Critical Decision Zone For The QQQs

• October 6, 2004
• Derrick Hobbs

Nasdaq
Facing Important Zone

The Nasdaq 100 Tracking Stock (QQQ)
is sitting on a 35 day, 13% rally from the August 13 low to the October 4 high.
Is this just another mini-rally within the context of a downtrending index? To
answer that question, I have identified a very critical price decision zone.

To boil down Fibonacci price
analysis, it is essentially used to identify key support and resistance zones
that will be faced in the future. In this case with QQQ, our Fib price analysis
shows a critical resistance zone from 36.45-37.57. If this zone is broken to the
upside (above 37.60) then I’m ready to look at buying pullbacks…but not until
then.

The other two items that
confirm this price zone as a critical decision are:

1)     
Time Cycles — I have 3 time cycles
between October 6 and 8 that suggest a potential reversal occurring.

2)     
2 std Deviation Regression Channel —
We are at the top of a downtrending regression channel.

 Combine these two parameters
that I closely follow with the price resistance zone and we have the makings of
a critical decision zone for QQQ.

How to trade it? If you’re a
“long only” player, wait for the zone to be broken to the upside and look to buy
that pullback.  If shorting is part of your quiver of arrows, look for triggers
in this area for shorts with a tight stop above 37.60.

Have a good one!

Derrik