Stock Market Technical Analysis Blog
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If you have been following CNBC & Marketwatch.com over the past month, you know that virtually every prominent WallStreet technician and strategist has made detailed commentary predicting the stock market is about to take a fall of 10-25%. These are people who make their living by being correct. That is all fine but let's take a look at the charts where it can be seen that something else could already be beginning.
- Chart 1: the Weekly bars chart of the Nasdaq shows a symmetric triangle that started breaking to the upside this week.
- Chart 2: the Weekly bars chart of the QQQ, the driver behind the Nasdaq, shows an ascending triangle breaking to the upside this week.
- Chart 3: the 120 min bar chart of QQQ broke out of its short term channel Thursday much to the surprise of the bulls and bears (not to the surprise of Team Yellen, but that's another topic). Going higher was not a consideration until the Thursday afternoon breakout because that upper QQQ channel line has been ruling the market very precisely and has been the token short play. The upper breakout we see in charts 1 and 2 is the movement in the QQQ chart where I marked in the blue arrow on Thursday and its upper movement thru this afternoon.
- Chart 4: Daily bars chart of QQQ shows what is being attempted, if they can just get the QQQ a little higher on Monday it will be back into its mother channel and a short covering frenzy could begin. If it stalls where it is at, all bets are off and the market could get really volatile really fast.
- Chart 5: the S&P 120 min chart. For the past several weeks the S&P has been a tool to frequently produce "new all time market high" headlines for Team Yellen. It has been a bit of a dubious game in that you can let the S&P drop 10 points then squeeze up 11 points and create a new all time high, over and over. The S&P is not what is moving the market now thru the SPY as it used to be. Numerous weeks ago they got control of it and they are maintaining this sideways channel to produce that frequent bullish headline.
Heads up folks...this may be a time to ignore what you think the market should do and must do and no doubt will do but instead have an open mind and take a look at what it is doing. Thursday's QQQ breakout caused both triangles in charts 1 and 2 to begin their upward launch which measure high enough to take the Nasdaq back to its Spring highs. Nothing is a done deal of course, and any really bad news broadsiding the market could stall it but Team Yellen has proven to have the tenacity to take the market higher that is likely to surprise even Bernanke. We are at record short interest levels now.
To squeeze or not to squeeze?
Trade well my friends