Hi Reid,
Yes, I agree that QQQQ is poised for a moderate upswing here.
As you know, yesterday the trendline you referred to was broken to the downside. That means the contracting trading range and the possibility that QQQQ might break out to the upside is now no longer on the table, and instead QQQQ broke down out of that contracting range as I suspected it would.
And today, QQQQ touched the first support level outlined previously, namely the lower BB level.
Message 21064375
Message 21065915
Intraday, the $36.93 support level you identified was breached (QQQQ traded as low as $36.70), but QQQQ closed right on that level, which is also a region of chart support. The candle formed was a hammer, suggesting reversal to the upside, and there are early technical signs favoring reversal to the upside here as well:
139.142.147.218
Short-term market internals strongly indicate reversal here as well.
But as QQQQ traded down, there was no significant net volume support generated. So that, together with other considerations outlined previously, indicates to me that the medium term correction is not over.
So I see a short term rally here, probably through the rest of the week. It will not be strong. After that, retest of the lower BB rail will occur, and I think it is most likely that this test will fail. Currently, the lower BB rail is at $36.71.
Below that, there is the support level at the 200 sma ($36.34). I think that will likely fail as well, and the next support below that would be the lower rail of the regression channel at about $35.80, then below that, solid chart support at $35.00.
139.142.147.218
Note also that the BBs have become very contracted at 1.4. There are only a few times in the last year when the BBs have been so contracted, and of course each one was followed very shortly by a powerful push against one of the BB rails to expand the BBs wide open.
stockcharts.com[w,a]daclyyay[dd][pd20,2!b200][vc60][iLb14!Lyb20,2.0]&pref=G
So, the scenario I see as most likely at this point is a 1 or 2 day modest rally, then downside to the 200 sma, then the lower regression channel rail, then reversal at about $35.00, where resumption of the long-term uptrend will occur.
...all IMHO, of course....
T |
