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

To: gregewing who wrote (1645)	8/2/2005 1:53:27 AM
From: J.K.	Read Replies (2) \| Respond to of 4814

You'll eventually be right. But first we'll visit 40.29, or even on to 41.40, I believe. Do you know why? None of the indicators you listed point to the reason. J.K.

To: gregewing who wrote (1645)	8/2/2005 4:42:40 AM
From: Walkingshadow	Read Replies (1) \| Respond to of 4814

Hi gregewing, QQQQ has been overbought for some time, as reflected by the extreme readings in the stochastic and Williams and the fact that it has been trading near the upper BB rail for 3 straight weeks (see chart below). You have a short setting on your BBs---only 10 periods. John Bollinger has always recommended 20 or so would be the most helpful for most situations. I think he's right. I used to use 22 period BBs, and they might be a bit better sometimes, but I would consider 10 to be much too short, particularly for an index. Anyhow, if you use the 20 period BBs, here's what you see: stockcharts.com[w,a]daclyyay[dc][pd20,2!b50][vc60][iLyb20,2.0!Lp15,5,5]&pref=G You can see that QQQQ has pulled back from the upper BB rail, indicating the trend strength upwards has eased back. And that is reflected also in the technical/momentum indicators: 139.142.147.19 OBV continues upwards, but everywhere else you look there are sell signals either in place (fast stochastic, slow stochastic, Williams, price ROC) or pending (MACD). Relative strength is about 70, as you point out, but this is a significant decrease from the higher levels previously recorded. In the first chart, you can also see that the BBs reached an extreme degree of expansion. I pointed out late last week that this was unstable, and we would have to see a contraction phase now. This has begun, and I expect BBs to get down well below 2.0. One way this can happen is for QQQQ to trade sharply down. That will pull the upper rail down FASTER than it will push the lower rail down, and the net effect will be contraction. It is difficult or impossible to imagine how upward movement in QQQQ now can cause a contraction in the BBs. So I guess the question of the day is this: Is this the picture of a market with dominant upside momentum? Is this typical of what you see at the beginning or even the middle of a bull run? T