5 Things To Consider Before Trading NQ Thursday

  • August 6, 2003
  • Derrick Hobbs

The Nasdaq has been kicked
around the last few days. The Emini Contract (NQ03U) is down a little over 8%
since the July 14 high. There are many reasons to be bearish at this point, but
let me paint the bullish scenario for this contract:

  1. Time Symmetry:
    The previous decline was 17 days and 7%. This decline is at 17 days and 8%.
    Not a bad spot to reverse???

  2. Pattern Symmetry:
    The previous corrective move was in the form
    of a Bullish Two Step Pattern from June 6 to Jul 1. That led to a 12% or 140
    pt rise in NQ. Well, at this point we have completed the exact same pattern.

  3. Candlesticks:
    After  wide range down day yesterday, we put in a
    Gravestone Doji today. This candle is often seen at reversal points. Ideally
    we see a gap up from Wednesday’s close to confirm this candlestick pattern

  4. Support Zone:
    The tradable zone here is from 1188-1213. I’d be
    looking for long trades in this zone. However, be aware that if we fall below
    this first zone, a momentum move to the downside could develop down to the
    1152 range. That’s why I’ll keep my stop just below 1188 on long trades.

  5. Sentiment Extreme:
    The Nasdaq 100 Tracking Stock
    (
    QQQ |
    Quote |
    Chart |
    News |
    PowerRating)     is at
    or near an all time high short interest. Approximately 250 million shares
    short. Based on average volume in this ETF it would take three days to clean
    that short interest out. I don’t know about you, but I don’t like to be in
    that kind of company.


 


Derrik Hobbs

 


“Fibonacci
for the Active Trader is by far one of the best trading books to come along in a
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I’ve read out of 50 and very enjoyable …”
–Daniel G.