Friday, August 28, 2009

Qs Hit The March 08 Low

The QQQQ has just touched the March 2008 low of 41.05 with an early morning high of 41.08. It would be surprising if this level could be surpassed on the first try. I expect it may require two or three attempts. The continuation of the rally obviously depends on a successful move through this resistance zone. The current pattern in the Qs could be an expanded flat correction, which would allow for a retest of the August low, possibly occurring as a sharp selloff lasting about two to three days. In any case, some sort of pullback is likely here.

Failure to breach the 41.05 level would likely mean that the rally is coming to an end sooner rather than later.

6 comments:

dave said...

"...which would allow for a retest of the August low, possibly occurring as a sharp selloff lasting about two to three days. In any case, some sort of pullback is likely here."

Think that would be best for bulls because too many flaws in recent rally.

Q's & individual techs sold off hard from the opening. On days like today, i think it's important to keep an eye on the relationship betw up stks & their opening prices.

Stks that are up but below their opens are weaker than they look.

dave said...

Craig,

Given the length of the 1st hour spike, don't you think that it would be difficult to challenge it within the next day or two ?

It looks like an ideal setup to sell short except that there's one more day left in the end of the month. I'd like for Monday to be sideways.

dave said...

Two very positive things for the short-to-intermediate term picture happened today: NH's by SMH & JJC - which also discourages me from being aggressively short.

dave said...

Another weekly spinning top by SPX. Other than SMH other indices also had similar candlesticks closing the week where we began Monday morning.

R. Craig Pritchard said...

On an intermediate term basis I am not shorting the indexes. However, I am short two stocks. I expect that September will be volatile, allowing for possible index swing shorts for the nimble, but as pointed out by COTs Timer, the small specs are the most bearish they have been in over two years. This is the primary reason, I continue to look to the long side.

You might want to look back a few years, but these weekly spinning tops in the indexes can often reflect a pause in the trend rather than a top. What do you think?

As an interesting side note, this rally has ignored several "astrological" cycle sell signals this year. This leads me to believe that the up side of the longer term 3.3("4") year cycle is in force at the moment. This is why so much of the usual reasoning fails. Remember how many times people called the top in 2003.

For that reason, right now I am not giving much weight to the daily time frame. The weekly and monthly are much more rewarding, although I must admit, it can get boring.

dave said...

"...a pause in the trend rather than a top." Yes, that's all i'm thinking. However, because of the Sept/Oct seasonality IF presented with the right setups i want to be at least nimble short. My experience has been that when one is profitably long @ 50 thinking comfortably that there's ONLY going to be a shallow orderly pullback to 45 you soon find yourself with one wheel in the ditch @ 40 wishing that you'd gotten out when you saw the pullback coming.

"...this rally has ignored several "astrological" cycle sell signals this year. This leads me to believe that the up side of the longer term ... cycle is in force at the moment."

Yes, i would say the same thing about the mkt ignoring the clear non-confirm by RSI (14) on 8/21,24 &25 three non-conf's in a row. That doesn't make me sell short, but it does frighten me about buying upside breakouts.

That's why this spring hourly & daily signals failed to produce meaningful sell-offs. Buy signals on weekly were more important.& influential. The weekly signal was overpowering all the shorter-term sell signals