The Qs (QQQ) Are Almost Back to Highs
I’m writing this during lunchtime, so we really don’t know yet if the markets will hold onto this gain. It’s about 12:40 and the markets are starting to inch back a little bit, so we’ll see where this ends at 4 o’clock.
This is the best looking chart of a broader market index right now. Admittedly, I have cherry picked the best to make the point that this just might be a baby bear market.
As you can see from the chart above, the NASDAQ 100 ETF symbol QQQ has retraced deeply into the breakdown that occurred last week. Again, we cannot know where this will end by 4 o’clock, but should this index and the others that have moved up today hold on to those gains, I think this baby bear will be on the run.
This isn’t to say that damage has not been done to the markets and many stocks, there has been, so were really not out of the woods here.
As I pointed out in this morning’s letter, one sentiment gauge has moved to a bullish level, and maybe that was enough to turn things since breadth was also bullish. That being said, tomorrow is triple witching of options and that may be skewing things. I also said in this morning’s letter we may not see a larger move until next week.
The weekly trends are still up and while last week’s break lower under the recent consolidation suggests lower prices. Today’s price action puts that in question.
Putting things in question has been the norm in this market, so again we’re back to sitting on the fence for now. That aside there are some other interesting developments today and some trades you may want to consider at the close.
Let me repeat again that I’m writing this during the midday doldrums of the trading day. There is no way to know where things will end, but if the charts look like they do now. I suggest taking positions for at least an overnight hold and possibly selling sometime in the morning.
This morning I said to keep an eye on the gold stocks as some more up pre-market. I also said that because GDX was retesting the prior reversal, but didn’t mention this morning .
As of this writing we’ve got a nice bullish reversal bar on the retest. Let’s see if GDX can hold onto this gain and if so consider taking a position.
Of course, I realize the above chart is in a downtrend, but that doesn’t mean it cannot move higher in the short term. And depending on the action tomorrow morning, it just might mean an overnight trade it all there may be.
First Majestic Silver Corp. (AG) is a stock in the above gold ETF and has a similar pattern. It’s down a lot from its high and because of the retest and reversal forming today I like this as an overnight trade to start and possibly a swing. A repeat again, this afternoon’s comments are based on prices closing in the area where they are now.
Above is the 3X leveraged crude oil ETF symbol UWTI. It too has had a turnaround day and is in the area of a prior low and other consideration for an overnight trade. You can also use the ETF symbol USO; however, it is not leveraged.
Biotechnology stocks have also had a turnaround day today and I like the overall bottoming pattern that’s occurred over the last two weeks. It did form a double top and came down very hard (big red down candle) last month. However, there’s been little follow-through in assuming the bullish close this ETF symbol IBB should move higher in the morning as well.
The action today in the markets has been bullish, but the day is an over. See were things close and if prices close near their highs the assumption is they’ll be higher tomorrow at least for the morning. Let’s see where they’re at a little later in the day.
All the Best,
Greg Capra
Founder of The Pristine Method of Trading
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