My homie Paul (thanks for stopping by the NYC meetup) wants me to talk about the QQQQ being stuck (pinned!) at 40. At the risk of Adam and David flogging me for talking about expiration pinning, I think that’s a part of why the Qs are stuck at 40. (There’s a reason I take off the end of expiration weeks.) But atually, in this case, there’s a better explanation than simply expiration games. Here’s the chart:
As you can see the Qs have run pretty hard right into the 200-day moving average. That’s typically a serious bull/bear battle line. The Qs are also extended — they’re above the upper Bollinger Band and stochastic is overbought. Also, I usually expect numbers which are multiples of 10 to be support/resistance. So add all that together and I’m not at all surprised to see QQQQ stuck at 40.
Potential swing trades:
See one of the recent ‘Chart Reading‘ posts for some potential swing candidates.
Potential day trades:
(From Briefing.com)
Gapping Down
LNCR -11% (OIG recommends reduction of cap rental for oxygen equipment – Jefferies), CHIC -5.3% (prices offering), EXTR -4.3% (to delay 10-K; announces stock option review), BOBJ -3.6% (MicroStrategy wins patent lawsuit brought by BOBJ), OMNI -2.4%, STOSY -2.1%, JBLU -1.5%, RMBS -1.4% (co files 8-K that it has received a notice of puported default from US Bank National Assn), HANS -1.1% (profit taking after 12% move yesterday).
Gapping Up
CAMD +17% (guides higher), HLIT +10% (Thomas Weisel upgrade), ADBE +9.2% (reports AugQ, beats by $0.03; also Goldman upgrade), VRSN +5.4% (RBC upgrade), NYNY +3.9%, TIVO +3.4%, ACGY +3.4%, FMD +3.2% (provides update on upcoming fees; also FBR upgrade), CRDN +2.4% (Wachovia upgrade), SWKS +2.1% (ThinkEquity upgrade), MRVL +1.9%, LVLT +1.2% (continues to move on Cramer comments this week), MSFT +1% (Goldman raises tgt to $33 from $30)… Under $3: GNTA +23% (Phase 3 data to be published in journal), SCLN +5.9% (positive clinical data).
Disclaimer & How I use this list
Negative divergences in more than a few indicators from the previous march up Labor Day. Volume higher than summer (of course) but notice the same thing you do about this past week…
Love your site.
Normally, when you have a trend you expect expansions of range and therefore volatility in the direction of the trend. This is key to signal the public participation in the move. This is not what has occurred on the markets since the beginning of August. In fact, see the lower indicator in the figures. I call it “speed” as it represent an average of the daily range/average price. You can see that during the last leg of the uptrend this indicator has been decreasing indicating lower daily ranges.
Therefore we can characterize this phase as a low volatility and directional phase.
As volatility has reached now very low levels, I expect to see an expansion of volatility shortly. But with a move of prices to the downside. This is warning that technical conditions might change. It is impossible however to say when this will happen.
My view is that this trend will not manage to breakout the various resistance levels. That is the moment to close long positions to reassess the situation later. At least this is my opinion.