EarningsBeats.com Digest for May 27, 2022
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Are We Set Up For A Significant Short-Term Rally?
I wouldn't be shocked, that's for sure. After selling off relentlessly for the better part of two months, we seem to have found at least a short-term floor. On the QQQ, which is an ETF that tracks the NASDAQ 100, a positive divergence formed on the latest price low. Any time I see that, I immediately think "PPO reset" at the centerline
and a possible 50-day SMA test. The QQQ ended yesterday at 299.33 and the 50-day SMA is at 329.21, but dropping every day:
If I connect the lows in 2022, I form a lower trend line. If I drag that trend line and connect it to the March high, I get the upper trend line (red-dotted line). This forms a channel. Note that the upper trend line would intersect with that 330 area sometime in June. Initially, I see an upcoming test of the declining 20-day
EMA (green arrow). That has been difficult resistance throughout this recent two month downtrend. So if we can break above that key moving average, then the upside possibilities increase. The early-May, heavy-volume breakdown at 313 will become a key price resistance level. Finally, the stock market historically performs well at the end of May and into early June. It's difficult to say for sure that prices are heading higher, but there's as many bullish signals
right now as I've seen in a long time.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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