Nasdaq 100 Trading Trust (QQQ). Every once in awhile you get a signal that is so strong you can not ignore it. After one year of bear market selling, and heavy selling over the last seven weeks, we finally have have strong bottoming signals in the Nasdaq. Sentiment has gotten so strongly negative over the last several weeks that you can hardly go to the coffee shop with out hearing about over valued tech stocks and the looming recession. When the public catches on to what we have known for over a year, its time to look the other way.The strongest signal we have of a looming bottom is the 10 day closing Trin, which closed above 1.5 for only the 12th time in the last forty years, and only the 4th in the last 20. Each time has marked a bottom. When the closing Trin gets so high, it shows utter panic on the part of traders and investors, when the crowd panics, WE MAKE MONEY. A few other indicators I will just rattle off here before concluding. The weekly ADX is right now above 60, yes I know this signals a strong trend is in place and we dont fight the trend, but what a weekly reading over 60 signals is a trend that is too strong, too obvious and too well loved. The move up in the Nasdaq over the last several years has been of a magnitude not seen since the Dutch went nuts for Tulips. The selloff since March of last year has also been of a magnitude not seen. When markets correct they do so in one of two ways, price and time. The Nasdaq has obviously corrected with price at this point. Time? Well, it could go sideways for some time, but an opportunity to buy such as we have right now has only occured 4 times in 20 years so Ill be taking it with QQQ's and Rydex Funds. Dont expect this run to equal the last one, as we still need some time to heal the wounds of the large move down. I suspect we will revert to historical returns of 8% a year or so and it will be some time before we have our Nasdaq 5000 party again. One final note, be careful in the Dow. Its still well loved and could use a bit more correction in price IMHO before the time correction starts.
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