Looking for a bullish signal? Watch this chart
The markets have been
schizophrenic lately. Strong up days have been mixed with strong down days.
The Dow and S&P have both held their Oct-13 lows but have failed to regain their
50 and 200-day moving averages. Even with the strong push today, it is unclear
whether 10-13 will become a bottom of any significance, or whether it will give
way in the not too distant future.
Lately, the Nasdaq 100 has been exhibiting
the most strength. It is the 1st major average to regain both its 50 and 200 day
averages. Yet the chart below of the
(
QQQQ |
Quote |
Chart |
News |
PowerRating) shows it is still not out of
the woods.
Notice the downtrending channel the QQQQ’s have
been locked in over the last few months. Also note the fact that the length of
time for each of the last 4 up and down legs has been fairly symmetrical. QQQQ
is now testing the upper line of its channel. If time symmetry is to hold QQQQ
will begin a new downleg in the next day or so. The combination indicates that
we are near a critical juncture for QQQQ, and since QQQQ is the current leader,
we are therefore at a critical juncture for the rest of the market. A break of
the pattern shown above would be bullish. A continuation of the pattern would be
bearish.
I remain extremely cautious on both the long and
the short side right now. Until the market tips its hand, there is no sense
risking a lot of capital. Stay in the game and wait for your opportunity.
Best of luck with your trading,
Rob Hanna
For those who may be looking to expand their
knowledge beyond just market timing, my
Hanna ETF Money Flow System utilizes the VIX in generating trading
signals for spread trades.
Rob Hanna is the principal of a money
management firm located in Massachusetts. He has spent the last several years
developing and refining methods for trading in stocks across multiple time
frames. He selects stocks using both fundamental and technical criteria, and
then trades them using technical analysis techniques.