Watching the QQQ gave important clues to the market this summer. Negative MACD Divergences on the weekly chart (top) of the QQQ showed up just before the big drop in August. As I write, QQQ is running into overhead resistance from the old up trend line drawn on the weekly chart (top). On the daily chart (bottom), QQQ reached up to touch the 50-day MA and fell back. If the NASDAQ leaders retreat, I would expect the market to follow.
The small cap Russell index, shown below in charts of the e-mini TF, has not even performed as well as the NASDAQ. You can see from the weekly chart below (top panel) the past negative divergences. In early August TF failed to achieve new highs and MACD confirmed the weakness – a fuzzy negative divergence. On the rebound, it is not even close to the past uptrend line. On the daily chart (bottom), notice TF’s current inability to reach its 50-day MA like QQQ.
In summary, I think there could be further to go on the downside before the market gets ready for election year.
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Traders Expo Las Vegas, Nov 18 2011 8am PST on MACD Divergences and 5:30pm PST on Weekend Market Status
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