Support & Resistance Report

[Mr Nasdaq]

Chart & Comments Updated for QQQQ...

The 'Support & Resistance Report' identified an area of Gathering Resistance (Sell Trigger) between $39.35 and $39.56 going into Tuesday's trade, and so it was found to be.

After printing a high of $39.38, Resistance was found.

The QQQQ pulled back 81 cents to a subsequent low of $38.57.

QQQQ (5 Minute Chart):

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[Mr Nasdaq]

QQQQ Trades (Weekend Update)...

For The Week Ending 05/19/06:

($0.10) = Loss from the 'Support & Resistance Report' Strategy (Day Trades)

($0.20) = Loss from the 'Support & Resistance Report' Strategy (Swing Trades)

($0.84) = Loss from a 'Buy and Hold' Strategy


For The 11 Weeks From 03/06/06 thru 05/19/06:

$9.45 = Profit from the 'Support & Resistance Report' Strategy (Day Trades)

$7.28 = Profit from the 'Support & Resistance Report' Strategy (Swing Trades)

($2.10) = Loss from a 'Buy and Hold' Strategy (QQQQ Closed at $41.45 on Friday, March 3rd)

A record of 'Buy' and 'Sell' Alerts that produced the results above may be viewed by clicking on the following link: A Record of 'Buy' and 'Sell' Alerts

The record of 'Buy' and 'Sell' Alerts is an Excel spreadsheet. If you do not have "Excel for Windows" on you PC, you may download a free copy at the following Microsoft web site: Excel Viewer Program

For an example of the "Support & Resistance Report", including an explanation of how it works and why it works, visit the Support & Resistance Report web site.

[Mr Nasdaq]

The "Character" of the market has changed...

With a solid drop below Support at the "50-Day Moving Average" and the "200-Day Moving Average", the charatcer of the market has changed.

When the market resides above those two important lines of Support, it is in Buy All Dips Mode.

When it falls below them, however, then the market is in Sell All Rallies Mode.

As a general rule, markets don't go down in a straight line (this week's action represents an exception to the rule).

There will be rallies along the way. When a rally rises to an area of Resistance, however, it will be met with selling.

This will be especially true when a rally lifts the price of a stock to an area of concentrated Resistance, also known as Gathering Resistance as identified by the "Support & Resistance Report" Spreadsheet.

It will be vital, therefore, in the days ahead to be aware of the locations of individual aspects of Resistance and especially areas of Gathering Resistance.

These areas will represent selling opportunities as well as shorting opportunities.

The QQQQ and the rest of the market will be in Sell All Rallies Mode until they are, once again, able to recapture what is now Resistance above their respective "50-Day" and "200 Day" Moving Averages.

[Mr Nasdaq]

GLENO, I agree...

"Mr Nasdaq..Next support could be the Monthly 20MA at 2144 or we could go to 2050..."

There is a warning sign on the Monthly Chart below. It is provided by the CCI that is attached to the top of the chart.

When the CCI breaks below the +100 Line, it is often a warning sign of a change in trend from up to down.

Because the CCI is doing just that on a Monthly Chart, it suggests that the new down trend will be "long-term" in duration:

[GLENO34]

Mr Nasdaq..Next support could be the Monthly 20MA at 2144 or we could go to 2050 ...

[BRIG_88]

2025......BRIG

[Mr Nasdaq]

nodeal, That's a great chart...

It shows the $COMPQ resting on a long-term trend line that has provided Support on two previous visits to it.

I wonder, though, about the PPO Indicator that is attached to the top of the chart. It doesn't look like it's ready to turn up just yet.

It may be time to ask ourselves where the next Support resides if Support at that long-term trend line fails.

[nodeal]

This should be the kicker.
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=2&mn=0&dy=0&id=p20193360580&a...

[nodeal]

This has been an amazing selloff. Look at the Bullish wedge forming on the 60 Min.

http://stockcharts.com/h-sc/ui?s=QQQQ&p=60&b=3&g=0&id=p84199424339&a=74707720&am...

[Mr Nasdaq]

QQQQ "Max Pain" = $41.00 (EOM)

[Mr Nasdaq]

Heads Up! We are seeing something on the 5-Minute Chart of the QQQQ that we haven't seen since Tuesday at 1:00pm...

that is a break above the "20-Period Moving Average".

Let's see if it can hold.

[gloe]

Looks like we are getting it. NDX filled that gap from November. LOL.

[Mr Nasdaq]

gloe, Did you say "Be careful"?

How right you are.

This diabolical market wants to shake every last soul out before delivering an "oversold" bounce.

[Vestor_2000]

Thanks! (eom)

[gloe]

The CCI measures price acceleration/momentum. If the price continues down but at a slower rate, the CCI can start going up (since the downmove has decelerated, even though it keeps going.) Be careful. I think stockcharts.com in chart school has an explanation of how the CCI is calculated.

[Mr Nasdaq]

The QQQQ has found Resistance so far this morning at what has been Support over the previous two days, which is the Monday and Tuesday Lows between $39.77 and $39.79.

If the QQQQ can demonstrate an ability to capture that Resistance and then begin to use it a Support, it may be "bounce" time.

[Vestor_2000]

I'm with you. I've noticed how the CCI has continued to improve in recent days, despite the fact that price continues down -- a form of positive D, I guess. As I noted in a previous message, I use the VTO Modified for trading. Of course, this trade is shaping up as a loss, but with the RSI-5 at 9, I think I will buy more and be patient. Semis are looking a little bit better at the moment, so perhaps we will get that oversold bounce soon. After that, who knows???

[Mr Nasdaq]

Vestor,

One of the challenges with the CCI on the Daily Chart is that, because it is a leading indicator, it will often bottom days before the QQQQ bottoms.

However, because the QQQQ is so "oversold" at the moment, and because either Wednesday or Thursday of "Options Expiration" week is often an up day, the odds may favor a bounce sooner rather than later.

[Vestor_2000]

Thanks, Mike. I had the same read, which means nothing if it comes from me. The fact that you verified makes me feel that I am on the right track in interpreting the signals, especially given your experienced with the CCI. We'll see how things play out.

Appreciate the feedback.

Rich

[Mr Nasdaq]

Vestor, the CCI has bottomed and bounced. That's a precursor to the QQQQ doing the same.

This mornings slam on the 8:30am CPI Report may be "icing on the cake" for traders who are ready to venture a purchase.

[Vestor_2000]

CCI Question

Mike, both the CCI and RSI are leading indicators, but it appears to me that the CCI is more sensitive. For example, the RSI has shown little movement in the past couple of days. Yet, the CCI has bounced to -204 from a recent low of -295 or so. Because of this "rebound," would it be "safe" (LOL, especially in this environment) to assume that the NDX will attempt a rebound shortly?

As I have mentioned previously, I am more into daily and weekly charts, so any hints you can give me re how I view the CCI on the daily would be appreciated. I continue to monitor the 5 minute for some of the signs we have discussed, but I have seen too many false signals in just the short time I have watched it. Perhaps it is me being a fish out of water, but it is a timeframe I would rather not pursue as an intermediate term trader.

Thank you again for your assistance.

Rich

[Mr Nasdaq]

A CCI of +250 or higher...

is ordinarily a sign that the rally is overextended:

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[3xBuBu]

Now reach the resistance @40.2 which is the yesterday support, let's see will it break out tomorrow or will continue its slide

[Mr Nasdaq]

"Positive Divergence" on a 5-Minute Chart...

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[Mr Nasdaq]

QQQQ and Monday's 5-Minute Chart...

The QQQQ is finding Resistance at its declining "20-Period Moving Average" on the 5-Minute Chart.

When it does manage to rise above that line, it finds Resistance at its declining "50-Period Moving Average".

The trend remains down until that situation reverses itself...

and any trades on the long side remain scalp trades only

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[Vestor_2000]

Not sure what is happening Wonderbuy. Other posters have pointed out a variety of differences between various chart providers. I'm not sure when the data comes from originally, but perhaps the feeds vary. Very, very strange! Perhaps, one day, we'll figure it out!

Take care.

[Vestor_2000]

That does explain things, Mike, though I did post the 5-minute chart. However, somehow it defaults to daily status, which is very strange. Technology!!!

Anyway, I am seeing positive-D on the 5-minute, so we'll see if it plays out... or if the action in Japan scares everyone tomorrow in New York!

[3xBuBu]

They are different even both with the same setting MACD(12,26,9)for $NDX
could it be the formula difference? (Big chart call it MACD EMA 9)
is that important whether it is zero or different value or we care about its trend?
note that the shape are the same, but the peak values (on May 4 and 11) are different too

[Mr Nasdaq]

Vestor, that explains the discrepancy between your description and the chart that you posted.

Your observations are based on the 5-Minute Chart. But, you posted a link to the Daily Chart.

I can't explain the discrepancy between BigCharts.com and StockCharts.com other than to guess that the MACD settings on the BigCharts Chart is different than the MACD settings on the StockCharts Chart.

[Vestor_2000]

This is very strange, Mike. The chart I shared is a 10-day, 5-minute chart. The final MACD is just below the zero line. On Stockcharts.com, the MACD is just below -7. Could our browsers be displaying the information differently?

I am at a loss to explain this.

[Mr Nasdaq]

Vestor, Your words describe a "Positive Divergence"...

But they do not describe the behavior of the MACD on the Daily Chart that you attached:
http://bigcharts.marketwatch.com/intchart/frames/frames.asp?symb=%24ndx&time=&freq=

I see an $NDX closing at the low of day (1635) and a MACD also closing at the low of day (between -10 and -20), not at 0 as you described.

Are you making your observations on the basis of the Daily Chart or on the basis of a chart of another time frame?

[3xBuBu]

LOL be aware of sharks

[Vestor_2000]

Divergences

Mike, this is fascinating. Perhaps I am looking at divegences improperly. But this is what I see, based on the same chart I shared earlier:

On Thursday at about 11 a.m., the NDX hit about 1660 and the MACD tagged a -10. On Friday at 11:00 a.m., the NDX tagged about 1638, but the MACD tagged a higher low at about -5. After a brief bounce in the early afternoon, the NDX fell to about 1635 or so, but the MACD hung around the zero line. So, I see price making lower lows but the MACD making higher lows, which is why I see positive divergence. However, is there a certain amount of time that needs to pass before the divergence is validated?

Thanks! I really need to get squared away with this.

Rich

[Mr Nasdaq]

The Question On Every Traders Mind Going Into Monday's Trade...

[Mr Nasdaq]

Hi Vestor, I'm not seeing a "Positive Divergence" from the MACD that you are seeing on your attached chart of the $NDX:

http://bigcharts.marketwatch.com/intchart/frames/frames.asp?symb=%24ndx&time=&freq=

What I see is a MACD that has dipped to the same low that it was at when the $NDX last visited 1635 in early March.

The MACD may be even a hair lower as of the close on Friday than it was in early March...and with no sign yet of turning up.

That puts the odds in favor of still lower prices on Monday.

How much lower before a bounce materializes is another question.

We shall see.

[Vestor_2000]

Mike,

Given last week's action, there is no doubt about the technical damage done in the markets. Broken trendlines, crashes below key moving averages, etc., were just a few of the signs. Additionally, after the close on Friday, the NASDAQ Summation Index was down about 58 points, one of the biggest drops in recent memory. In fact, the decline reminded me of the two-week period we went through in April of last year, soon after GM announced their various earnings-related problems that sent shivers throughout the entire market.

Now, all of this said and using the following chart, it looks like we could get a very short term bounce, which I believe is also confirmed by the fear showing up on the VIX and its 10-day SMA.

http://bigcharts.marketwatch.com/intchart/frames/frames.asp?symb=%24ndx&time=&freq=

As I've noted in recent messages, I trade in the daily and weekly timeframe, but I am trying to understand the very short charts that you've highlighted, in the hopes of finding an edge for earlier entires. On the attached chart, I can see the negative divergence forming on the MACD several days ago that led to the recent decline. Conversely, there now is positive-D forming on the MACD, which I believe will give us a bounce, perhaps briefly above the 20 and 50-day SMA targets you mentioned in a recent message to me. Throw in a deeply oversold CCI and a few other things is why I feel we get a bounce (if we don't collapse first on Monday). If we show some strength, I intend to sell what few long positions I have and go to cash and put on a small short position in the $RUT.

Do you feel my comments/assessment is correct, or am I missing something? What's more, if the bounce occurred, how would you gauge its strength to see if it was a "V" shape recovery (not counting ont his one, but you never know)? Would you rely on the CCI readings you've detailed in recent messages? Volume? Would apprciate your added perspective. Many thanks!

Rich

[nodeal]

To me, this looks like the line in the sand:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=1463560,1&cmd=show,IDAY[N]&disp=E

[nodeal]

Interesting observation although it has no real significance. The last two lows on the QQQQ's were at 40.13 and 40.16. Yesterdays low was 40.19. 3 cent spreads. Note some data providers a tick below that on daily charts, but looking at intraday data I think the low was 40.19. If it rallies up on Monday like it has the last two times we have been under 40.20 bears may freak out again and cover. Not saying it will, just saying it has in the past.

[Mr Nasdaq]

Hi keithbart, the heavy and unrelenting selling of last week...

that began on Wednesday shortly before the 2:15pm Fed announcement on interest rates provided 3 separate opportunities to take a short position at failed "Gathering Support".

The last two of the three opportunities came on Thursday and can be seen on the 5-Minute Chart below.

The two light blue bands represent Thursday's areas of "Gathering Support".

You can see how both areas did, indeed, provide Support for at least 30 minutes each before finally giving way to Thursday's unrelenting selling.

The two points of failed Support are marked by the two "Warning To Longs" messages.

"Warning To Longs" because of failed Support means that it's time to exit a long position and to venture a short position:

[keithbart]

On your public charts page under the QQQQ daily chart you
stated, "Note: The results above do not include profits
from shorting failed Support or going long on captured
Resistance". What does that mean? Can you give us an
example from last week. How much more can someone have
made if they shorted failed support or captured
Resistence? Thanks.

[Vestor_2000]

Thank you, Mike. I appreciate your perspective. I needed that reminder about the CCI leading. So, even at -300, it doesn't mean it couldn't hit -350 or so, though that would be really extreme. Once it turns, to say, -250 or better, there would be plenty of time to enter a trade. I appreciate your thoughts on the 5-minute chart. This is a timeframe I barely look at, as I concentrate on the weekly and daily. However, I clearly am in favor of anything that provides an early heads-up.

Take care and have a good weekend.

Rich

[Mr Nasdaq]

Vestor_2000, The CCI is approaching -300 on the Daily Chart.

That's an extreme reading, no doubt about it.

It looks, though, as if it is not quite ready to turn up.

That observation, in additon to the fact that the CCI is a leading indicator (meaning the CCI bottoms first, then the QQQQ bottoms) suggests that caution goes to the longs.

I would feel more confident that we have seen a momentary bottom if the QQQQ could demonstrate an ability to rise above and hold above its "20-Period MA" and "50-Period MA" on the 5-Minute Chart.

Mike

[Vestor_2000]

I use the VTO Modified approach, which you've probably seen on other boards. Rightly or wrongly, I'm always looking for a better way, especially as I am an impressionable 50 year-old. LOL.

Seriously, though, I took an intial trade yesterday. However, applying some of your thoughts... gathering support, CCI of -250.... etc., it seems like one might get a bit more aggressive now on the buy side, at least for a short term trade and on this chart:

http://stockcharts.com/h-sc/ui?s=$NDX&p=D&yr=0&mn=6&dy=0&id=p38945058448

Would you agree?

Thanks in advance for your assessment.

Rich

[Mr Nasdaq]

A Visualization of Friday's area of "Gathering Support" for the QQQQ...

One of the characteristics of an area of Gathering Support is that you can see its effects on a 5-Minute Chart:

At the end of a week that was marked by heavy selling, the QQQQ finally found an area of "Gathering Support" that it was willing to honor:

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[nodeal]

Put/Call at 1.6 according to stockcharts.com

[Vestor_2000]

Just got back from running some errands. Man, it's ugly out there. I have a little more in the market than I would like, but still am about 65 percent in cash.

Take care.

[Mr Nasdaq]

A Visualization of Thursday's areas of "Gathering Support" for the QQQQ...

Even when sellers are in the "driver's seat", as they are on Thursday, a falling price must still pause at an area of Gathering Support and even bounce a little before continuing its decline.

The fact that there have been no "back-side-bounces" to violated areas of "Gathering Support" in order to test them as Resistance is a sign of extreme weakness on the day.

[nodeal]

Hopefully they can take 41 back. I will get long on that and see if they break it again.

[nodeal]

Market getting pummeled. 41 broke like a twig. In cash

[Vestor_2000]

Great minds think alike, Mr. N. LOL. It's late and I am watching the hockey game from Edmonton, but I am getting acquainted with your site. Like your thoughts about CCI. Haven't spent too much time with that indicator, but will take a closer look. Thanks for the tips.

Have a good one.