QQQ On the Brink

Talk about an ugly chart - look at the QQQ as of Friday!

All the signs point down - the index is below its 15 (small red line), 50 (blue line) and 200 dma (lime green line). In addition, both the 15 and 50 dma are now pointing down. I have a added a regression channel dating from the last lows of last July with width of 1 standard deviation and we broke below that for the first time last week! We closed below the lows for March. The next real support is around 52.68 where there is a fib line that was confirmed by some congestion back in November.


The problem with the QQQ is that there is no real leadership from the big guns - AAPL has been flat to down, CSCO is finding a bottom, INTC and MSFT are going nowhere. NFLX is not going to save the index!


On the lighter side, I have one double-smooth stochastic indicator pointing up as of Wednesday which could indicate a bottom (or temporary consolidation) which it has in the past. But it's sometimes too early and other indicators are pointing down! But geopolitic issues are weighing on the market now and it's not something that indicators will predict.

Oil - June 17

Not a pretty picture with oil at the end of today. Using the lows of February and Highs of last month as anchors for a Fibonnaci study, we can see that the 50% retracement line held for a while (large red circle), acting as support and resistance for close to a month with spikes to the 38% retracement line. But this week has been bad with both the 61.8% retracement line and the 200 DMA broken! The 50 DMA is no decidedly going down and above the 15 DMA.

All my others indicators are now pointing down. The next support line is at 90.50, but it's weak. Real support is around 85 which is where the big money came in during the last rally. But anything is possible on a daily basis especially over a weekend!


The daily lines worked pretty well today again:

It got pretty dicey in the afternoon when S3 was broken (first green circle) but the market recovered around 92.50 (there is a dail fib line there not pictured) and climbed back to S2 (second green circle) by the end of trading. It is not encouraging for the oil market that on a day when the dollar lost over 50 basis points that oil lost ground as well. 

Follow the Big Money on Oil

Looking for an explanation for the oil move in the latest weeks - look no further than the big money leaving the station. Barchart (www.barchart.com) publishes a Commitment of Trader chart updated on a weekly basis. The latest one is below.

The middle chart is the traditional Commitment of Trader (COT) chart. The green line is what is called Large Spec. These are large banks and money managers. The blue chart in the lower chart  (Disaggregated COT) represent Managed Money (commodity traders or advisers). The charts plot the difference between long and short positions of the various groups. The higher the line, the "longer" one group is. Look what has been happening since early May - big money is getting out of oil. They have been driving the price up since last September and now, they are cashing in. And look at the price since then... Surprise!

The Value of Support and Resistance Lines

The move in oil today is the perfect illustration of why it is valuable to have an idea of where the price will "stick" in the coming hours. Drawing support and resistance line based on previous day prices is the easiest way. The formula for calculating the Pivot Point and the Support and Resistance line is available on the Internet. I have programmed Amibroker to display them automatically in my charts at the beginning of the day. Below is today's price action on the oil future market.

The Pivot Point for the day is in gray, the support lines in red. Resistance lines do not appear as they are above 100. The red circles point out congestion areas and support where you can tell that there was some hesitation on the direction. It is not always that clear cut, but these lines usually offer some guidance!

Dollar Fibonacci Retracement - 5-13-2011

And to match the euro Fibonacci retracement, here is the opposite chart with the dollar using the lows of October and the highs of January as anchors. The red dotted line is a regression channel for 2011 and we are against the top line now!

Euro charts 5-13-2011

Some euro charts to put the latest moves in perspective.


First a regression channel for 2011. We are now at the bottom of the channel which should provide some support.

And now for some Fibonacci lines - using the 2001 low and highs as anchors. As with the regression channel, 1.41 seems to be a good support level. At least temporarily.

And finally, a Fibonacci regression using the previous highs of last October and the lows of January as anchors. Once again, the 1.41 line is significant.

Dollar reaches 50 dma!

The dollar is not at its 50 dma which has been breached last in January! Might be a good resistance point...