Nasdaq 100

[nullzero]

Im still 90% short in my portfolio  . So this last down turn I saw about a 6% gain overall in portfolio. Fundamentally I believe we are due for a big decline not just speaking technically. The real estate boom is over and the use your house as an ATM is over as well. So consumer spending will definately be down in the coming quaters. Resturants might be good short espically if they bounce. CMG looks good for short.

[Melf Elf]

[Whacked all the way back to the bottom of the Bear Flag. 

We're within a hair of breaking it to the downside.   That isn't looking very friendly at the moment

The QQQQ broke the Bear Flag to the downside today when 37.53 got printed.  That puts Targets: 37.16 IN PLAY (the bottom of the Bear Flag) and 35.56 IN PLAY.

37.02 still is IN PLAY from the last Bear Flag break on June 6.

The bottom Bottom Bollinger Band came in on Friday at 37.1699.

37.02-37.16 is important support.

[Melf Elf]

The QQQQ broke the Bear Flag to the downside today when 37.53 got printed.  That puts Targets: 37.16 IN PLAY (the bottom of the Bear Flag) and 35.56 IN PLAY.

The 37.16 target MADE yesterday.  The QQQQ scrambled back above the bottom of the Bear Flag, so the 35.56 target is ON HOLD.

37.02 still is IN PLAY from the last Bear Flag break on June 6.

37.02-37.16 is important support.

Yesterday's low was 37.08, right in the middle of that range of support, so six cents could be "close enough" to consider the 37.02 target MADE, as well.

Yesterday's candle wasn't a strong reversal stick, but the QQQQ has got a chance at a double-bottom here, at 37.16 and 37.08.

Time to rally outta this danger zone! 

[Melf Elf]

Yesterday's low was 37.08, right in the middle of that range of support, so six cents could be "close enough" to consider the 37.02 target MADE, as well.

The 37.02 Bear Flag target has MADE, so that's now a moot point.

Yesterday's candle wasn't a strong reversal stick, but the QQQQ has got a chance at a double-bottom here, at 37.16 and 37.08.

Time to rally outta this danger zone! 

No double-bottom. 

The QQQQ scrambled back above the bottom of the Bear Flag, so the 35.56 target is ON HOLD.

The QQQQ didn't hang on to the bottom of the Bear Flag for very long this morning.  The Second Bear FlagTarget: 35.56 is back IN PLAY.

[brandyjoco]

thanks for your work on this.  I'm not great at charts but doesn't it look like INDU and COMP just broke through below some very very important support lines?

[Melf Elf]

thanks for your work on this.  I'm not great at charts but doesn't it look like INDU and COMP just broke through below some very very important support lines?

brandy,

See my post on the NDX in Frederick's "How Low Can We Go?" folder.

[Melf Elf]

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."

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.

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

I was reminded of those comments that I made to nullzero two months ago at the broken Double Top when, today,  DHI finally lowered their 2006 estimate by 30%, from $5.25-$5.35 to $3.65.

Great example of the old saw, "First the chart...then the news."  We saw the breakdown in the chart in mid-May, then the bad news came out today, two months after the breakdown.

It's also a good example of why I say that I'm distrustful of what "appear to be" good fundamentals, when a chart is breaking down, and of why I say that I defer to the price action in the chart at that point, and ignore the fundamentals.   

DHI recently was referred to as "The Teflon Homebuilder" because it was about the only bulider that hadn't lowered its numbers.  DHI simply held off lowering for as long as it could, would be my guess, given the 30% drop in guidance.  They must have had some iinkling before today that prospects weren't exactly knocking their door down, wanting a new home.

At any rate, DHI gapped down today and currently is off 8%, near $21, off 24% from the point of the breakdown.

"The market is a discounting mechanism...rule of thumb is roughly 6 months into the future."  DHI was almost $42 in January...it's $21 in July, down almost 50%

In terms of the NAZ/QQQQ, yesterday's break of the H&S Top in the NAZ 100, like DHI, also was a one-year top, so we need to be careful with that.

[nullzero]

Its hard to touch any long position in a market like this. I think the only stocks that can hold up in this market are strong funadmental high yield div. stocks, any stock related to oil that is fundamentally strong ex. (SU, HES, VLO, XOM) and will benefit from higher oil prices, commoditys stocks and ETFs  like ex. (GLD, SLV, PD, FCX, N), and foreign stocks, ETF, foreign currency.

[Terliso]

Alister,
Nice job on MRVL and on the overall market since May. Applause.

You too melf elf, you've done a great job by posting your analysis & being patience hitting the keyboard (you got triple applause from me gotta wait an hour though )

Just by looking on the QQQQ weekly scale ... there is no doubt the chart is really bearish, looks like we are entering in BEAR MARKET (Shorting Time)

---- The 50(SMA) weekly Scale just missed by hair
---- Histogram did not managed to tick up on the positive side
---- MACD Fast Line bounced below from Slow line... (VERY UGLY!!)

As always I must applaud Melf Elf for his great Analysis

[Melf Elf]

[The QQQQ didn't hang on to the bottom of the Bear Flag for very long this morning.  The Second Bear FlagTarget: 35.56 is back IN PLAY.

The Bear Flag Target: 35.56 just MADE.

Thanks, Alister! 

[Melf Elf]

[The Bear Flag Target: 35.56 just MADE.

The low on the day came in a few minutes later, at 35.54.  The QQQQ rallied and finished out the session on a Bullish Doji Star Hammer which "should be" good enough for a rally here off the Bear Flag target that  MADE.

[Melf Elf]

The low on the day came in a few minutes later, at 35.54.  The QQQQ rallied and finished out the session on a Bullish Doji Star Hammer which "should be" good enough for a rally here off the Bear Flag target that  MADE.

Wow, it sure was! 

While yesterday's rally looked very impressive, that's the nature of a bear market rally.  They come from out of the blue, and they often are very sharp to the upside, like the Fed rally on June 29 to the top of the Bear Flag on the QQQQ chart above.

Yesterday's rally to a high of NDX 1498 probably still has some room on the upside, to broken support of the year-long top at NDX 1511-1515, and possibly above that, to the bottom of the the broken Bear Flag, or to the bottom of the broken channel (blue), but I'd want to see a lot more than yesterday's snapback rally toward resistance.

Re-tests of broken support (NDX 1511-1515, in this case) are common.

[Melf Elf]

I'd want to see a lot more than yesterday's snapback rally toward resistance.

Re-tests of broken support (NDX 1511-1515, in this case) are common.

Gap up at the open to NDX 1497, well below the broken neckline of the H&S Top, then Wednesday's rally was completely reversed to the downside.

[beroznikmal]

intersting to see that the qqqq might be gong thru another bearish formation...

What you think MELF?

[Melf Elf]

intersting to see that the qqqq might be gong thru another bearish formation...

What you think MELF?

b.,

Yes, that's how it looks.

The QQQQ now is at DOUBLE resistance: Friday's high was 37.14, at the top of the Bear Flag.  The low of the last Bear Flag was 37.16.

If we get through there, next DOUBLE resistance is the bottom of the last Bear Flag  and the 50DMA, both at about 37.90.

The NAZ 100 closed just about smack on a re-test of the neckline on the broken one-year H&S Top.  I'll show you that chart next.