Hi Brookelise,
Re: It's odd to think of QQQ still overbought in the 44s, but that's what MACD seems to be saying.
FWIW, I just received the following in an email from the "Options Strategist", Larry McMillan. Seems to be covering some of the same ground you're on.....
Stock Market
Sell signals have arrived. The oscillator generated a sell signal at Tuesday's
close and the put-call ratios followed suit the same day. When a signal is fresh,
there is always the chance that it will be false that numbers will be forthcoming
the next day to negate it.
However, that did not happen this week. In fact, Wednesday was an extremely
negative (even oppressive) day. There were rumors that much of Wednesday's negativity
was due to month-end window dressing (or "undressing") by institutions, but that
is irrelevant as far as our technical indicators go. Thursday did manage to
see the market rally back a bit, but it seemed to me to be struggling. In summary,
I believe the rally that we had since the beginning of April is over, and lower
prices lie on the immediate horizon.
The weighted equity-only put-call ratio has turned up after drifting sideways
for a couple of weeks. That is a sell signal, and it is confirmed by computer
projections as well. Similar sell signals have been generated by the "normal"
equity-only put-call ratio (and the breakdown of that ratio into its NYSE and
NASD components), the weighted $OEX ratio, the NASDAQ-100 weighted ratio ($NDX)
and the QQQ weighted ratio.
The oscillator stands at +97.13 as of Thursday's close. It generated a sell
signal when it fell below +180 last Tuesday. In
addition, implied volatility has given a signal, too. $VIX has jumped up from
23 to 26, putting a bottom in place on the chart. That is a warning that the
market will be volatile, and since we have these other sell signals, one would
have to assume it's going to be volatile on the downside.
As our final arbiter, though, we will use price as we usually do. By that I mean
that one should not blindly short stocks or buy puts. Rather, one should look
for stocks that are weakening and have fallen below established support levels.
For example, IBM closed just below 112 today. That is right on the verge of
a breakdown. Other major levels would be 44 for QQQ and 67 for Microsoft (MSFT).
HTH, Ray :) |
