QQQQ In The Zone

  • May 24, 2005
  • Kevin Haggerty

NYSE volume declined again to 1.26 billion shares

as price advanced with the SPX
(
$SPX.X |
Quote |
Chart |
News |
PowerRating) closing at 1193.86 (.618RT is

1193.60), +0.4%. The Dow
(
$INDU |
Quote |
Chart |
News |
PowerRating), 10,524,
(
QQQQ |
Quote |
Chart |
News |
PowerRating), 37.85, and Nasdaq

(
$COMPQ |
Quote |
Chart |
News |
PowerRating), 2057, were all +0.5%. The volume ratio remained positive at 68

and the 4 MA is 65. Breadth was +921 with the 4 MA +810. In the primary sectors,

both the
(
SMH |
Quote |
Chart |
News |
PowerRating) and BKX were -0.2% with the XBD virtually unchanged. Energy

was the leader again with the
(
OIH |
Quote |
Chart |
News |
PowerRating) +1.6% and XLE +1.7%, which is now +6.6%

in six days low-to-high from the Generals’ Pullback setup at the 37.94 low. The

$CYC closed at 727.24, just above the 200-day EMA of 723.59 and below the 733 –
743

primary resistance (see chart). Despite the inflation/economic growth rhetoric,

the
(
TLT |
Quote |
Chart |
News |
PowerRating) advanced +0.8% and is just a few ticks away from an RST sell

setup. The inverse would be the $TYX below 43.51, which traded to an intraday

low of 43.78 yesterday, closing at 43.87. The decline was from 49.31 on 03/23 as

the economic rate of growth has slowed down in different areas. Both the $CRB

and Industrial Metals Index ($GYX) have been declining since mid-March and the

same for the Goldman Sachs GSCI Total Return Index ($GTX) which is down about

18% since early April, closing yesterday at 5625, below its 200-day EMA of 5722.

If you check the S&P 500 screen on my commentary

page today, you will see that there was no real price and volume thread from

yesterday’s market action relative to groups/sectors.

The QQQQ has advanced seven straight days, so any

downside should be expected. It closed at 37.85 with the retracement level in
play at 38.26. Yesterday’s intraday high was 38, so you are in the zone.

Expect some random major index/stock price
movement through the end of this week and some more relatively low volume.
Daytraders should take trading profits a bit sooner on at least a percentage of
any initial position. The other way to do it is to take only 50% of your normal
position on entry and then you can add to it only if the trend goes your way.

Have a good trading day,

Kevin Haggerty

P.S. I will be
referring to some charts here:
www.thechartstore.com in the future.