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QQQ Top Components at Resistance

The top 5 components of the top-heavy QQQ/Nasdaq 100 are all at resistance on the 60-minute time frames, including several at gap resistance. These are fairly significant resistance levels on the intraday time frames so 60-minute closes above these levels on most or all 5 of these leading stocks would certainly be near-term bullish although zooming out to the daily charts, there is still much more work to be done in order to firm up the bullish case as the Nasdaq 100 & Nasdaq Composite are still about 8% off their 2015 highs & are still well shy of the 61.8% Fibonacci retracement levels from those 2015 highs.

Personally, I'm adding back another day trade sized short position on QQQ here, of which I'll either close all out on a solid break & 60-minute close of 1% above these levels -OR- should we roll over here as I'd expect, I will take partial profits before the close while bringing home the rest of that position.

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Jun 30, 2016 11:40am|Categories: Equity Market Analysis|Tags: , , , , , , |4 Comments

4 Comments

  1. cem602 June 30, 2016 11:50 am at 11:50 am

    @rsotc
    Thoughts on resistance holding? Seems like every time we tag one, we get a small reaction, barely a pullback and then ramp higher….really getting tough to fight these central banks. SNP has had some good thoughts that we’re likely in a new era of the markets where being a bear has become harder than it’s worth, despite some big names like Soros and Ichan being heavily short.

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    • rsotc July 1, 2016 2:31 pm at 2:31 pm

      @cem602 My thoughts on your question: As far as resistance holding, that is all relevant to the time frame one is trading or using for their analysis. Lately, I’ve been posting a lot of charts ranging from the 5-minute to 60-minute time only because other than the tag of the daily support levels on Monday, there haven’t been many key daily & especially weekly levels to highlight. There is still plenty of significant resistance levels overhead, particularly on the Nasdaq comp, NDX, RUT, MID, and just about every other index but the SPX which is within shouting distance of new highs.

      In the video that I did yesterday, I highlighted how the rip that we had over the last few sessions as well as the even larger 3-day dip leading into Monday’s lows was simple par for the course in this market over the last couple of years it traded in a large, mostly sideways to slightly lower trading range. I also highlighted several periods where these big 5% or so rips & dips were immediately followed by a nearly equal rip or dip in the opposite direction, much like two big heavyweights exchanging blows. Eventually, one of those fighters (bulls or bears) will come out ahead (i.e.- the market will eventually either trend up or down following those back & forth periods).

      I guess the take away is that nothing has change recently in the longer-term technical picture, despite the big post Brexit drop & ensuing strong rally. Does is suck for both long & short swing traders to get caught up in such large back & forth (but go nowhere) moves? Of course. However, despite the fact that this market hasn’t had a clearly defined primary trend in over two years now, these rips & dips are still conducive to swing trading IMO.

      I recently highlighted the divergent highs in the US market on the daily time frame along with several sell signals & the failed downtrend line breakout attempts in early June that confirmed short entries for swing shorts on the market. Then on Monday, I made it quite clear that the markets had fallen to key support levels on the daily charts where a bounce was likely & posted covering my entire IWM short position (which was my core index short position and I also mentioned reducing some other short exposure in the trading room as well). http://rightsideofthechart.com/iwm-small-caps-at-support/

      I don’t claim to have a crystal ball nor am I foolish & cocky enough to guarantee that the market will certainly do this or that but I will say that I’ve been around long enough to know that certain patterns of psychological behavior and perceptions always repeat around market tops and bottoms such as the extremely widely held (and dangerously false IMO) belief that the Fed has, after all these years, finally stumbled upon just the right magic formula to finally end all recessions & stock market declines so we should all embrace this new era of perpetually stock gains & sleep well at night while positioned long with maximum leverage with the comfort of knowing that the central banks have finally mastered full control of the financial markets & will never allow another bear market, at least not until they think we should have one (and when do you think that would be even if they did have that power?). Just as most believe “it really IS different this time around” at the top, those same individuals believe the bottom of the market is miles away right about the time the last long has puked up his last share at the end of a bear market.

      Long answer to a short question, I know, but my point is NO, I don’t, in the slightest, buy into the fact that the CB’s can prevent a bear market & even if I’ve been making the case that we are most likely in the early stages of one, I still continue to trade both long & short based on what the intraday & daily charts indicate. At some point in the future, the charts will unambiguously confirm that the primary trend is bearish (which I think is safe to say will be when $SPX is solidly trading below 1800). Although it isn’t my primary scenario, I can certainly see the potential that the consolidation over the last two years has not been a topping process, rather a consolidation before another clear primary uptrend emerges but that’s all long-term stuff so if the evidence starts to clearly point that way, my long-term bias (which is quite often in direct contrast with my positioning) will begin to shift as well.

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  2. dan123 June 30, 2016 12:27 pm at 12:27 pm

    Thank Randy for all the charts and videos, greatly appreciated.

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  3. jacant June 30, 2016 12:36 pm at 12:36 pm

    Nice chart set! Thanks!

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