Different day, same old
story as the Qs continue to hold key hourly support levels. At the
risk of sounding like a broken record, pullback long entries remain the lowest
risk until we begin to lose underlying supports on decent volume. Having said
that, we remain arguably at interim overbought levels as measured by high-band
stochastics and an imploding VIX, and I remain glued to stochastic indicators to
try to gauge the true strength of these climbs. Thus far, any price vs.
stochastic divergence has brought us down to major support levels (see below)
which have subsequently held.
8, 2001Â 12:10 PM EDT
Approx. Equivalent QQQ Price
Why do I care so
much about stochastics? Well, yesterday provided a great answer, as multiple
divergences provided a heads-up prior to the afternoon descent. As I’ve often
said, divergence means little unless and until confirmed by trend changes, which
the three-minute chart provided nicely.