QQQ and SPY look set to bounce with a couple Hammers formed at around the 38% Fib retrace levels. The 50 day moving averages look good right now as a limiter if bulls can manage to get a bounce going.
The NDX led the SPX out of the 2009 bottom. The bottom panel shows QQQ in relation to SPY rolling over since the spring of 2012.
The most recent rally out of the summer was led by the emerging markets. The top panel shows the EEM-SPY ratio threatening to break down.
What’s it mean? Maybe the S&P 500 will just keep going up with a flight to equity safety tout, but as of this moment it is losing its leaders. Oh for a hard correction.
Is the NDX (QQQ) in a progression of higher highs and higher lows (yes, so far) forecasting new highs or about 80% of the way through completing an H&S top? I ask because I really don’t know. I’d say that the H&S is just conjecture and speculation while the series of higher highs and lows is fact. So there, I guess that’s the answer.
I would not confuse these candles showing up as Hammers. A Hammer is technically a bullish Hammer only after after it shows up after at least a short-term downtrend. It is a reversal candle after all.
More often than not in my experience these candles prove to be ill-fated little ‘buy the mini dip’ exercises if they show up just after a market starts to break. There’s the key resistance shown on the chart of QQQ. If it gets through there I guess it will have been an okay candle, but not a reversal candle.
I bought QQQ as a potential multi-week trade and the 3x leveraged TECL as a short-termer. Recall last week’s posts about the QQQ’s Hammer reversal.
I’ll let QQQ breathe for a bit longer, but TECL is released for +9% as I am rediscovering my inner trader by using a small, high frequency trading account. It’s good to trade and remind oneself of the disciplines involved; like never fall in love with a position.
QQQ is getting up into a congestion zone and while I am thinking that December could see the start of a bullish phase in the market I am not at all sure there will not be some real grinding and churning going on until it conclusively begins.
Traders who were brave enough to buy the Hammer reversal might think about taking profits… 9% or so is not bad for a week’s work in a temperamental market.
Thank you market for this small gift. I will not look you in the face.
With some of the Captains of the Nasdaq 100 getting clobbered on earnings (hello GOOG), it looks like the QQQ is heading for the noted support zone. That would be the buying op if – and that’s a moderately significant if at this juncture – the election year cycle and sentiment profile remain true to form.