. AI is real, and it's transformative. But the stock prices got ahead of the fundamentals. This correction was overdue.
📈 The Few Winners: Travel and Lodging Shine
Not everything sold off this week. A handful of names posted strong gains Friday, mostly in the travel and lodging sectors:
- Airbnb: Surged 5% in extended trading after reporting strong Q3 earnings and guidance
- Expedia: Soared 15% before the open after beating consensus on earnings and revenue, then raising its fiscal 2025 revenue forecast
These results suggest that consumer spending on experiences (travel, dining, events) remains strong, even as broader sentiment weakens. People are still willing to spend money on vacations and short-term rentals, which is a positive signal for the consumer economy.
But here's the rub: travel stocks aren't big enough to move the market. When mega-cap tech names like Nvidia, Microsoft, and Google fall, the indices follow. A few travel names rallying doesn't change the broader picture.
🎯 My Take: The EMA Is the Only Thing Keeping Us Long
Let me be blunt: The score at 5.04 is screaming danger. It's sitting at the absolute top of the High Risk range, one tick away from shifting to Extreme Risk-Off (100% SQQQ).
And the fundamentals back it up:
- Consumer sentiment at 3-year lows (University of Michigan: 50.3)
- Government shutdown creating economic uncertainty (no data, no clarity)
- AI stocks getting hammered on valuation concerns (the rally's core driver is breaking down)
- Nasdaq down 3% for the week (worst since April)
- Powell killed December rate cut hopes (Fed staying cautious)
If I were looking at fundamentals alone, I'd be 100% defensive right now. But I'm not—because the trend filter is still active.
QQQ closed Friday at $609.74, still above its 70-day EMA of $599.41. That $10.33 gap is narrow—dangerously narrow—but it's enough to keep the EMA override active.
Backtesting proves that fighting strong uptrends costs money, even when fundamentals are deteriorating. The EMA filter is designed to keep you in the trade until the trend definitively breaks. And it hasn't broken yet.
But it's close.
⚠️ Bottom Line: Volatility Is Back—Watch the EMA Like a Hawk
The post-election rally is over. Volatility is back. The score is frozen at 5.04 (High Risk), and QQQ is clinging to its 70-day EMA by a thread. The final recommendation is still 100% QQQ, but only because of the EMA override.
Here's your game plan for next week:
- Watch the 70-day EMA at $599.41: If QQQ breaks below this level, the override turns off. You'd immediately shift to 50% SQQQ / 50% Cash (assuming the score stays at 5.04).
- Monitor the score: If it drops below 4.95, the recommendation shifts to 100% SQQQ regardless of price action. That's a full defensive pivot.
- Track government shutdown news: If Schumer's proposal gains traction and the shutdown ends, sentiment could improve quickly. But if it drags on, expect more downside.
- Watch AI stocks: If Nvidia and mega-cap tech continue to bleed, the broader market will struggle. These names have driven the rally all year—if they break, everything breaks.
The Nasdaq's worst week since April is a warning shot. Consumer sentiment at 3-year lows is a warning shot. The score at 5.04 is a warning shot.
Right now, the trend is still technically intact. But trends don't end gradually—they end violently. When the break comes, it happens fast.
Stay long for now, but keep your finger on the sell button. This market can flip in minutes.