Hi Reid,
I have doubts that the obvious upside targets are within the reach of QQQQ on this leg.
That target, as you pointed out, is the upper rail of the regression channel, which by the way coincides pretty closely with the upper BB rail. Also, this is just under those doomsday candles that form a stiff layer of overhead resistance beginning at $38.01.
Just looking at the chart and technicals, this seems very reasonable.
But the volume patterns make this target doubtful.
Also, QQQQ is overbought on the intraday chart:
139.142.147.22
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Internals:
Short-term market internals also cast doubt here. The $TICKS suggest about one more day (or perhaps less) of upside.
$TICK:
stockcharts.com[w,a]dallyyay[db][pb10][vc60]&pref=G
$TICKQ:
stockcharts.com[w,a]dallyyay[db][pc10][vc60]&pref=G
But the $TRINS are starting to show evidence that upward momentum has already started to weaken considerably:
$TRIN:
stockcharts.com[w,a]dallyyay[db][p][vc60][iLp14,3,3!Lp14,3,5]&pref=G
$TRINQ:
stockcharts.com[w,a]dallyyay[db][p][vc60][iLp14,3,3!Lp14,3,5]&pref=G
Furthermore, the $VIX and $VXN fell today by an unusually great amount, and I think anything more than a day of downside in the volatilities is asking too much:
$VIX
stockcharts.com[w,a]daclyyay[db][pb10!b20][vc60][iLp14,3,3!Lp14,3,5]&pref=G
$VXN:
stockcharts.com[w,a]daclyyay[dc][pb10!b20][vc60][iLp14,3,3!Lp14,3,5]&pref=G
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Note also that the BBs continue to get even further contracted.
QQQQ:
stockcharts.com[h,a]daclyyay[dc][pd20,2][vc60][iLyb20,2.0!La12,26,9]&pref=G
The BB width now stands at 1.40. There have been only 3 other times in the last 2 years when the BBs have been so contracted, and each was followed very shortly by a strong push against one of the BB rails:
stockcharts.com[h,a]daclyyay[de][pd20,2][vc60][iLyb20,2.0!La12,26,9]&pref=G
The most direct, obvious resolution would be for QQQQ to push strongly on the LOWER BB rail. The alternative, that QQQQ would open the BBs by pushing on the upper BB rail, is highly unlikely, since that would require QQQQ to rally powerfully above $38 and right through that overhead layer of powerful resistance we have spoken about on numerous occasions.
On the other hand, the middle of the BBs on the weekly chart happens to be at $38.01:
stockcharts.com[h,a]waclyyay[df][pd20,2!b20][vc60][iLyb20,2.0!La12,26,9]&pref=G
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FUTURES:
The futures markets give mixed guidance:
Oil has blown past resistance, is now trading close to $52, and looks for all the world headed for a retest of the all-time highs, but appears to be beginning a short-term correction first:
futuresource.com
The dollar failed spectacularly at chart support, and gapped down right through that level. Now it looks ready to resume the downtrend, after a bit of relief rally first into the upside gap:
futuresource.com
The index futures trading right now suggests a short-term top is near.... SPX is wavering at the critical 1200 mark, for example, and the e mini NDX moving sideways with little evidence of upside conviction.
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When you take all these things into consideration, then I conclude that while $38.01 at first glance appears to be a reasonable upside target, there is a very significant probability that this short-term rally will run out of steam considerably short of that and reverse to the downside.
Tomorrow in QQQQ, I anticipate a flat open (but the Preliminary GDP released an hour before the open could change that if it deviates from consensus), a bit of rally in the early part of the session tomorrow that will largely reflect retail buying, with an intraday top at about $37.65 or less. Then late in the session, we'll see a pullback, and possibly outright selling, and this will continue into next week.
....all IMHO, of course.
T |
