Hi DaGushman,
Glad I could help.... can't remember what I said about ING. Guess it was okay?
Anyhow, re the April chart support, if you look at the weekly chart, you will see that during the month of April, QQQQ closed several times at about $37.00 or so (actually, I think it was just below $37, maybe $36.96 - $36.98). It butted its head against that resistance level, failed, tried again in June, failed again.
139.142.147.218
QQQQ then proceeded to form a V-bottom reversal in August, and it was off to the races. In the process, it blew right thru that $37.00 resistance level with a very bullish candle, and that resistance thus became new support.
Now, QQQQ has pulled back to test for the first time that support level. That's pretty close to where it closed today.
<< How are volume patterns shifting? >>
I like to study volume patterns. I think they can be very helpful, particularly when there are extremes. I think volume tends to be underappreciated and misinterpreted.
Basically, when you see volume surge as a stock trades down, that is not increasing selling pressure, but increasing buying pressure. If the surge is very pronounced, it often will stop a free-falling stock dead in its tracks. If the volume suddenly drops to almost zilch, then I think what happens is there are a ton of big buyers on board, and because the current trading volume is relatively low, they can methodically walk up the ask. This is harder to do if volume remains high as they are trying to walk it up, for the same reason that it is next to impossible to manipulate a stock like MSFT or GE or something that trades huge volume, but quite easily done with stocks with limited floats and/or low prices (hence, the momo crowd targets these latter stocks, never GE or MSFT).
When you see a surge of volume as a stock is rising to a new high, that is not buying pressure, but selling pressure, and can also stop a strongly rising stock dead in its tracks.
Now, for the indices, there are "pools" of these two flavors of volume that can and often do build up over time. Eventually, the market must react to them. The greater the pool of volume the market has not yet reacted to, and the longer this unstable situation continues, the greater the move to resolve the situation.
Now, sometimes you have both types of volumes accumulating. For supportive volume, this will not accumulate so long as the market is rising, because the market is relieving the "pressure" created by the supportive volume. And it will continue to rise, until it encounters signficant quantities of resistive volume.
Right now, we have a large surplus of resistive volume that has built up over weeks, and the market has only partially reacted to this. The good news is that in the process of intially working off this resistive volume, the market has begun to accumulate a pool of supportive volume that will eventually stop the slide.
In the longer term, the "pool" of supportive volume greatly exceeds the resistive volume generated, and that's one reason I am convinced the long-term uptrend will continue---the market must react to this pool of volume that has been only partially processed over the last few months.
This often works out very well for individual stocks as well, but again, it is most useful when it is very obvious.
Hope this makes sense. Again, volume patterns are most helpful when they are very obvious. Subtle differences are not helpful. If you are staring at a chart wondering about these things and trying to decide, then it is too subtle to be useful IMHO, at least for me. It should fly off the page at you.
RE QQQQ options, yes I do sometimes. I buy calls or puts depending on which way I think the trend is going, always as close to at the money as possible. I avoid buying options with less than 3 months till expiration.
T |
