📊 Score Drops to 5.04: EMA Override Barely Holding
The Edge Of Markets score dropped to 5.04, sitting right at the top of the 4.95-5.04 range (High Risk). That normally signals 50% SQQQ / 50% Cash—serious defensive positioning.
But QQQ closed at $609.06, still above its 70-day EMA of $602.13. When price is in an uptrend (above the 70 EMA) and the score screams caution, our backtesting shows staying long beats going defensive. The margin is getting thin, though.
Final Recommendation: 100% QQQ (EMA Override active)
This is the closest call we've had in weeks. The score is one tick away from Extreme Risk-Off (below 4.95 = 100% SQQQ). If QQQ breaks below $602, we're done fighting the trend. For now, the override holds—barely.
📉 Shutdown Ends, Markets Don't Care
You'd think ending a 43-day government shutdown—the longest in U.S. history—would spark a relief rally. Instead, markets got crushed:
- Dow Jones: Down 619 points (-1.3%) to 47,544
- S&P 500: Fell 1.6% to 6,629
- Nasdaq: Plunged 2.5% to 22,562
President Trump signed the bill into law after the House passed it 222-209 Wednesday night. The shutdown had delayed critical economic data releases (October CPI and jobs reports may never be published). But the reopening didn't matter to traders today.
Why? Because the real problem isn't the shutdown—it's what's happening underneath.
🔄 The Tech Rotation Isn't Slowing Down
Yesterday the Dow broke 48,000 while Nasdaq fell 0.26%. Today, the rotation out of tech hit full force:
- Tesla: Down 7% (continuing the AI/tech selloff)
- Nvidia: Fell 4% (after SoftBank's $5B stake dump earlier this week)
- Disney: Crashed 7% on mixed Q4 earnings despite streaming growth
- AMD: Bucked the trend with a 6% gain on 2025 growth targets, but couldn't save the sector
The tech sector overall dropped 0.9% while defensive sectors (health care, consumer staples, energy) caught bids. This is the same rotation we've been tracking for days—money moving from high-valuation growth to old-economy value.
The score dropping to 5.04 aligns perfectly with this action. When tech leadership breaks, the score picks it up.
💸 Fed Rate Cut Odds Are Falling
Here's what really spooked markets: December rate cut odds fell to 55%, down from 65% earlier this week. That's a massive shift in sentiment—traders are now pricing in a higher chance the Fed holds rates steady.
Why? Probably because:
- We're missing October economic data (shutdown delayed CPI, jobs reports)
- The Fed might not have enough fresh data to justify a cut in December
- Markets are realizing the "easy money" era is over (Powell's message from late October is sinking in)
When rate cut expectations drop, growth stocks (especially expensive tech) take the hardest hits. That's exactly what happened today.
🎯 My Take: The Score Is Warning You
Let's connect the dots:
- November 10: Score at 5.04, EMA override active, Dow hits records while Nasdaq lags
- November 11: Score hits 5.0 (one tick from Extreme Risk-Off), SoftBank dumps Nvidia, rotation continues
- November 12: Dow breaks 48,000, Nasdaq falls again, tech sector down 0.9%
- Today (November 13): Score back to 5.04, Nasdaq crashes 2.5%, tech leadership collapsing
The score has been stuck in the High Risk zone (4.95-5.04) for four straight days. It's not a bug—it's a feature. The model sees what's happening: tech valuations getting questioned, rate cut odds falling, sector rotation accelerating, leadership breaking.
The EMA override is keeping us 100% long, but this is not a comfortable hold. QQQ is only $6.93 above the 70 EMA. If we break $602, the override ends and we flip to 50% SQQQ / 50% Cash immediately.
The score is doing its job: warning you before the break happens, not after.
⚠️ Bottom Line: Don't Get Complacent
The shutdown ending was supposed to be good news. Markets fell anyway. That tells you everything about the underlying sentiment.
Tech is bleeding, rate cut odds are falling, and the score is sitting at 5.04—one tick from Extreme Risk-Off. The EMA override is still active (100% QQQ), but we're on thin ice.
What to watch:
- QQQ breaking below $602 (70 EMA) = override ends, flip to 50% SQQQ / 50% Cash
- Score dropping below 4.95 = Extreme Risk-Off (100% SQQQ)
- Continued tech sector weakness = rotation confirming the score's warning
- Fed speakers this week (Mary Daly spoke today at 8 AM ET, more coming)
If you're following our strategy: Stay 100% QQQ (EMA override) but have your hand on the eject button. This is not the time to be complacent. The market is giving you advance warning—listen to it.