Invesco QQQ Trust Series 1 (QQQ)

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OT: Critical Day

by Bob Colby

Wednesday’s activity suggests that the Demand for stocks may be beginning to match the Supply for stocks. The market is oversold, and the 12-day correction has wrung the previously excessive Bullish sentiment out of the market. Time cycles suggest an interesting juncture.

Friday is a holiday and the market is closed. Thursday 3/24/05 is precisely a Fibonacci 8 weeks from the important low on 1/24/05. Also, Thursday 3/24/05 is precisely 60 months from the S&P 500 Composite all-time high. W. D. Gann paid attention to anniversary dates from important highs and lows. He also made special note of a cycle of 60 months, which is five years. This week is a Fibonacci 21 weeks from the important low of 10/25/04. The short-term correction has lasted 12 trading days, and Thursday 3/24/05 is the Fibonacci 13th trading day since the high of 3/7/05. By all these counts, Thursday 3/24/05 is a date that bears watching for signs of trend change.

The correction has knocked many technical oscillators down to a deep oversold condition, the deepest of 2005 in some cases. Also, some of the indexes are near various technical supports.

The ISE Sentiment Index is now more than one standard deviation below the norm at 1.19, compared to 1.66 previously. This indicator is a call/put options volume ratio based on new customer positions. The current low level indicates caution on the part of options speculators, which is Bullish, according the Art of Contrary Opinion.

The latest survey by Investors Intelligence shows Bulls at 53.6% versus Bears at 27.8%, the lowest net Bullishness since last September, which also might be Bullish.

Oil, commodities, gold, and foreign currencies are breaking down, and that might encourage money to flow back into stocks.

On Wednesday, the stock market was moderately weak in the first 80 minutes before turning up after 10:50 a.m. The S&P 500 finished with a slight gain of 0.07% by the close. Not all major indexes confirmed the small upturn, however. Breadth was Bearish again, with 734 advances trailing 2607 declines on the NYSE. Volume on the NYSE rose to 2.28 billion shares, up from 2.11 billion shares traded in the previous session. High and rising volume indicates heavy selling pressure was met with heavy demand, and so these forces are starting to come into balance.