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Strategies & Market Trends : Playing the QQQQ with Terry and friends. -- Ignore unavailable to you. Want to Upgrade?

To: IHateSourCream who wrote (321)	5/23/2005 10:45:39 AM
From: Walkingshadow	Respond to of 4814

Hi IHSC, A correction is already overdue. In less than 3 weeks, QQQQ is up 10%. Not counting today, there have been 6 straight up days in a row. 8 of the last 10 sessions have ended higher. TICKs are falling: stockcharts.com[w,a]dallyyay[db][pc8!b13][vc60]&pref=G stockcharts.com[w,a]dallyyay[db][pc8!b13][vc60]&pref=G But the $TRINs, which tend to lag the TICKs a bit, are still falling: stockcharts.com[w,a]dallyyay[db][pc8!b13][vc60]&pref=G stockcharts.com[w,a]dallyyay[db][pc8!b13][vc60]&pref=G Volatilities are a bit mixed, but appear to be stabilizing or already starting to reverse to the upside: stockcharts.com[w,a]daclyyay[db][pc8!b13][vc60]&pref=G stockcharts.com[w,a]daclyyay[db][pc8!b13][vc60]&pref=G stockcharts.com[w,a]daclyyay[db][pc8!b13][vc60]&pref=G The CBOE put/call has suddenly fallen to 0.62, which is an extremely low reading. This low of a reading has not been approached since last November: stockcharts.com[w,a]dallyyay[dd][pc8!b13][vc60]&pref=G This tells me that market sentiment has moved to rather bullish extremes that are unsustainable. When sentiment gets to extreme levels like this, that generally is associated with a reversal in the opposite direction, so here the prediction would be that the markets will reverse to the downside. Looking at the weekly put/call, the last time we saw spikes this low was January 2004, July 2004, and the very end of December 2004: stockcharts.com[w,a]wallyyay[df][p][vc60]&pref=G Each time a significant move downward in QQQQ price followed rapidly. IMHO, this will happen again. I see little in the market internals with the exception of the TRINs that would be consistent with continued uptrend here. The intraday chart shows some early and unconfirmed evidence of technical weakening: note that the previous peak in stochastics was not met or exceeding by the current peak: 139.142.147.22 Obviously, the daily chart of QQQQ shows extreme overbought conditions, but also early, subtle, and unconfirmed evidence of technical weakening just below the extremely heavy resistance zone that begins just above $38: 139.142.147.218 On the other hand, QQQQ has just pulled back sharply from its high of the day, but generated a strong surge of supporting volume. Still, there is an excess of volume built up from last week that is exerting downward pressue on price. So I continue to see strong evidence for a correction beginning at any time. T