QQQ clearly broken down

The major indexes appear to have pretty conclusively ‘broken down.’ There was a large bullish wick put in place at the bottom of the initial breakdown, but upon returning to the old support, major indexes have since retreated.  Here is the long term Nasdaq (weekly) chart that shows a (7 year old!) rising wedge failing at the old 2000 high, forming a double top, and now breaking down.  Just based on the time and percentage moves involved in this chart, I’d imagine we have a good ways to fall.

2015-09-28-QQQ_CHARTS

Same ugly story in the S&P.

2015-09-28-ES_CHARTS

At this point I am settled into my short and have taken most long exposure off the table. Bear markets are typically incredibly volatile (much moreso than bull markets), so I am viewing big rallies as opportunities to add shorts and trim longs.

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  1. Draft
    October 23, 2015 at 11:43 am

    Chris Kimble is saying that today QQQ is hitting the underside of the old support/resistance line. I wonder if that’s the case or whether he’s drawing the lines wrong — it’s a different support/resistance line than the one you’ve drawn.

    • October 26, 2015 at 9:40 am

      I see technical analysis as deeply subjective, so I would seldom use the word “wrong,” after all, it is simple a tool used to try and gauge probabilities. The difference between his chart and mine is that I include the 2009 bottom and he does not. It alters the trajectory of the support line a bit… mine is a clear wedge, his is a bit closer to a channel. I think they are just two different ways of observing a set of price data. He is definitely far more experienced than I and more accomplished, so I am sure he has very good reasons for reading the chart as he does. In general, I think my charts of these major indexes are more like wedges than his because I include 2009 and he often does not. Maybe he views it as an anomolous ultra-pessimistic bottom and so better left out? I don’t know. But I always like to gather as many perspectives as possible and keep them all in mind.

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