QQQQ - Thursday's 5-Minute Chart...
The QQQQ opened on a positive note on Thursday, but then gave way to some heavy volumed selling.
Thursday's 5-Minute Chart (below) shows the QQQQ delivering what is often crudely referred to as a "gap and crap" day. It also shows how a wider than usual area of Gathering Support served as such until 3:00pm at which time Support was violated altogether, perhaps in reaction to the 3:00pm Consumer Credit Report.
On Friday, the QQQQ will trade based on the 8:30am Employment Report.
This much anticipated report will likely be a market mover that determines whether the QQQQ recovers from Thursday's pull back or continues down to test Support at last week's low ($43.26).
The QQQQ opened on a positive note on Thursday, but then gave way to some heavy volumed selling.
Thursday's 5-Minute Chart (below) shows the QQQQ delivering what is often crudely referred to as a "gap and crap" day. It also shows how a wider than usual area of Gathering Support served as such until 3:00pm at which time Support was violated altogether, perhaps in reaction to the 3:00pm Consumer Credit Report.
On Friday, the QQQQ will trade based on the 8:30am Employment Report.
This much anticipated report will likely be a market mover that determines whether the QQQQ recovers from Thursday's pull back or continues down to test Support at last week's low ($43.26).
QQQQ - Tuesday's 5-Minute Chart...
The QQQQ remains in a sideways consolidation from its 2006 High ($44.86). After two up days, Tuesday's action was to the downside.
Tuesday's 5-Minute Chart (below) shows the QQQQ performing the up-and-down gyrations that customarily follow a 2:15pm (EST) interest rate announcement.
On Wednesday, further downside in the QQQQ will find it testing a 3-member area of Gathering Support between $43.47 and $43.50.
The QQQQ remains in a sideways consolidation from its 2006 High ($44.86). After two up days, Tuesday's action was to the downside.
Tuesday's 5-Minute Chart (below) shows the QQQQ performing the up-and-down gyrations that customarily follow a 2:15pm (EST) interest rate announcement.
On Wednesday, further downside in the QQQQ will find it testing a 3-member area of Gathering Support between $43.47 and $43.50.
QQQQ - Friday's 5-Minute Chart...
The QQQQ gapped up at the open on Friday in positive reaction to the 8:30am Consumer Price Index (CPI) Report that showed inflation at the consumer level remains tame.
Friday's 5-Minute Chart (below) shows the QQQQ open at $44.76, one cent below Friday's area of Gathering Resistance. Resistance was found at that point and $44.76 proved to be Friday's high.
On Monday, the QQQQ remains at the upper end of its recent trading range, the high of which is the high of 2006 ($44.86).
The first Economic Report of note for the week will arrive at 8:30am on Tuesday. It's the Producer Price Index (PPI) Report.
The monthly PPI is a measurement of inflation that manufacturer's of goods are experiencing. It is, therefore, a close relative to last Friday's CPI Report and, like the CPI, is ordinarily a market mover.
The QQQQ gapped up at the open on Friday in positive reaction to the 8:30am Consumer Price Index (CPI) Report that showed inflation at the consumer level remains tame.
Friday's 5-Minute Chart (below) shows the QQQQ open at $44.76, one cent below Friday's area of Gathering Resistance. Resistance was found at that point and $44.76 proved to be Friday's high.
On Monday, the QQQQ remains at the upper end of its recent trading range, the high of which is the high of 2006 ($44.86).
The first Economic Report of note for the week will arrive at 8:30am on Tuesday. It's the Producer Price Index (PPI) Report.
The monthly PPI is a measurement of inflation that manufacturer's of goods are experiencing. It is, therefore, a close relative to last Friday's CPI Report and, like the CPI, is ordinarily a market mover.
QQQQ - Monday's 5-Minute Chart...
The QQQQ demonstrated on Monday the dangers of taking a long position at the upper end of a trading range.
Monday's 5-Minute Chart (below) shows the QQQQ rising in early trade to within a penny of Gathering Resistance, after which the QQQQ spent the remainder of the morning in a steep and steady downtrend that culminated in a ferocious sell off in late afternoon.
On Tuesday, the steeply declining 20-Period and 50-Period Moving Averages of the 5-Minute Chart in addition to the fact that Monday's violated area of Gathering Support may now serve as Resistance, suggest that there may be more downside to come for the QQQQ.
The QQQQ will trade initially based on the 8:30am Producer Price Index (PPI) Report.
The monthly PPI is a measurement of inflation that manufacturers of goods are experiencing. It is, therefore, ordinarily a market mover.
Interpreting the ADX Indicator (Daily Chart - Not Shown Here):
The thick black ADX Line continues to decline from above 40 ('overbought' territory). It\'s decline has correctly identified the short-term market top ($44.86) and the beginning of the current trading range, the low of which, so far, has been Support in the vicinity of the Spring peak ($43.00).
An ADX Line that turns up and begins to rise is a sign that a new trend is developing or an old trend is resuming. If the thin green line is above the thin red line and rising, then the new trend will be up. If, however, the thin red line is above the thin green line and rising, then the new trend will be down.
The QQQQ demonstrated on Monday the dangers of taking a long position at the upper end of a trading range.
Monday's 5-Minute Chart (below) shows the QQQQ rising in early trade to within a penny of Gathering Resistance, after which the QQQQ spent the remainder of the morning in a steep and steady downtrend that culminated in a ferocious sell off in late afternoon.
On Tuesday, the steeply declining 20-Period and 50-Period Moving Averages of the 5-Minute Chart in addition to the fact that Monday's violated area of Gathering Support may now serve as Resistance, suggest that there may be more downside to come for the QQQQ.
The QQQQ will trade initially based on the 8:30am Producer Price Index (PPI) Report.
The monthly PPI is a measurement of inflation that manufacturers of goods are experiencing. It is, therefore, ordinarily a market mover.
Interpreting the ADX Indicator (Daily Chart - Not Shown Here):
The thick black ADX Line continues to decline from above 40 ('overbought' territory). It\'s decline has correctly identified the short-term market top ($44.86) and the beginning of the current trading range, the low of which, so far, has been Support in the vicinity of the Spring peak ($43.00).
An ADX Line that turns up and begins to rise is a sign that a new trend is developing or an old trend is resuming. If the thin green line is above the thin red line and rising, then the new trend will be up. If, however, the thin red line is above the thin green line and rising, then the new trend will be down.
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QQQQ - Tuesday's 5-Minute Chart...
The QQQQ gapped down at the open on Tuesday in negative response to the 8:30am PPI Report that showed a higher than expected rate of inflation at the manufacturing level.
Tuesday's 5-Minute Chart (below) shows the QQQQ falling to Gathering Support from which it bounced in the morning and again in the afternoon.
On Wednesday, the only economic report that the QQQQ will face is the weekly 10:30am Petroleum Status Report.
Strong or rising oil inventories are bad for the price of oil and oil-related stocks but good for the rest of the market.
Weak or declining inventories, as were reported last Wednesday, are good for the price of oil and oil-related stocks but bad for the rest of the market.
The QQQQ gapped down at the open on Tuesday in negative response to the 8:30am PPI Report that showed a higher than expected rate of inflation at the manufacturing level.
Tuesday's 5-Minute Chart (below) shows the QQQQ falling to Gathering Support from which it bounced in the morning and again in the afternoon.
On Wednesday, the only economic report that the QQQQ will face is the weekly 10:30am Petroleum Status Report.
Strong or rising oil inventories are bad for the price of oil and oil-related stocks but good for the rest of the market.
Weak or declining inventories, as were reported last Wednesday, are good for the price of oil and oil-related stocks but bad for the rest of the market.
QQQQ - Thursday's 5-Minute Chart...
The most notable observation that can be made about Thursday's action in the QQQQ is that it tested Support at the 50-Day Moving Average. The QQQQ hasn't traded below Support at its 50-Day Moving Average since the August Lows.
Thursday's 5-Minute Chart (below) shows the QQQQ falling sharply in reaction to a weaker than expected 12:00pm Philly Fed Report. Because the QQQQ sliced through Gathering Support without so much as a tip-of-the-hat, it was later forced to return in order to pay its proper respects.
On Friday, all eyes will be on Support at the 50-Day Moving Average. That's because many fund managers use a close below the 50-Day Moving Average as a 'Sell' Signal, which, of course, results in even lower prices.
The most notable observation that can be made about Thursday's action in the QQQQ is that it tested Support at the 50-Day Moving Average. The QQQQ hasn't traded below Support at its 50-Day Moving Average since the August Lows.
Thursday's 5-Minute Chart (below) shows the QQQQ falling sharply in reaction to a weaker than expected 12:00pm Philly Fed Report. Because the QQQQ sliced through Gathering Support without so much as a tip-of-the-hat, it was later forced to return in order to pay its proper respects.
On Friday, all eyes will be on Support at the 50-Day Moving Average. That's because many fund managers use a close below the 50-Day Moving Average as a 'Sell' Signal, which, of course, results in even lower prices.
QQQQ - Friday's 5-Minute Chart...
The QQQQ closed below Support at its 50-Day Moving Average on Friday.
Just as a close above the 50-Day Moving Average constituted an intermediate-term "Buy" Signal last August, Friday's close below the 50-Day Moving Average may now constitute an intermediate-term "Sell" Signal (an intermediate-term signal can last anywhere from weeks to months, as did the "Buy" Signal of last August).
Friday's 5-Minute Chart (below) shows the QQQQ bouncing sharply from its initial visit to Gathering Support only to find Resistance at the violated 50-Day Moving Average and then bouncing again, more modestly this time, in the afternoon.
On Tuesday, with failed Support at the 50-Day Moving Average ($43.33), all eyes will be on potential Support in the vicinity of $43.00.
The $43.00 mark is important because it represents a combination of the Spring Peak (see the Weekly Chart) and the middle of the 10-Week Trading Band (labeled 10wtb50 on the spreadsheet)...
1) In chart work, former peaks (such as the Spring Peak at $43.00) often serve as Support on the way back down.
2) The middle of a 10-Week Trading Band ($43.00) represents a neutral price for the previous 10 week period and also often serves as Support on the way back down.
If, therefore, Support in the vicinity of $43.00 fails, it would be viewed as evidence, in addition to failed Support at the 50-Day Moving Average, that the intermediate term picture for the QQQQ is weakening.
The QQQQ closed below Support at its 50-Day Moving Average on Friday.
Just as a close above the 50-Day Moving Average constituted an intermediate-term "Buy" Signal last August, Friday's close below the 50-Day Moving Average may now constitute an intermediate-term "Sell" Signal (an intermediate-term signal can last anywhere from weeks to months, as did the "Buy" Signal of last August).
Friday's 5-Minute Chart (below) shows the QQQQ bouncing sharply from its initial visit to Gathering Support only to find Resistance at the violated 50-Day Moving Average and then bouncing again, more modestly this time, in the afternoon.
On Tuesday, with failed Support at the 50-Day Moving Average ($43.33), all eyes will be on potential Support in the vicinity of $43.00.
The $43.00 mark is important because it represents a combination of the Spring Peak (see the Weekly Chart) and the middle of the 10-Week Trading Band (labeled 10wtb50 on the spreadsheet)...
1) In chart work, former peaks (such as the Spring Peak at $43.00) often serve as Support on the way back down.
2) The middle of a 10-Week Trading Band ($43.00) represents a neutral price for the previous 10 week period and also often serves as Support on the way back down.
If, therefore, Support in the vicinity of $43.00 fails, it would be viewed as evidence, in addition to failed Support at the 50-Day Moving Average, that the intermediate term picture for the QQQQ is weakening.
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QQQQ - Wednesday's 5-Minute Chart...
Having found Support at Tuesday's area of Gathering Support, the QQQQ rose to test Wednesday's area of Gathering Resistance.
Wednesday's 5-Minute Chart (below) shows the QQQQ pulling back from Gathering Resistance in early trade in order to fill the morning gap. After filling the gap, the QQQQ mounted a second challenge to Gathering Resistance and closed within its boundaries.
When an important aspect of Support is violated (like the 50-Day Moving Average has been), a stock will often return to the former aspect of Support in order to test Resistance there (Support, when violated by a falling price, becomes Resistance). That's what the QQQQ did on Wednesday.
On Thursday, the QQQQ is poised to give Resistance at its 50-Day Moving Average another test.
The QQQQ must capture and hold its 50-Day Moving Average in order to regain a clean bill of health for the intermediate-term (the weeks and months to come).
The area above a 50-Day Moving Average is often regarded as 'buy all dips' territory while the area below a 50-Day Moving Average is regarded as 'sell all rallies' territory.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before:
Having found Support at Tuesday's area of Gathering Support, the QQQQ rose to test Wednesday's area of Gathering Resistance.
Wednesday's 5-Minute Chart (below) shows the QQQQ pulling back from Gathering Resistance in early trade in order to fill the morning gap. After filling the gap, the QQQQ mounted a second challenge to Gathering Resistance and closed within its boundaries.
When an important aspect of Support is violated (like the 50-Day Moving Average has been), a stock will often return to the former aspect of Support in order to test Resistance there (Support, when violated by a falling price, becomes Resistance). That's what the QQQQ did on Wednesday.
On Thursday, the QQQQ is poised to give Resistance at its 50-Day Moving Average another test.
The QQQQ must capture and hold its 50-Day Moving Average in order to regain a clean bill of health for the intermediate-term (the weeks and months to come).
The area above a 50-Day Moving Average is often regarded as 'buy all dips' territory while the area below a 50-Day Moving Average is regarded as 'sell all rallies' territory.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before:
QQQQ - Thursday's 5-Minute Chart...
The QQQQ spent Thursday trapped between Gathering Support in the vicinity of $43.00 and Resistance in the vicinity of its 50-Day Moving Average.
Thursday's 5-Minute Chart (below) shows the QQQQ bouncing between Support and Resistance as mentioned above.
Friday represents the QQQQ's last chance in 2006 to recapture Resistance at its 50-Day Moving Average. The 50-Day stands at $43.38 going into Friday's trade.
The QQQQ must recapture and hold Resistance at its 50-Day Moving Average in order to regain a clean bill of health for the intermediate-term (the weeks and months to come).
Each day's area of Gathering Support and Gathering Resistance is calculated the night before:
The QQQQ spent Thursday trapped between Gathering Support in the vicinity of $43.00 and Resistance in the vicinity of its 50-Day Moving Average.
Thursday's 5-Minute Chart (below) shows the QQQQ bouncing between Support and Resistance as mentioned above.
Friday represents the QQQQ's last chance in 2006 to recapture Resistance at its 50-Day Moving Average. The 50-Day stands at $43.38 going into Friday's trade.
The QQQQ must recapture and hold Resistance at its 50-Day Moving Average in order to regain a clean bill of health for the intermediate-term (the weeks and months to come).
Each day's area of Gathering Support and Gathering Resistance is calculated the night before:
The Many Aspects of Support & Resistance...
A wide variety of individual aspects of Support & Resistance are in common use by traders today.
I use the following list of individual aspects of Support & Resistance in my work .
When two or more individual aspects of Support or Resistance coincide (reside within 10 cents of one another) in order to form an area of concentrated Support or concentraded Resistance, it is then that I sit up and take notice.
That's because two or more individual aspects of Support or Resistance that coincide create a much more reliable trading opportunity than does an individual aspect of Support or Resistance that is standing alone.
The following 5-Minute Charts provide a visual representation of how the QQQQ honored its areas of concentrated Support and concentrated Resistance in recent days:
Individual Aspects of Support & Resistance:
From a Daily Chart:
20-Day Moving Average
50-Day Moving Average
200-Day Moving Average
Upper Bollinger Band
Lower Bolling Band
Daily High
Daily Low
Daily Close
Daily Pivot Points (S2, Pivot, R2)
Fibonacci Numbers
From a Weekly Chart:
20-Week Moving Average
50-Week Moving Average
Upper Bollinger Band
Lower Bolling Band
Weekly High
Weekly Low
Weekly Close
Weekly Pivot Points (wS2, wPivot, wR2)
10-Week Trading Band
From a Monthly Chart:
20-Month Moving Average
Upper Bollinger Band
Lower Bolling Band
Monthly High
Monthly Low
Monthly Close
Monthly Pivot Points (mS2, mPivot, mR2)
From a 'Point & Figure' Chart:
Double-Top Breakout (D-Top)
Double-Bottom Breakdown (D-Bot)
Triple-Top Breakout (T-Top)
Triple-Bottom Breakdown (T-Bot)
Bullish Support Line (BSL)
Bearish Resistance Line (BRL)
A wide variety of individual aspects of Support & Resistance are in common use by traders today.
I use the following list of individual aspects of Support & Resistance in my work .
When two or more individual aspects of Support or Resistance coincide (reside within 10 cents of one another) in order to form an area of concentrated Support or concentraded Resistance, it is then that I sit up and take notice.
That's because two or more individual aspects of Support or Resistance that coincide create a much more reliable trading opportunity than does an individual aspect of Support or Resistance that is standing alone.
The following 5-Minute Charts provide a visual representation of how the QQQQ honored its areas of concentrated Support and concentrated Resistance in recent days:
Individual Aspects of Support & Resistance:
From a Daily Chart:
20-Day Moving Average
50-Day Moving Average
200-Day Moving Average
Upper Bollinger Band
Lower Bolling Band
Daily High
Daily Low
Daily Close
Daily Pivot Points (S2, Pivot, R2)
Fibonacci Numbers
From a Weekly Chart:
20-Week Moving Average
50-Week Moving Average
Upper Bollinger Band
Lower Bolling Band
Weekly High
Weekly Low
Weekly Close
Weekly Pivot Points (wS2, wPivot, wR2)
10-Week Trading Band
From a Monthly Chart:
20-Month Moving Average
Upper Bollinger Band
Lower Bolling Band
Monthly High
Monthly Low
Monthly Close
Monthly Pivot Points (mS2, mPivot, mR2)
From a 'Point & Figure' Chart:
Double-Top Breakout (D-Top)
Double-Bottom Breakdown (D-Bot)
Triple-Top Breakout (T-Top)
Triple-Bottom Breakdown (T-Bot)
Bullish Support Line (BSL)
Bearish Resistance Line (BRL)
Buy at Gathering Support ... Sell at Gathering Resistance
Consistently Successful Traders buy at areas of Gathering Support and sell at areas of Gathering Resistance. Knowing where these areas are located helps them to determine when to buy and when to sell.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before:
Consistently Successful Traders buy at areas of Gathering Support and sell at areas of Gathering Resistance. Knowing where these areas are located helps them to determine when to buy and when to sell.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before:
QQQQ - Support & Resistance Areas...
Consistently Successful Traders ...
... buy at areas of Gathering Support (the purple areas below the previous day's closing price)
... and sell at areas of Gathering Resistance (the purple areas above the previous day's closing price)
... Knowing where these areas are located helps them to determine when to buy and when to sell.
The following Support & Resistance Report for the QQQQ applies to Tuesday's trade (01/16/07).
The previous day's Closing Price of $45.31 is labeled "CL")
Consistently Successful Traders ...
... buy at areas of Gathering Support (the purple areas below the previous day's closing price)
... and sell at areas of Gathering Resistance (the purple areas above the previous day's closing price)
... Knowing where these areas are located helps them to determine when to buy and when to sell.
The following Support & Resistance Report for the QQQQ applies to Tuesday's trade (01/16/07).
The previous day's Closing Price of $45.31 is labeled "CL")
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QQQQ - Tuesday's 5-Minute Chart...
The QQQQ delivered a narrow 27-cent trading range on Tuesday ahead of Intel's after-hours earnings report.
Tuesday's 5-Minute Chart (below) shows a sluggish day in which the QQQQ tested neither Gathering Support below nor Gathering Resistance above.
On Wednesday, the QQQQ will trade initially based on the 8:30am (EST) Producer Price Index (PPI) Report. The PPI is a measurement of inflation at the wholesale level and, therefore, is always a market mover.
Later in the day, the QQQQ will trade based on the 2:00pm (EST) Beige Book Report. The Beige Book is published by the Fed and is scanned for hints on what the Fed plans to do with interest rates at its next meeting.
Buy at Gathering Support ... Sell at Gathering Resistance.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before (Wednesday's areas are slightly different from the areas shown below that applied to Tuesday's trade):
The QQQQ delivered a narrow 27-cent trading range on Tuesday ahead of Intel's after-hours earnings report.
Tuesday's 5-Minute Chart (below) shows a sluggish day in which the QQQQ tested neither Gathering Support below nor Gathering Resistance above.
On Wednesday, the QQQQ will trade initially based on the 8:30am (EST) Producer Price Index (PPI) Report. The PPI is a measurement of inflation at the wholesale level and, therefore, is always a market mover.
Later in the day, the QQQQ will trade based on the 2:00pm (EST) Beige Book Report. The Beige Book is published by the Fed and is scanned for hints on what the Fed plans to do with interest rates at its next meeting.
Buy at Gathering Support ... Sell at Gathering Resistance.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before (Wednesday's areas are slightly different from the areas shown below that applied to Tuesday's trade):
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RIMM Buy Alert...
Buy at Gathering Support ... Sell at Gathering Resistance
Consistently Successful Traders buy at areas of Gathering Support and sell at areas of Gathering Resistance. Knowing where these areas are located helps them to determine when to buy and when to sell.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before:
Buy at Gathering Support ... Sell at Gathering Resistance
Consistently Successful Traders buy at areas of Gathering Support and sell at areas of Gathering Resistance. Knowing where these areas are located helps them to determine when to buy and when to sell.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before:
QQQQ - Wednesday's 5-Minute Chart...
After a sluggish morning, the QQQQ pulled back in the afternoon to test Support at its 2006 High ($44.86).
Wednesday's 5-Minute Chart (below) shows the QQQQ testing Gathering Support of which Support at the 2006 High is a member.
On Thursday, the QQQQ will continue the important test of Support at its 2006 High from which it broke up and out 4 days ago after a two month consolidation beneath it.
A decisive close below Support at the 2006 High would invalidate the breakout of 4 days ago and place the QQQQ back into "trading range" mode.
Economic Reports to which the QQQQ may react are:
1) 8:30am - Consumer Price Index (CPI)
2) 10:00am - Leading Economic Indicators
3) 12:00pm - Philly Fed Manufacturing Survey
After a sluggish morning, the QQQQ pulled back in the afternoon to test Support at its 2006 High ($44.86).
Wednesday's 5-Minute Chart (below) shows the QQQQ testing Gathering Support of which Support at the 2006 High is a member.
On Thursday, the QQQQ will continue the important test of Support at its 2006 High from which it broke up and out 4 days ago after a two month consolidation beneath it.
A decisive close below Support at the 2006 High would invalidate the breakout of 4 days ago and place the QQQQ back into "trading range" mode.
Economic Reports to which the QQQQ may react are:
1) 8:30am - Consumer Price Index (CPI)
2) 10:00am - Leading Economic Indicators
3) 12:00pm - Philly Fed Manufacturing Survey
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