📊 Score Slips to 5.15 — Hanging On to Neutral by a Thread
The Edge Of Markets score dropped to 5.15 this morning at 7:09 AM ET — the absolute floor of the Neutral zone (30% QQQ / 70% Cash). One more tick down and we're in Cautious territory with SQQQ exposure. The model has been deteriorating all week: from 5.21 highs on Sunday to 5.16-5.17 on Monday and Tuesday, and now 5.15 today.
Here's the technical gut punch: QQQ closed at $609.24, falling back below the 70-day EMA ($615.29). Yesterday we celebrated QQQ reclaiming the EMA at $616.68. That celebration lasted exactly one trading day. The trend filter is back to "downtrend," which means if the score slips below 5.15, we follow it directly into defensive positioning — no override to save us.
Final Recommendation: 30% QQQ / 70% Cash
70% cash while the Nasdaq drops 1.2%? Sometimes the best trade is the one you don't make.
🎭 The Greatest Earnings Report Nobody Wanted to Buy
Let's talk about the absurdity of what just happened. Nvidia reported $68.1 billion in revenue (up 73% YoY), earnings of $1.62 per share (up 82% YoY), and guided next quarter to $78 billion — all above Wall Street estimates. Record data center revenue of $62.3 billion. The AI boom is not slowing down by any measurable metric.
The stock dropped over 5%. Its worst day since April.
This is peak "sell the news." Yesterday's blog literally covered the after-hours euphoria — NVDA ripping higher, the whole AI food chain rallying. Today? The market woke up, looked at the numbers, said "yep, great, already priced in," and dumped it. Hyperscaler capex concerns, margin questions on Blackwell ramp, whatever narrative you want to slap on it — the reality is simple: when everyone is already long and the good news arrives, there's nobody left to buy.
The broader carnage told the story. Nasdaq fell 273 points (-1.2%) to 22,878. The S&P 500 dropped 0.5% to 6,908. Meanwhile, the Dow managed to eke out a gain of 17 points because boring, old-economy stocks suddenly look appealing when the AI darling gets slapped. Rotation is the word of the day.
📉 The 70 EMA Reclaim Was a Head Fake
This one hurts for the bulls. Yesterday QQQ closed at $616.68, just above the 70-day EMA at $615.05. We flagged it as the first genuinely positive technical signal all week. Today QQQ crashed through it and closed at $609.24 — a full $6 below the EMA ($615.29).
Failed EMA reclaims are not neutral events. When price pops above a key moving average and immediately fails, it's worse than never reclaiming it at all. It traps breakout buyers who now become sellers, creating additional downward pressure. The bears just got a gift.
For our model, this matters because the EMA override is now off. If the score drops to 5.14 or below tomorrow, we go to 40% SQQQ / 60% Cash — no safety net. The model and the technicals are aligned in saying: be careful here.
🧩 The Contrarian Signal Nobody's Talking About
Here's something interesting buried in today's options data: the Nasdaq-100's put-to-call ratio just hit 1.2 — the highest level since the 2022 bear market bottom. The S&P 500's put-to-call ratio climbed to 0.9, the highest since April 2025.
That's a lot of hedging. Like, "everybody simultaneously buying insurance" levels of hedging. And historically, when everyone is bearish at the same time, the market has a nasty habit of doing the opposite.
Does that mean we're bottoming here? Not necessarily. The 2022 extreme came at a genuine bear market low, but similar spikes in 2024 and 2025 just produced temporary corrections that resolved higher. The signal says "peak fear, possible bounce" — it doesn't say "all clear."
This is worth watching over the next few sessions. If QQQ can stabilize around $605-610 and reclaim the EMA on the next attempt with conviction, this stress gauge reading could mark the low.
🏛️ Jobless Claims Solid, But Tariff Chaos Looms
Initial jobless claims came in at 212,000 — below the 216,000 forecast and barely budging from last week. The labor market remains stubbornly resilient, which is both good news (no recession yet) and bad news (the Fed has no reason to rush rate cuts).
Meanwhile, the tariff situation continues to be a complete mess. After the Supreme Court ruled last week that Trump exceeded his authority using IEEPA for tariffs, the administration responded by implementing a 15% global tariff under different legal authority. FedEx has already sued for a refund on what it estimates is a $1 billion tariff hit. Trade partners are in "cautious wait-and-see mode" — which is diplomat-speak for "nobody knows what the rules are anymore."
The score's deterioration from 5.21 to 5.15 over the past few days is partly reflecting this uncertainty. Economic fundamentals are fraying at the edges — not collapsing, but enough to keep the model from committing to any bullish allocation.
🎯 My Take: The Score Protected You Today
Let's be real about what happened this week. On Monday, the market rallied on the AMD-Meta deal. On Tuesday, Nvidia crushed earnings after hours. The temptation to go all-in on tech was enormous. But the score sat at 5.16-5.17 with 70% cash, refusing to budge. Today, the Nasdaq dropped 1.2% and Nvidia — the company that just printed the best quarter in semiconductor history — fell 5%.
This is exactly what 70% cash is for. Not because the model predicted the Nvidia selloff specifically, but because it recognized that the economic backdrop doesn't support aggressive positioning right now. Tariff chaos, a deteriorating trend (QQQ below EMA), and economic data that's "okay but not great" — that combination says "keep your powder dry." And today, dry powder felt a lot better than being full TQQQ.
The biggest risk from here? The score is at 5.15 — literally the last number that keeps us Neutral. If tomorrow's data pushes it to 5.14, we flip to Cautious with SQQQ exposure, and with QQQ below the EMA there's no override. The model is one bad datapoint away from going defensive. Watch that number.
⚠️ Bottom Line: One Tick Away From Defensive
Score at 5.15 (Neutral: 30% QQQ / 70% Cash). QQQ at $609.24, below the 70 EMA. No override protection. The failed EMA reclaim is a bearish signal, the Nvidia "sell the news" reaction suggests the market is running out of catalysts, and the score is teetering on the edge of going defensive.
Key levels: QQQ $615 (EMA reclaim), QQQ $605 (support). Score 5.14 triggers Cautious allocation. Score 5.25 would signal improvement.
The Nasdaq stress gauge at 2022 levels says we might be near a bounce. But "might" doesn't pay the bills. Stay disciplined, stay mostly cash, and let the data tell you when it's safe to wade back in.