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Wednesday, August 13, 2008

08/12/2008 Market Recap: QQQQ Holds the Key

According to the Climax Run theory I talked about these days, the market seems healthy due to the pullback today, and so far I have not seen any market topping signals and thus I assume it is a chance to open long positions.  Just to be clear, I am not saying the market could not reverse the trend and plummet, but the probability is relatively low because the big moneys may have not completely dumped their positions yet in just a month of rally.  Unless there is really bad news, the market may not go south abruptly.

2.3.4 Nasdaq Total Volume/NYSE Total Volume.  This chart might be the first one which gives a topping signal.  You should be cautious when buying dip, especially when QQQQ is so bullish the possibility of triggering a signal on this chart is high.  Similar with put call ratio, because Nasdaq is considered as relatively risky investment, it means the money is too crazy to avoid the risk and the market is over bullish while the Nasdaq volume is much greater than the NYSE volume, in other words, it will be a early warning of the market top.

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1.1.B QQQQ and VXN.  NAMO is still overbought.  Therefore if QQQQ rallies sharply tomorrow, no chasing high.  1.1.6 PowerShares QQQ Trust (QQQQ Daily), QQQQ closed with a Doji, which means 50% of chance is continuation, and 50% of chance is reversal.  I guess it will be a reversal because STO is overbought, NAMO on 1.1.B QQQQ and VXN is also overbought, 1.1.4 Semiconductor Holders (SMH Daily) has rallied for 7 days and is overbought, too.

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5.3.0 Financials Select Sector SPDR (XLF Daily) this is the key tomorrow.  It is on a very important support that it should not go under.  Once the support is broken, the next one is at 19.75 which means the entire market may pullback at the same time.

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3.1.1 US Dollar Index (Weekly).  After so many days of sharp rally, US dollar is closing to the primary downtrend line.  Pay attention to the battle.

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1.1.2 Nasdaq Composite (Weekly).  Here is another downtrend line, and Nasdaq has not passed it.

As a summary, this is a buyable dip providing that QQQQ will pullback instead of rally tomorrow.

1.4.0 S&P/TSX Composite Index (Daily).   Concerning the Canada market, RSX is testing the support once again, and the pattern is a Descending Triangle.  I guess it won't break because US dollar is approaching a very important resistance and may take a rest now, moreover the oil on 3.4.1 United States Oil Fund, LP (USO Daily) is oversold and due for rebound.  In addition, RHTSX on 1.4.4 TSE Bullish Percent Index is extremely oversold.  Therefore TSX probably won't go down further.

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1.5.0 Shanghai Stock Exchange Composite Index (Daily).  The China market is oversold.

1.6.0 Hong Kong Hang Seng (Daily).  The Hong Kong market is oversold, too.

3.3.0 streetTRACKS Gold Trust Shares (GLD Daily).  GLD is oversold.

2 comments:

  1. Funny, in your technical analyses, I have not seen Fib ratios being used. For qqqq it is now 618 retraced and that normally says caution for longs until pullback.

    2c

    ReplyDelete
  2. Thanks for the comments

    Seldom was I right whenever I use Fib.

    You should've noticed I have Fibs on all charts. I just feel that Fib isn't as convincing as that of breadth, so I don't normally mention Fib or even indicators unless they're in very extreme values.

    ReplyDelete

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