Nasdaq 100

[Melf Elf]

I dont think QQQQ is going to have a bounce. Its looking super bearish right now.

nullzero,

The bounce lasted for five minutes at the open.   QQQQ got only to 40.26, then tanked for the remainder of the day.  I didn't expect it to get very far on those "manufactured" closes of 40.19 and 40.16 on Friday and Monday.  The NASDAQ stocks have looked much, much weaker than those closes would indicate.

I think those "manufactured" closes is what's referred to as "painting the tape."  Having the QQQQ appear to look much better than it really was by posting the two closes right at 40.16. - 40.19 support.

My APPL that I was long, for example, has been getting whacked.  It had a false breakout to 73.80 a week ago, then got grabbed by the throat and taken down.   It went as low as 64.75 today.  That's a 12.3% hit...much worse than the QQQQ closes would indicate.  A lot of stocks seem to have taken similar or worse hits.

[Terliso]

QQQQ took a hit today... not good

[beroznikmal]

Looks like the QQQQ is trying to close the gap... hopefully then we'll see is that is it 

[beroznikmal]

Looks like the QQQQ is trying to close the gap... hopefully then we'll see is that is it  39.36

39.31 now... ARSH!!!!! 

[beroznikmal]

Looks like the gap was closed... and a reound has occured.. lets just hope the bulls will take over...  39.55 and recovering....

[beroznikmal]

looks like its down again ...39.37.... argh!!!!!!!!!!!!!!!!!!

ok am I annoying anyone yet....

[Melf Elf]

6. Whle the "sloppy" action was going on, the QQQQ formed another bullish pattern, a Bullish Falling Wedge (the pattern in red), so things still looked okay.  The "sloppiness" was justifiable: the QQQQ was forming another bullish pattern: a Bullish Falling Wedge (pattern in red).

Since the trend in the QQQQ was bullish, that pattern "should have been" a bullish continuation pattern, and it "should have' broken out to the upside.  It didn't.  It broke to the DOWNSIDE on Thursday, May 11, putting target: 39.455 IN PLAY.

Uh-oh-h-h....that's a whole different ball game right there!

Falling Wedge Target: 39.455 MADE yesterday.

looks like its down again ...39.37.... argh!!!!!!!!!!!!!!!!!!

ok am I annoying anyone yet....

B.,

Nah-hh-h, I liked your "play by play" account.   

[Melf Elf]

On the breaks of the "Bullish" (wasn't bullish) Falling Wedge...the up trendline off the April, 2005 low...the 200DMA...and, 40.16-40.19 support...The NASDAQ is down eight days in a row, for the first time since September, 1994!



A ninth down day today doesn't seem likely, but if we get it, it would be the first time since May, 1984.



After a beating like the market has taken here, it's pretty easy to get "lathered up for Bear," so I'm making an extra effort to be on the alert for downside fakeouts (maybe AAPL), positive divergences like we had last October when it looked like we might be going down the crapper, etc.

At the October, 2005 low, we had a nice postive in the MACD histogram.  At the March, 2006 low of 40.19, we had TWO positive divergences in the MACD histogram.

Indicators don't always give postive divergences at bottoms, or negative divergences at tops. We might not get that.  But, when stocks are tanking below support like the QQQQ has been, I at least like to see some evidence that the bleeding has stopped.

MACD chart next.

[Melf Elf]

QQQQ - MACD Chart

[usedcasting]

Nice work Melf, as always. Thanks and appl

uc.

[Melf Elf]

Nice work Melf, as always. Thanks and appl

uc.

Thanks, uc.  FINALLY an up day in the QQQQ!

Bullish Hammer (also a harami, I suppose) that looks like it might produce at least a relief rally, back to all of the broken support that I outlined last weekend.  Maybe one of those "One-to-Three Day Wonders" to the upside, but at this point, I think that any rally is suspect.

Stocks, in general, haven't seemed to react well to earnings which is suggestive of a lot of good news having already been factored into the market:

1. Some stocks made a high on earnings: GIGM.

2. Some stocks broke patterns on earnings: BEN

3. Some stocks re-tested broken patterns on earnings, and failed: BBC

4. Some stocks re-tanked, or even crashed on earnings: DIET..TMTA (that happens even in strong markets, though).

My "overall" feeling about earnings, however, has been that it didn't matter how good the earnings were, "We're selling the news."  Just my impression.

[nullzero]

market looking ugly

[Melf Elf]

market looking ugly

nullzero,

Yeah, unfortunately. 

There's been a lot of damage done the charts since the critical breaks in the QQQQs on May 11 and May 12, when I began this discussion that weekend.  No better example than your DHI short.

That next Monday morning, May 15, DHI broke below a year-long Double Top, taking out 28.78, the October 27, 2005 low.  That's the middle of the Double Top.  It looks like an "M-shape."

Prior to that break, DHI printed 28.78 exactly on May 4, 2006, went into an Ascending Triangle formation, broke below the triangle, then  broke below critical 28.78 support.

(We need a face on the toolbar that looks real nauseated, like it's just about to you-know-what).

That action  isn't "just a normal pullback," as many analysts on CNBC are saying.  That's a serious break below a one-year Double Top in a stock (and sector) that has had a terrific six-year run to the upside.  I remember sometime last summer calculating that Hovnanian (HOV) was up something like 2,700% since its late 1999 low.

   

When a sector has had a run like that, it's not a question of "if," but "when" it's going to have a sizeable correction.  That time already arrived for DHI and the other builders, but the date "when" DHI has a serious CIT (change in trend) was May 15, 2006.  Unless/until DHI closes back above 28.78, its in full-blown Bearish Mode, and its at risk of making the downside target that is IN PLAY.

A rally back to broken support at 28.78 for a re-test at some point would be "a normal pullback," but it woud be a "normal pullback" to year-long RESISTANCE. 

DHI is just one example of why I said yesterday that I'd view any rally here in the QQQQ as suspect. 

[beroznikmal]

wow what crazy action today was...
tanking from open till 12 and rebound from there on, forming a hammer...
volume was enormous.... techinically, the qqqq closed above the support of 38.23

My prediction is that we will get a 3 day rally maybe more upto the 39 level before seeing another session of down days...

Be safe and GLTA

[Melf Elf]

DHI is just one example of why I said yesterday that I'd view any rally here in the QQQQ as suspect.

The rally from the May 24 low was suspect, indeed.  It was a Bear Flag rally, back toward the broken Double Top at 40.16-40.19.  The Bear Flag high was 40.00, just below the break.

Yesterday's low of 37.49 was within $0.16 of the Double Top Target: 37.33 that has been IN PLAY since the May 12 break.  That could be "close enough" for another rally attempt, but this isn't much of a base to go up against the four-month Double Top.

In case Alien reads this: The solid green line is the line of scrimmage.  All of the candles above it are playing for the Bears.  The candles below it (since the May 12 breakdown) are playing for the Bulls.

The Bulls are outnumbered 4-1, and are the underdogs.