71st day of $QQQ short term up-trend; $SPY RWB pattern over, mutual fund window dressing to bring rally?

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The QQQ short term up-trend has held. But note that the RWB pattern has ended for the SPY on this daily chart.This is the first time since the beginning of this rally in November that the RWB pattern has failed.

This is a close-up of the daily SPY. 

The SPY closed (dotted line) among the longer term averages (blue lines) and is leading the shorter averages (red lines) down to converge with them, making the white space in between them disappear. This is important technical weakness. If the RWB pattern does not reassert itself and a BWR pattern emerges, the decline will be larger and longer. I still suspect a snap back rally this week into the end of the quarter when the mutual funds dress up their quarterly portfolio reports with the strongest stocks. Or you can attribute it to  the vote….

$QQQ short term up-trend could end today at 70 days; end of 1st quarter rally coming?

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This modest decline has not reached over-sold levels yet. I went to cash and gold in my trading accounts yesterday. Plenty of time to get back on board when my stocks look strong again with RLCs=6. I would not be surprised if we  get a sharp snap back rally into the end of the quarter mutual fund window dressing at the end of this week. Media pundits are becoming hysterical about this decline. Don’t people know that the market goes in both directions and this has been a rare uninterrupted advance? The longest QQQ short term up-trend (by my definition) since 2006 was 88 days and this one just turned 70. The put/call ratio is 1.04 and T2108 is 36. Daily 10.4 stochastics for QQQ=57. Bounces usually come after more extreme numbers than these. Meanwhile the RLC (red line count) for these symbols:  QQQ=0, SPY=0, UUP=0 buy TLT=6, GLD=6. So stocks and dollar down but bonds and gold up. This daily chart of QQQ shows the high volume distribution day yesterday.

 

$QQQ strongest; $GS weakens, $WD resumes advance and $YIN has GLB; a strategy for setting stops

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The RLC (red line count described in yesterday’s post) for the indexes are:  QQQ=6, SPY=0 and DIA=1. Thus the QQQ remains in a strong up-trend even as the other two indexes remain much weaker. The DJ-20=0 and is again causing me some concern, as I noted yesterday. GLD is rising with an RLC=6. Ten of the Dow 30 stocks have an RLC=0 and another 3 have an  RLC=1 or 3. GS is an example of a Dow stock with an RLC=0.

After failing to hold its green line break-out (GLB), GS has declined so that it closed (closes shown by dotted line) below all of its 6 red line averages (hence RLC=0) and is now below most of the blue lines. While this is not the kiss of death, I would not buy GS again (or hold it) until GS can close back above its 6 red lines (RLC=6) like it did in early February.

WD shows the type of strong action that might interest me. (WD came up in the scan I described yesterday, which you can get by joining my TC2000 Club.) After having a GLB in early February,  WD advanced and then consolidated and now has broken out. It has an RLC=6 (see end of first line on chart). Its lowest red line = 41.18 (see end of second line on chart), which is around where I might place my first sell stop. However, recent daily lows (shown by purple dots) are around 40 and may be a better place of prior support to set my stop. Alternatively, if I had bought the stock in February I might wait for the stock to close at its top blue line, around 39 to exit. When the RWB pattern disappears I must exit. Another strategy is to sell half a position at the higher stop and the rest at the highest blue line.

This weekly chart shows that the 2016 IPO, YIN,  has had a GLB (Monday on high volume).

Here is the RWB daily chart for YIN. Note its strong RWB pattern and that the RLC was 6 just about every day.