45-minute to go before the close as I start typing this & the equity indices have been trading sideways all afternoon, essentially not moving higher or lower. Although I’m sitting tight with my QQQ & IWM short personally, I’m going to reinstate the stop on the IWM short trade to a daily close above 131.30 on IWM (slightly above the previous stop of 130.90) & reinstate the previous stop of a daily close above 117.50 on QQQ. IWM will likely be very close as it is trading just above that level as I type (and just recently started moving down below from that 15-minute rising wedge) while barring anything short of a meltdown into the close, the QQQ trade will most likely close above the suggested stop of 117.50 (about 0.80% above where it is trading now). Again, both IWM & QQQ may be revisited as new short swing trade candidates soon, should we get some decent evidence of a top in the charts.
$NAAD vs $COMPQ Nov 21st
On a related note, here’s one of many market breadth indicators that I like to use to confirm the sustainability of an rally or new highs in the market. This chart plots the Nasdaq Composite ($COMPQ) on top against the Nasdaq Advancing vs. Declining Issues ($NAAD). In a healthy market, you will typically see the $NAAD rising along with the $COMPQ. When you get divergence between the two, i.e. stocks rising while the $NAAD is falling, that indicates that all is not well under the hood & those divergent highs, such as we now have, are typically followed by meaningful corrections in the stock market.