6th Day of QQQQ Short Term Down-trend; Critical test near

GMI2/6
GMI-R5/10
T210844%

The more sensitive GMI-R is now up to 5, but the GMI is at 2.   We are close to the critical point where this rebound will hit resistance and falter or break through. In a few days we will learn whether this down-trend can change to an up-trend.   The QQQQ, now at 48.62,   needs to close two days above 49 to signal a new short term up-trend.

6 thoughts on “6th Day of QQQQ Short Term Down-trend; Critical test near”

  1. With stocks possibly moving into buy territory, if I recall, you mentioned you would post a TC2007 scan that would pull stocks hitting a new all-time high. I would be interested in seeing it.

  2. Professor,

    Though I have always agreed you with regard to the employment of stop-loss orders, given last week’s sell-off some disturbing realities seem to be coming to light. With nearly 70% (by popular estimates) of the market driven by institutional high-frequency trading (quant models and such), there appears to be, in the more extreme situations, a grossly magnified directional bias. Last week many people were automatically sold out of their positions in higher quality (generally more liquid blue-chips) at prices well below fair-value only to watch them rebound as actual human traders at the exchanges realized the enormity of the discrepancy taking place. It seems to me that nowadays the aggregated effect of stop-loss orders (of the trailing % variety) are serving to inadvertently artificially drive prices down even further when a collapse in price crosses the very popular 8-12% trigger. What is your opinion on this?

  3. Tristan: We get one extreme whipsaw day unlike anything we have seen before and everyone wants to abandon stop losses. Stop losses, if placed at technically accurate places, save me a lot of money. Typically when my trigger price is hit, the stock keeps declining without a significant rebound. I therefore get out at a good price right away. When support is broken I do not want to hang around in the hopes of getting a better price–I want to exit immediately. And stop limit orders might keep me in a declining stock. I would not abandon stop losses unless we begin to get a string of days like we had on Thursday. The fact that everyone is talking about Thursday proves how unusual it was. Stop loss orders generally work very well, except for a bizarre and extremely rare day like that.

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