Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: goingbroke who wrote (4526)	8/9/2007 6:56:20 PM
From: Don Green	Read Replies (1) \| Respond to of 4814

It is common knowledge each year during August all of the main players are on vacation so wild rides are very common until the bosses return.

To: goingbroke who wrote (4526)	8/10/2007 3:22:45 AM
From: Walkingshadow	Respond to of 4814

Hi GB, Technical and momentum indicators are fundamentally based on past price and volume changes, hence they are mostly trend-following. Their predictive ability is limited, and I don't believe it is possible to use charts/technicals alone to predict market movement with anything greater than about 70% accuracy or so consistently. Now, that said, there are times when critical information can be gleaned from careful analysis of charts, but must be properly interpreted in the context of other market characteristics such as internals and sentiment. So, what can we learn from recent action in the markets? Well, they always say that past performance does not necessarily predict future results. That might make the corporate attorneys writing Safe Harbor disclaimers sleep better at night, but it ignores the fact that history does in fact repeat itself, that market activity is not random, and that patterns can very definitely be discerned and exploited (just ask the big boys who invest billions in the algorithmic trading that dominates market volumes, and in some situations is the closest thing there is to a certain profit). Well, here's what I note from history. I think you will agree that there are some striking parallels. Specifically, the put/call and the daily volatilities reach very low levels at market tops (see arrows). Conversely, both indicators spike at market bottoms. Note also the surges of volume at the bottom in July of last year, and compare that to the even more marked volume surges in recent weeks.

To: goingbroke who wrote (4526)	8/10/2007 3:59:08 AM
From: Walkingshadow	Read Replies (1) \| Respond to of 4814

Here's another historical similarity from the recent past in QQQQ. Back in late February/early March of this year, the indexes dropped sharply, losing 7.2% from the peak on Feb. 22 ($45.42) to the bottom 7 session later, on March 5 ($42.15). In the process, there was sharply increased intraday volatility, a very high peak in the put/call, and a series of candles amidst a strong surge of volume in an area of congestion that turned out to be the bottom. From there, the index rallied over 19% to the highs of July 19. Now I think there are parallels that should not be ignored. Again we have a sudden downturn with sharply increased volatility that is associated with high volume, and spikes in fear and bearishness evidenced by the put/call. Might we retest the previous lows from about 5 days ago? Possibly. I posted before that I did not think the previous highs from July would get taken out. However, that possibility is less remote now, IMHO. What seems clear to me is that this market is coiling for a significant move upwards. At this point, it is getting difficult to predict how far that might go. When will that start? Possibly tomorrow, but we could easily retest the lows, as I said above. That retest could be simply intraday, or we could get another close at the previous lows. So I cannot say with any degree of confidence when the market will finally move up, just that this is imminent and could begin as early as tomorrow, or as late as several sessions from now.