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Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (7710)	4/12/2005 7:53:56 PM
From: Vendit™	Read Replies (1) \| Respond to of 8752

The stick that formed today is a typical hammer and is indicative of a short term bottom. Momentum rushed back towards the top of the trading range by eod and should push past the days top into the open tomorrow. A run to 36.80 - 37.00 would not surprise me.

To: Gersh Avery who wrote (7710)	4/13/2005 12:46:42 AM
From: Walkingshadow	Read Replies (1) \| Respond to of 8752

Hi Gersh, QQQQ looks to be at a critical juncture here, as your forks analyses seems to suggest. Certainly the chart does. As you pointed out, the BBs are indeed critically contracted now. The width is less than 1.0, which is the second lowest reading in over 3 years: stockcharts.com[w,a]daclyyay[dd][pb50!d20,2][vc60][iLg!Lyb20,2.0]&pref=G This makes a very strong move increasingly likely. That move will be to the downside, IMHO. There are a number of reasons why I think this, and I have posted about them repeately here. Today, another reason was added: the market rally has all the hallmarks of a bull trap. Specifically, even as the market was rallying, it was generating huge amounts of resistive volume that will prove to be the undoing of this minor rally. 139.142.147.22 This kind of volume is exactly the opposite of what is required to generate a sustained rally. This is not so easy to appreciate on AskResearch charts, but carefully compare where the accumulation of volume was in today's afternoon rally with what we saw yesterday in RSTG----night and day: 139.142.147.22 We may well see QQQQ first rallying once again to resistance from the declining 50 sma and chart resistance at $37. If so, it will get soundly turned away there. Even the "reasons" for the rally are laughable: rumblings from the Fed that they will not raise 50 bps, that instead they will continue with the "measured pace." biz.yahoo.com Well, Talkingheadspeak notwithstanding, the market never thought they were going to raise 50 bp in the first place. The market long ago priced in 25 bps per meeting through September or so at least (last I looked), and had NOT priced in a 50 bps increase, as reflected by the Fed Funds Futures. So there was no problem to resolve in the first place---smoke and mirrors from the talking heads. <<Bullish is the close over the 20 SMA>> Normally, that is true. But this time, I think the 20 sma offers little resistance for two reasons. First, the BBs are so contracted that the midregion (i.e., the 20 sma) is for all practical purposes nonexistent. As you point out, the width of the BBs is not far away from the normal intraday volatility associated with a few sessions, maybe a week's worth. The top and bottom rails now are support and resistance for the trading range between $36 and $37---they are only separated by $0.99! Second, the last time around, the 20 sma also offered little resistance, but QQQQ sure got slammed last Friday when it crept up on the 50 sma! Thus, the 20 sma and 50 sma are so close to one another right now that it trivializes the normal resistance offered by the 20 sma. And now, the 50 sma is just above the upper BB rail, and this is in a region of strong chart resistance. You can also draw a trendline across the peaks, beginning at the first session in January. So there is resistance from 5 sources beginning at $37: chart resistance, BB resistance, 50 sma resistance, the trendline from the first candle at the beginning of the year, and the bearish candles from January's meltdown. And just in case you might wonder whether 5 sources of resistance will be sufficient to turn back QQQQ (which remember, has shown little sustained energy to the upside all year), here is an additional one: 139.142.147.218 This is exactly what we saw when QQQQ was trying to break through the tremendous overhead at $38, and we will see the same result this time: if QQQQ dares trespass into that zone of heavy resistance beginning at $37, I think we'll see it thrashed once again. I see zero evidence that this market has put in a bottom, and a lot of evidence that it has not. I expect QQQQ to get turned back this week sharply, and head for the lower BB rail, which it will push wide open. All IMHO, of course.... T