Watching the QQQs

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.

QQQ on Sept 1, 2011 - Weekly and Daily Charts
TradeStation Screenshot of QQQ on 09/01/2011

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.

TF Weekly and Daily Charts as of Sept 1, 2011
TradeStation Screenshot of TF on 09/01/2011

In summary, I think there could be further to go on the downside before the market gets ready for election year.

Upcoming Educational Presentations

TradeStation Strategy Network, Sept 6 at 4pm EST, Join me for a live online presentation on the latest in MACD Divergence technology. Click here to register for TradeStation Webinar

Trading Options for ProfitS (TOPS) Group Meeting, Sunnyvale CA, Sept 10 at 1pm PST. If you’re in town, feel free to attend this meeting for an extended talk on technical and fundamental indicators to get insight into the movements of the broad market.  Email RSVP to ovug (at) helpone.com

Traders Expo Las Vegas, Nov 18 2011 8am PST on MACD Divergences and 5:30pm PST on Weekend Market Status
Treat yourself to a trip to Vegas to sharpen your trading skills! Click here to register for Traders Expo

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