Wednesday, September 26, 2007

Tech stocks get giddy


Just remember gentle readers. . .you read it here first!. Apparently the Wall Street Journal was so inspired by my comments about the Qs that they wrote a feature article about it. Unfortunately, the WSJ site is subscription based, but if you have an account, read away.
They Qs gapped up at the Open, made another new high and settled down slightly on the upper Keltner channel band to close with a doji. I've pulled back a bit on the chart scale to show the current indicator signals. Typically, the Qs would fade at this overbought level (RSI3>90 and MACD>1) although the pattern of mid-July shows the overbought condition can prevail for some time as price hugs the upper band. The Qs have been on a steady incremental rise since Sept.7th with fairly consistent daily volume as opposed to the volume roller coaster of July and August. Based on current momentum I don't think we'll see a dramatic retracement here, but a pullback is overdue. However, as long as EOD bars continue to stay above the 8 DSMA (plot the low, not the close), the Qs will continue to climb.
The VIX continues to hug the lower bollinger band while maintaining their distance from the 10 and 20 DSMAs. VIX and More also notes this disparity and adds some historical meat to the stew. As with the Qs, the VIX is flashing extreme signals. . .in this case . . .oversold readings . . . the MACD histogram is creeping towards the zero line with the MACD itself registering an whooping -2.5.

1 comment:

AlfaMike said...

Right so I like what you're saying. Surely the market will pull back some time soon, but I would think it will first make a run maybe 5% higher than the July top - which on the QQQQ Nasdaq index might be 2.5 points over the 50.7 July high, or 53.2 or so. Just a guess, with tech being so strong, and end of quarter window dressing.