Profunds index and sector trading

[frenchee]

QQQ Short-Term Analysis

Yesterday, QQQ closed higher with a lower high and a higher low. I'm nervously long here for three important reasons.

First, QQQ has struggled to a small gain over the past week as oil plummeted from the 50 level. QQQ might react downward to an upside reversal in the price of oil, which is now oversold but starting to lose downside momentum. QQQ's muted response to good news relative to the oil's decline could be signaling a market ready for drop.

Second, QQQ is overbought. Short-term breath (e.g., Chaikin Money Flow and NAMO) show a negative divergence with price. Price oscillators (e.g., Slow Stochastics) are in a presignal area for a sell.

Third, despite QQQ's average price move this past week, total trading volume has been extremely low, indicating a lack of buying interest. Quite possible short sellers are covering positions causing a rally and smart money is leaving the marketplace.

Summing the weight of the evidence suggests resistance between 34.68-34.96 on 30 Sep 04. Therefore, if QQQ will close less than 34.19, the lower Raff Regression Channel line, I'm closing my long and going short.

http://img8.imgspot.com/u/04/240/16/QQQdailyCMF08270444436.jpg
http://img8.imgspot.com/u/04/240/16/NAMO27Aug04.png
http://img8.imgspot.com/u/04/240/16/QQQdailySTO082704.jpg
http://img8.imgspot.com/u/04/240/17/QQQdaily082704.jpg