Monday, August 6, 2007

QQQQ bounce sign...

This might be a helpful sign when trying to bottomfish an index...

The QQQQs were down in the morning and approaching 47 -- a technical level of sorts. Obviously, once it breaks 47 there may likely be a lot of stops triggered, causing the market to freefall. However, buyers kicked in and the QQQQs only got as low as 47.03.

Now if shorts control a stock -- they'll always push it under that key level and cause the selling to escalate.

Here, though, once it became clear the QQQQs couldn't be pushed under 47... you could probably take a big position with a stop at 46.99 and assume the powers-that-be are there for you. And it turns out -- they were!

qqqq 50 day is 48.08
9 day is 48.23

I would expect to see some battles at these levels... if the bulls can push it through both -- they'll get a lot of short covering to keep the counter-trend rally going... but eventually those support levels might fail to support -- and then I would expect this narrow breadth, low volume burst to die violently.

But remember -- when a key support level doesn't fail on what should be a horrible day -- that might be a good sign to look for the Snapper.

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