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QQQ Testing Key Support

QQQ (Nasdaq 100 tracking ETF) is once again testing the potentially important 116.00 support level with both of the 60-minute trend indicators recently flipping to bearish for the first time since June. Watching for a breakdown followed by impulsive selling as the likely catalyst for a move down to the 110.70 level in the following sessions.

QQQ 60-minute Aug 31st

QQQ 60-minute Aug 31st

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Aug 31, 2016 12:27pm|Categories: Equity Market Analysis|Tags: , |7 Comments

7 Comments

  1. dan123 August 31, 2016 2:07 pm at 2:07 pm

    thanks Randy for the update

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    • rsotc August 31, 2016 2:12 pm at 2:12 pm

      YW Dan. Looks like another successful test of support so far with the Q’s bouncing off that 116 level… tap, tap, tap. It would be preferable for the bearish case for the 116 support level to hold today, with QQQ opening lower in the coming session to gap down below it as that would put in a potential powerful Island Cluster Reversal top on the daily time frame. Whether that occurs or not, I’m still on watch for a solid break below 116.00 (not by a just a few pennies), including a 60-minute close below as well as impulsive selling (i.e.- large red candles on increased volume).

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      • snp August 31, 2016 11:41 pm at 11:41 pm

        island is becoming the size of Greenland…

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  2. pkm48193 August 31, 2016 2:15 pm at 2:15 pm

    OK! Bought TZA when QQQ crossed 116. Do we add more positions as it drops? Closed DUST. Are you worried about the Jobs Report on Friday? Should I buckle my seat belt? : )

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    • rsotc August 31, 2016 2:48 pm at 2:48 pm

      pkm- While I think that your TZA trade will likely start to move in your favor soon, just don’t become complacent with your stops. QQQ did move below 116.00 but only very briefly & by the slightest margin & without any follow-through or impulsive selling so I wouldn’t consider that a breakdown, rather just most likely a quick stop-clearing run on the day traders.

      Again, I think that the 116 support (and 215.30 on the SPY which is a little further below) will be taken out with conviction soon & personally, I’m not overly concerned with Friday’s Employment Situation report or Jobless Claims on Thursday morning. If you try to manage your swing trades around the economic calendar, then you’ll never be in a position for more than a few day or so as there’s always something due to be released that could cause a knee-jerk reaction in the market either way. That’s just me, of course, so by all means, if you are concerned about being caught on the wrong side of a gap later this week then you might want to close or lighten up on the position before then.

      As far as buckling your seat belt, you bring a good point that most should be aware of. It is often on the heels of such periods of extremely low volatility, such as the one that we have been in since early July, that some of the sharpest rallies & corrections emerge from. While the summer doldrums can go on for a while longer, it would be a mistake for a trader or investor to accept this as some kind of ‘new norm’ in the market, therefore thinking that it’s OK hold above average position sizes (other than day traders) because the overnight risk of a large gap or sudden sharp rally or sell-off no longer exists. So yes, while most traders & investors are probably falling asleep at the wheel (or their desks) right now, just make sure that the airbags are turned on & the seat belt is buckled as this market can go from zero to sixty in the blink of an eye, given the proper catalyst.

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  3. Art August 31, 2016 3:14 pm at 3:14 pm

    I agree Randy. There seems to be some kind of set point at VIX 14, ive noticed for the last couple of weeks. If VIX hits 14 or thereabouts then volatility gets pushed back down maybe some kind of Algo trading. But that is not going to last and when the stop comes off that, i think we are going to see some very sharp moves.

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  4. upordown August 31, 2016 11:23 pm at 11:23 pm

    my software shows a possible macd divergence on the qqq 60 min.. tomorrows open may be important.. higher lows so far in spy dia.. gap down starts down move.. gap up and push back to old highs

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