Wednesday was the 7th day of the current QQQ short term down-trend. However, the DIA and SPY are showing signs of strength. Often times after a declining market, investors are cautious and buy the blue chips first. After they have profits and feel more comfortable with the market, they buy the more speculative tech type stocks. This could explain the divergence between the tech stocks (QQQ) and the other indexes. It remains to be seen how this divergence will be resolved. At some point the trends will converge.
IBD calls market in confirmed up-trend; GMI back to 3
I noted yesterday that the markets were so oversold that I thought they might bounce. At Monday’s close, 59% of the Nasdaq 100 stocks were oversold. By Tuesday’s close this percentage fell to 39%. Now that the rebound has begun, the question is how far it will go. No one knows. During the most recent market bounce, the percentage of oversold stocks fell to zero. I will watch closely to see whether this market tops out soon or develops into a sustained major up-trend.
5th day of QQQ short term down-trend
The long and short term market trends are down. I remain mainly in cash in my trading accounts. Many of the stocks I follow are very oversold, suggesting that we could get a bounce.