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Divergence between the Semis & Nasdaq 100 a Red Flag

Note the nearly perfect correlation between SMH (Semiconductor ETF) & QQQ (Nasdaq 100 ETF) up until the sudden & very distinct disconnect between the two that occurred immediate prior to the August crash in QQQ which was the largest correction in years. Immediately following the August 24th lows, the very tight correlation between the Nasdaq & the semis was once again restored until this recent, nearly identical disconnect between the two.

SMH vs. QQQ Nov 5th

SMH vs. QQQ Nov 5th

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Nov 5, 2015 10:44am|Categories: Completed Trades - Short, Equity Market Analysis|Tags: , , , |3 Comments

3 Comments

  1. HiddenPivots November 5, 2015 10:49 am at 10:49 am

    Randy, have you arrived to a price target on QQQ if so what time frame hypothetically?

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    • rsotc November 5, 2015 10:58 am at 10:58 am

      The horizontal lines on that 60-minute QQQ chart just posted are some near-term targets. I’ve been lazy & do plan to add some price targets to the TQQQ Active Short trade, which I will soon, but my intention for that trade was, and still is, that it has a good chance of morphing into a multi-month swing trade with the possibility of the Q’s revisiting the Aug lows. However, there is considerable work to be done on the charts to even put that as a strong likelihood at this time because the recent rally did quite a bit a damage to the intermediate & longer-term bearish case. I’m still watching to see what happens in the coming days & weeks. Haven’t added to that initial TQQQ short position since the day I posted/shorted it & don’t plan to at this time. With the charts not very clear right now & earnings season still underway, I can think of no better reason to keep things light for now.

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