Market indexes still on edge. Which way will QQQ break?
There are a number of factors suggesting that the current QQQ short term up-trend is about to end:
- Daily Bollinger Bands are very narrow, indicating low volatility and an imminent break in one direction or the other;
- Daily MACD histograms are negative;
- Daily fast stochastic is below slow stochastic;
- After many weeks, QQQ has closed below 10 day and 4 week averages;
- 2nd quarter earnings are mostly out–post-earnings lull;
- On verge of weakest month of year–dreaded September;
- GMI2=4 and T2108 weakening;
- Growing anxiety over a possible Fed hike in September, and November election;
- Sell in May, come back on Halloween;
- Completed 37 days of QQQ short term up-trend.
Time for me to raise sell stops and be defensive— until Mr. Market tips his hand…..
The QQQ has now closed below its 10 day average for the first time since June 28. (See blue dotted line below.) Combined with other indicators, it looks like the current rally may be ending. We are also entering the post earnings release lull period and the weakest month of September. A good buying opportunity is likely ahead, but I am very defensive for now.