Sunday, January 17, 2010

Charts: PowerShares QQQ Series 1 (ETF), $OEX

As per your request.

QQQQ Weekly:

It is often referred to as the "Q's" or "Cubes" due to its unusual ticker symbol, the Nasdaq-100 Trust QQQQ is probably the best-known exchange-traded fund (ETF) in existence.  The QQQQ ETF tracks with the Nasdaq-100 Trust Index, consisting of the top 100 companies traded on the NASDAQ exchange. The ETF's ten largest holdings accounted for nearly 50% of the QQQQ's value.  The Nasdaq weekly has confirmed a divergence and a quick check with QQQQ confirms the same.  Note that the MACD-H has already ticked down, completing the divergence.  This is a massive divergence and look how shallow C is.  The only way to trade this is on the short side.

QQQQ Daily:

The daily has also confirming a divergence couple of days back.  QQQQ was not able to break new highs and the last few attempts were accompanied by sell downs the next day.  The Nasdaq is the strongest of the three markets and it is not surprising to see that it gets heated up first.  If one were to trade it from the short side, it is not unreasonable to expect a retrace to the 42.5 price level.

$OEX Weekly:

The S&P 100 Index ($OEX) is a market-capitalization weighted index consisting of 100 large blue chip stocks across various industries. Many fund managers use this index as a benchmark to measure the performance of large cap stocks overall. The market capitalization of the companies in the S&P 100 varies considerably, but in general large companies have a market cap greater than $5 billion dollars.

The charts of QQQQ ETF and the $OEX looks similar.  But the QQQQ ETF chart is the more dangerous looking chart of the two.  What will really bringing it down is probably the earnings report of GOOG in the coming week.  It will either extend the run of the tech stocks or the put the nail in the coffin for the already shaky tech sector.  Coming back to the $OEX, the momentum seems to be zeroing out and I do not clearly a more shallow C formed.  But it is nevertheless very suspicious looking.  Picking a top can be a dangerous thing to do -- a wounded bull can still hurt you.

$OEX daily

The $OEX daily is showing a clearer signal.  both the histogram and the MACD lines are diverging.  Taking a look back at the weekly will conservatively put the price target at in the 490 region.

I can't seem to find DJX.


randomjaywalking said...

Can you put up the OEX charts and price target?

randomjaywalking said...

The DJX would be handy also :)