Zeev's Turnips Patch-No Politics (ZEEV)

[Mr Nasdaq]

QQQQ - The daily goal of the market is to leave as many traders as possible holding the short end of the stick. It doesn't matter whether they are long or short, the market is out to get them all.

The market was at its diabolical best in this regard on Wednesday. Against all odds (still rising oil, rising interest rates and a big disappointment by CSCO that triggered a steep sell off in that stock), the QQQQ rose in early morning trade to a high of $39.69.

It stubbornly remained in that vicinity all morning. It was enough to encourage many traders to close their short positions. It was enough to encourage many others to open long positions. By the end of the day, the former shorts and the new longs were all licking their wounds.

The only defense that traders have against this diabolical nature of the market is to make themselves aware on a daily basis of the probable locations of Resistance and of Support.

In last nights notes, Fibonacci calculations were done in order to reveal where Resistance was likely to be found in Wednesday's trade. $39.64 marked the 50% Retrace of the Summer Rally's losses up to that point. That's about where Resistance was found on Wednesday.

The QQQQ rose another 4 1/2 cents beyond Resistance at $39.64 in order to make sure that many traders where thoroughly scared out of their short positions and that other traders were scammed into long positions.

Then, shortly after 12:00PM, the trap was sprung. The QQQQ declined to a new post-Summer Rally low of $38.97. It closed at $39.11.

Wednesday's failed Support at $39.21, opens the door to a minimum Fibonacci 38% Retrace of the Summer Rally ($38.77) and perhaps a 50% Retrace ($38.35). See the Daily Chart for the Summer Rally's Fibonacci Lines:

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID735617

The 50% Retrace Line ($38.35) would be a good place for the QQQQ to find Support and bounce. That's because the "50-Day Moving Average" ($38.34) happens to be in the same vicinity. The combination of these 2 aspects of Support compose an area of fortified Support.

Target Stores (TGT) and Dell Computers (DELL) both report earnings on Thursday. Target reports before the market opens. Dell reports after the close. Each report has the potential to be a market mover. Target's report and the response it receives from the market will be of special interest. That's because it was a poor retail report for July, published last Thursday, that triggered the current sell off in the general market.

The best trading strategy in a Down Trend is to sell when prices rally to areas of Resistance, especially if prices rally to areas of "Gathering Resistance" (highlighted in purple on the "Support & Resistance Report" Spreadsheet).

The best trading strategy in an Up Trend is to buy when prices pull back to areas of Support, especially if prices pull back to areas of "Gathering Support" (highlighted in purple on the "Support & Resistance Report" Spreadsheet).

(The above comments are taken from the "Support & Resistance Report" that is emailed to subscribers at the end of each trading day.)