The QQQQ sold off in dramatic fashion on Thursday when it opened below Support at its 2006 High ($44.86) and then proved unable to recapture that line.
Thursday's 5-Minute Chart (below) shows that a failed area of Gathering Support often constitutes a sell signal and that when an initial area of Gathering Support fails, it often leads to a test of the day's secondary area of Gathering Support.
On Friday, the QQQQ is back within the arms of its two-month trading range and testing another significant area of Gathering Support that includes as two of its members the 20-Day and 50-Day Moving Averages.
Failed Support here would represent an additional short-term negative for the QQQQ with the potential to turn into an intermediate-term negative (lasting weeks to months).
The QQQQ spent Friday testing Gathering Support between $43.87 and $43.95.
Friday's 5-Minute Chart (below) shows two separate bounces from Gathering Support.
On Monday, the QQQQ is not out of the woods. It must continue to find Support at the combination of its 20-Day and 50-Day Moving Averages whose values are in close proximity to one another at the moment between $43.92 and $43.96 and which are fortified by 3 additional apspects of Support that together form a 5-member area of Gathering Support between $43.91 and $44.00.
Failed Support here would represent a short-term negative for the QQQQ with the potential to give Support at the Spring Peak($43.00) another test (See the Daily Chart ... not shown here).
Each day's area of Gathering Support and Gathering Resistance is calculated the night before:
GOOG Sell Alert (Based on Gathering Resistance) ...
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 and loaded as "Alerts" into the Medved QuoteTracker via QuoteTracker's "Paste from Excel" Button:
The QQQQ demonstrated severe weakness on Monday by violating yet another significant area of Gathering Support.
Monday's 5-Minute Chart (below) shows the QQQQ slicing through a 5-member area of Gathering Support that included the 50-Day Moving Average and the Middle of the 10-Week Trading Band, both of which are significant in that they represent intermediate-term aspects of Support.
On Tuesday, it will be important for the QQQQ to capture what is now Resistance at the combination of its 50-Day Moving Average ($43.94) and the Middle of the 10-Week Trading Band ($44.00). That's because many fund managers treat two consecutive closes below either of these two aspects of Support as a "Sell" Signal.
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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 and loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ rose on Tuesday to test Resistance at Monday's failed area of Gathering Support. Resistance was found and resulted in an impressive afternoon pull back.
Tuesday's 5-Minute Chart (below) shows the QQQQ rising to the area of Resistance mentioned above and the subsequent pull back that tested short-term Support at Monday's Low.
On Wednesday, the QQQQ will face Resistance above between the 50-Day Moving Average ($43.96) and the Middle of the 10-Week Trading Band ($44.00). As we observed in last night's notes, the QQQQ must capture those lines of Resistance to regain a clean bill-of-health for the short to intermediate-term.
On the other hand, if short-term Support at this week's low ($43.50) fails, Wednesday's area of Gathering Support between 43.16 and 43.21 may receive a visit.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ gapped up at the open on Wednesday and after doing battle for more than an hour with Gathering Resistance at $44.00, Resistance was captured which opened the door to an impressive rally.
Wednesday's 5-Minute Chart (below) shows the struggle with Gathering Resistance at $44.00, the eventual capture of that Resistance and the subsequent rally that proved strong enough to capture the day's second and less imposing line of Gathering Resistance at $44.17.
On Thursday, the QQQQ may present traders with another gap-up open based on favorable reaction to several earnings reports that were published after the market closed.
Wednesday's recapture of Resistance at the 50-Day Moving Average ($43.98) and the Middle of the 10-Week Trading Band ($44.00) represents a short-term positive for the QQQQ.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ closed back below the combination of its 50-Day Moving Average and the Middle of the 10-Week Trading Band on Thursday and did so on increasing volume.
Thursday's 5-Minute Chart (below) shows that the sell off in the QQQQ was stopped only by the day's area of Gathering Support between $43.58 and $43.60.
On Friday, the QQQQ is back in the dog-house below its 50-Day Moving Average ($44.00) and the Middle of the 10-Week Trading Band (also $44.00). That puts Wednesday's rally in the category of "giant head-fake". It also makes a test of Support at the lower end of the 2-month trading range ($43.00 - $42.52) more likely.
Rising interest rates are given the blame for Thursday's weakness. The Weekly Chart of the QQQQ (on display at my StockCharts.com web site) shows the relationship between long-term interest rates and the QQQQ (Comments regarding the relationship appear below the chart).
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
After printing a new low for the week at $43.29, the QQQQ recovered from that low and spent the remainder of the day within a 30-cent trading range.
Friday's 5-Minute Chart (below) shows the details of a day in which the QQQQ neither rose to an area of Gathering Resistance nor fell to an area of Gathering Support.
On Monday, the QQQQ remains in the dog-house below its 50-Day Moving Average ($44.01), the Middle of the 10-Week Trading Band ($44.00) and a Double-Top Breakout ($44.00) that may be failing.
As long as the QQQQ remains below what is now an area of Gathering Resistance beginning at $44.00 and extending to $44.10 (for Monday's Trade), the bears retain an edge and a test of the low end of the two-and-a-half month trading range ($43.00 - $42.52) remains in the cards.
A capture of the 5-member area of Gathering Resistance between $44.00 and $44.10, however, would suggest that the bulls have the ball and are running with it.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ spent Monday splashing beneath it's substantial area of Gathering Resistance.
Monday's 5-Minute Chart (below) shows the QQQQ rising at mid-day to within a stone's throw of Gathering Resistance, then pulling back at the sight of it.
On Tuesday, the QQQQ remains in the dog-house below its 50-Day Moving Average ($44.02), the Middle of the 10-Week Trading Band ($44.00) and a Double-Top Breakout ($44.00) that may be failing.
It will react at 10:00am to the Consumer Confidence Report.
Wednesday, however, will be the big day for economic reports: 1) 8:30am - Fourth Quarter GDP 2) 2:15pm - FOMC Decision on Interest Rates
Both reports will be market movers.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ rose in early trade to test Resistance at the previous week's high ($44.47). After printing a high of $44.40, it pulled back to test Support at Wednesday's post FOMC Meeting breakout, then, closed at $44.02.
Thursday's 5-Minute Chart (below) shows the details.
On Friday, $44.00 represents a pivotal line for the QQQQ. That's because no less than 4 individual aspects of Support/Resistance have converged at that very number.
It may help, therefore, to think of $44.00 as the 50-yard line on a football field. Above that line, the bulls have the edge. Below that line, the bears have the edge...and so it will remain until either the bulls or the bears breakout of the trading range within which the QQQQ has been confined for the last two-and-a-half months.
The QQQQ closed the week with a narrow 31-cent trading range on relatively light volume. It spent most of the day above Support at $44.00 suggesting that the bulls enjoyed a slight edge on the day.
Friday's 5-Minute Chart (below) shows the QQQQ pulling back on two separate occasions to test and find Support at $44.00.
On Monday, $44.00 still represents a pivotal line for the QQQQ. That's because there remain 3 individual aspects of Support/Resistance that currently intersect at that exact number and a fourth aspect that stands only 4 cents away at $43.96.
It may help, therefore, to continue to think of $44.00 as the 50-yard line on a football field. Above that line, the bulls have the edge. Below that line, the bears have the edge...and so it will remain until either the bulls or the bears break out of the trading range within which the QQQQ has been confined for almost three months.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ spent another day in which it was unable to venture too far from what has been identified as a pivotal line at $44.00. A pull back to $44.00, however, found Support, giving the bulls a slight edge for the second day in a row.
Monday's 5-Minute Chart (below) shows an early morning rally to within 4 cents of Gathering Resistance at which time Resistance was found and followed by a pull back to Support at $44.00.
On Tuesday, $44.00 still represents a pivotal line for the QQQQ as it will continue to do for at least the remainder of the week. That's because 4 individual aspects of Support / Resistance currently intersect in the tight space between $43.96 and $44.00.
It may help, therefore, to continue to think of $44.00 as the 50-yard line on a football field. Above that line, the bulls have the edge (as was the case on Monday and last Friday). Below that line, however, the bears have the edge.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ continued to hug the $44.00 line on Tuesday. After spending most of the day below that line, which suggested that the bears were winning Tuesday's tug-of-war, the QQQQ recovered to close at $44.05.
Tuesday's 5-Minute Chart (below) shows the QQQQ's continued fascination with $44.00.
On Wednesday, $44.00 still represents a pivotal line for the QQQQ, as it will continue to do for at least the remainder of this week.
The significance of $44.00 in Wednesday's trade stems from the fact that 5 individual aspects of Support/Resistance now reside in the tiny space between $43.96 and $44.00.
Above $44.00, therefore, the bulls will be viewed as having the edge. Below $44.00, the bears will be viewed as having the edge.
An eventual break of big proportions from $44.00 is inescapable. Which way will the QQQQ break? At this point, it's a coin toss. The only thing that can be said for sure is that below $44.00, those with long positions must be on their guard.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ gapped up at the open on Wednesday and, after a brief pull back, continued to rise ... compliments of good earnings and guidance from CSCO.
Wednesday's 5-Minute Chart (below) shows the QQQQ capturing and holding Resistance at the previous week's high ($44.40).
On Thursday, if the previous week's high at $44.40, having been captured by a rising price, is now willing to serve as Support, it represents a short-term positive for the QQQQ and places it in position to challenge Thursday's area of Gathering Resistance.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ spent Thursday backing and filling within the boundaries of Wednesday's high and low.
Thursday's 5-Minute Chart (below) shows the QQQQ closing, once again, above Resistance at the previous week's high ($44.40).
On Friday, traders will be watching for a resolution to Thursday's indecisive day.
The fact that the QQQQ remains above the previous week's high at $44.40 continues to represent a short-term positive leaving the QQQQ in position to challenge Friday's area of Gathering Resistance.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ gapped up at the open on Friday and continued to rise, printing a new high for the week at $44.72. It then embarked on a pull back that evolved into a heavy volumed sell off in the afternoon.
Friday's 5-Minute Chart (below) shows the QQQQ rising to within 8 cents of Gathering Resistance then pulling back with such force that it violated a wider than usual 8-member area of Gathering Support.
The chart also shows that the $44.00 line still has special meaning to the QQQQ, serving as Support upon first approach, then as Resistance after it's eventual violation.
On Monday, the QQQQ is back below the pivotal $44.00 line where the bears have the edge.
From a longer-term perspective, there may be a bearish 'Head & Shoulders' formation taking shape on the Daily Chart (not shown here ... see my Public Charts at StockCharts.com). The first dashed black line identifies the 'neckline' of the formation. The second dashed black line marks the target price of the formation which is near Support at the 200-Day Moving Average.
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
The QQQQ delivered a narrow 30-cent trading range on Monday in which it dipped to test Support at last week's low ($43.64). Support was found, but the QQQQ remained below the pivotal $44.00 line, closing at $43.70.
Monday's 5-Minute Chart (below) shows the details.
On Tuesday, the QQQQ remains below the pivotal $44.00 line where the bears have the edge.
Tuesday's area of Gathering Resistance is a substantial one...composed of 8 individual aspects of Resistance that reside within a thin 9-cent range. The QQQQ will have to slug its way through that range if it is to re-establish a clean bill of health for the days and weeks to come.
From a longer-term perspective, there may be a bearish 'Head & Shoulders' pattern forming on the Daily Chart (not shown here). The target price of the 'Head & Shoulders' pattern is near Support at the 200-Day Moving Average ($40.80).
Each day's area of Gathering Support and Gathering Resistance is calculated the night before and may be loaded as 'Alerts' into the Medved QuoteTracker via QuoteTracker's 'Paste from Excel' Button:
