PeakTrader.com Forum Index PeakTrader.com
Economics, Portfolio Optimization, and Technical Analysis
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 
Log inFast Charts

QQQQ & VXN

 
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Market Forecast
View previous topic :: View next topic  
Author Message
arthur
Guest





PostPosted: Sat May 21, 2005 9:35 am    Post subject: QQQQ & VXN Reply with quote

The two charts below are QQQQ and VXN daily year-to-date charts. QQQQ (Nasdaq 100) is at major resistance, i.e. the Price-by-Volume zone (bars on left side) and consolidation area (circle). VXN (Nasdaq 100 volatility index) closed at an all-time low Fri, which suggests a QQQQ pullback. Moreover, the QQQQ RSI and Oscillator (ULT) are both above 70, the Nasdaq TRIN's five and 10 day MAs are below 0.70, and the Nasdaq Oscillator is about 45, which are all near or at severely overbought levels. There may be little upside without a pullback.

"May Max Pain" last week turned-out to be the highest level the stock market could reach. Most "institutions" may be fully invested, i.e. those who participated hedged stocks with bonds, since both the stock and bond markets seem stretched. Those who didn't participate will wait for a pullback, or are skeptical. Also, many hedge funds seemed to have covered much of their short positions. The Federal Reserve has been draining liquidity out of the (commercial banking) system for over a year (including exchanging Treasury notes for money, while the low Treasury yields remain a conundrum) and will maintain its tightening stance, to move monetary policy from accommodative to neutral, in its effort to preempt inflation. The stock market is entering a seasonally weak period.

Nasdaq's most recent open gap is at 2,005, created last Wed morning, when QQQQ was at 36.75. Roughly a 40 point Nasdaq move equals a one point QQQQ move. QQQQ could fall over a half point easily and quickly, which I expect early next week. Nasdaq closed at over 2,046 and SPX closed at over 1,189. SPX has open gaps at 1,198, 1,174, 1,143, and 1,138. The QQQQ trading range, over the next week or two, may be between the two recent consolidation areas, which are shown by the Price-by-Volume bars in the chart below, i.e. roughly 36 1/4 to 37 3/4. If QQQQ closes below 37 1/4, it may fall another half point quickly. The major MAs may also provide support.

Economic reports next week are: Mon: None, Tue: Existing Home Sales, and FOMC Minutes, Wed: Durable Goods Orders, and New Home Sales, Thu: The first revision of first quarter GDP and GDP Price Deflator, and Unemployment Claims, and Fri: Personal Income, Personal Spending, and revised Michigan Consumer Sentiment.

The Core CPI was reported unchanged for Apr last Wed. However, the Core CPI is rising at about a 4% annual rate so far this year, and one month doesn't make a trend. The general trend is accelerating inflation. The FOMC Minutes on Tue will be a market mover, because it outlines future policy. The Durable Goods Orders report is a leading economic indicator. The economic data Fri will be important.

Next week is a light earnings week. Some notable earnings reports are: Tue: NTAP, Wed: DLTR, and Thu: HNZ DG.

I'd like to move my portfolio more into cash, and wait for higher volatility levels. Last week was tough trading, because the market rallied strongly without much volatility. Consequently, it was a buy & hold market, rather than a trading market. Over the past few months, trading ranges were more easily identified and predictable. However, it's uncertain whether the market has shifted to more random movements, for a few weeks, or if last week was a one week anomaly.


Back to top
Display posts from previous:   
Post new topic   Reply to topic     PeakTrader.com Forum Index -> Market Forecast All times are GMT - 8 Hours
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Powered by PeakTrader 2.0.8 © 2001, 2002