The Market's About to Enter a Tricky Month By Larry Benedict, editor, The Opportunistic Trader Hi traders, welcome to this week’s update for The Opportunistic Trader… After a strong first quarter in the markets, investors are now busily reviewing their open positions. And with the April 15 tax deadline fast approaching, folks sometimes cash out of stocks to pay their taxes. This backdrop can create decent-sized swings. After all, this major rally is now looking toppy. So these swings could become more pronounced as investors look for excuses to sell. Especially with so many people likely sitting on outsized gains. Even those late to the Nvidia (NVDA) and AI story could have almost doubled their money since the start of the year. But to understand the bull market’s increasing weariness, just consider the price action since the FOMC meeting concluded last week (March 20). The major indices initially rallied after the Fed reconfirmed the likelihood of cutting interest rates three times by the end of the year. Yet that rally soon fizzled out in the following days. And the market’s other challenge is one that I have been writing about for some time… That is, the market is carried by an ever-dwindling number of major players. Although Alphabet (GOOGL) has rebounded over the last few weeks, Apple (AAPL) and Tesla (TSLA) are still struggling to generate any momentum. And Nvidia (NVDA) has yet to retake its March 8 high (when we opened our put option position). Its momentum has recently been declining. That recent weakness in the semiconductor space has also spread to major players like Advanced Micro Devices (AMD) and Taiwan Semiconductor (TSM), which are both well down from their March 8 highs. So I’m watching how this influences the Nasdaq and our put option position. As you can see on the chart below, the current leg of QQQ’s rally took off in October last year. But the broader rally dates back to October 2022, when QQQ formed its post-COVID trough: Invesco QQQ Trust Series 1 (QQQ) 
Source: eSignal This current rally coincided with the Relative Strength Index (RSI) forming a ‘V’ and rallying from oversold territory (lower grey dashed line) in late October. And the 10-day Moving Average (MA, red line) crossed above and pulled the 50-day MA (blue line) higher. Both MAs are still tracking higher. But notice the growing divergence between the QQQ stock price and the RSI (orange lines). The RSI has been steadily falling since mid-January (showing declining momentum). But it has yet to fall through support (green line) despite testing it multiple times. So the action around this level will be key. If the RSI continues to fall and gains traction in its lower band, that will eventually pull QQQ lower too. As always, I’ll be monitoring this and a host of other factors (including jobs, unemployment, and inflation data). So stay tuned as this trade develops… Regards, Larry Benedict
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