QQQQs were very interesting today

[Mark Politi]

Aloha,

 

The Q's reacted quickly to the upside on the durable goods news  and then at 10:00 on the housing report.  However, after the housing report news was published, the Q's took a $1.39 nose dive from $31.05 to $29.66.  What the reason was for this sharp decline is a mystery to me given how sensitive it was with Monday's news.  The only thing I can attribute the decline to is that the Q's are pretty close to a well defined resistance level of $31.50.  Today's decline lasted until 3:00 PM.  Then it rallied up to close at $30.52 for a .19 gain into after hours trading - as of about 7:00 PM Eastern Time.

 

Darlene Nelson Powell's rules for trading are to wait for second day confirmation either at support or resistance before jumping into a position AND it must be moving in the desired direction.  She defines second day confirmation as today's high or low breaking past the high or low of yesterday AND continuing to move in the desired direction.  Absent those conditions, she does not normally enter the trade.  

 

The key question regarding the Q's this week is are they going to reach the resistance points before turning over to the downside or has it already run out of steam and ready fall now?  My understanding of her rules is that even though the Q's broke through the low of yesterday, they closed ABOVE yesterday's low and were moving UPWARD.  Hence, I do not believe we have a good second day confirmation according to her rules.  However, I will post an update once she updates to her daily commentary on her website (yes, it's another paid subscription).

 

If my interpretation of her rules are correct, then we'll be looking for a second day confirmation tomorrow.  If that occurs, we could be looking at a 50 % retracement of the last two week's rally.  More to follow.  Keep in mind it will take more than a two week rally to turn a bear market into a bull market, as noted in Arnold's previous posts.  The key is to get take bites out of the movements going up and going down and not to try to pick tops and bottoms.  Getting chunks out of the middle will make you money every time. 

 

Happy trading and aloha for now,

Mark       

[Arnold Kameda]

Thanks Mark for your great post! Nice to hear from you. Are you back in Hawaii?
Arn

[MVP]

Aloha Arn. Yea got back from Maui this afternoon. Still waiting for
Darlene's update. When's the next meeting?

Aloha,
Mark


Sent from my iPhone

[Arnold Kameda]

Howzit MarK & welcome back! Next meeting is dependent on our pal AC (Al) getting us a room at U of P; haven't heard from him in a long while. I hope he is OK?
Arn

[Mark Politi]

Latest update from Darlene is as follows:

 

"I am standing on the side waiting to see how today looks for my bias.  At 8:30AM we have initial claims and the GDP Final reports out and I would like to see if we get a direction that is sustainable after 9:45AM EST. 

Sentiment indicators are starting to say we need to pullback, but a few are still bullish like the TICK. 

I would have to see us break the highs of yesterday and sustain still going up above that to be bullish, but everything is screaming resistance and do we have enough good news to sustain another leg up?  The market wants to go up against the odds, but any sign of bad news and we could see this turn over at a perfect resistance level.  Any good news and we could see what I would consider an unsustainable rally."

That's a quote from Darlene's update for tomorrow.  Not very specific but then again, the Q's only gave a hint of being bearish but not the kind of signal we'd look for to convince us of a reverrsal or retracement.  Consequently, it looks like we're still looking for a second day confirmation tomorrow or a continuation upward to resistance. 

Good luck, my friends,

Aloha for now,

Mark