Where Is The Market Heading?
Higher oil prices and good economic data helped US equities rally last week. On Friday, market indices started to sell into the close and this momentum continued into the Monday morning trading session. So what’s ahead for the market, and should we be tightening our stops in our long positions?
A Close Look At The QQQ’s.
Since mid-December, when the QQQ’s corrected into the $100.00 area, it was experiencing the “yo-yo” effect, bouncing each time from support, thus forming a quadruple bottom. The tough part about being overly optimistic about continuing higher is that since the QQQ’s marked a new yearly high last year at $106.25, the overall technical pattern started to weaken, judging by the falling tops from the daily chart below. Each time this pattern sets in, along with the increased volatility, it makes it difficult for us swing traders and investors to take our eyes off the market.
What Is This Market Really Trying To Tell Us?
Last week, we had five consecutive green days in which the QQQ’s broke resistance at $103.00 level (marked with “1” on the chart below) and showed no sign of weakness, thus entering into the next tradable void with a new target of $104.60 (marked with “2” on the chart below). On Monday, however, it triggered a sell on the daily chart that by lunch quickly reversed. All large time frames are pointing higher with strong technical consolidations.
If in the coming days the QQQ’s push through area #2 on the chart, it would give us the conformation that it is ready to tackle the highs we’ve seen at the end of last year.
We will continue to look at $100.00 area as support and a hefty shelf for any price action trying to test that area.
Any break of support under $100.00 could bring accelerated selling pressure and that might take the market lower, close to last October’s support area around $90.00.
Technical Image: Daily Chart of QQQ below
Key Technicals
- Bias: Bullish
- Support Levels: $100.00, $99.36, $97.50, $95.00, $90.00 areas
- Resistance: $104.59, $105.26, $106.25
Good trading everyone,
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