Saturday, March 29, 2008

Qs Weekly Update

Click on charts to enlarge.
Above is the updated daily, weekly, monthly bar 3 linear regression (30,11,3) study.
After the Monday breakout from the upper LR30 channel, the Qs spent the rest of the week pulling back to close with a modest gain of +.40 for the week (DIA and SPY finished neg for the week; IWM was pos).
The Qs are displaying disparity between the various time frames, as we are seeing negative technicals in the daily and monthly and positive technicals in the weekly. With the weekly reading at the top of the LR30 channel and the monthly reading at the bottom of the channel, the most likely resolution is a continuation of the lateral consolidation channel shown in the daily chart and an eventual return to the LR30 mean (41.50). Once earnings get rolling, volatility typically picks up and if things get dicey with more reports like ORCL, we could easily see a test of the previous lows. I've yet to see any encouraging news regarding macro economic fundamentals. . . the current report card is verging on a failing grade.
Our longer term AROON model continues to be non-committal to sell. I've expanded the time frame to 13 months just to illustrate the great signals this indicator has provided in the past. As with all indicators, it's vital to backtest efficacy and in the case of the Qs, a daily setting of 18 seems optimal. We got a late BUY with Monday's pop, which I ignored, since it fired at the 75 level. . . suggesting little room for further upside move. . . which was proven out during the course of the week. The best AROON BUY entries are at the +-30 level, leaving plenty of room to the upside. Exits are best controlled with a trailing stop as a green/red down cross is way too late. Check it out for your favorite stocks, ETFs, etc at
Further signs of a likely continued slide back towards the daily LR30 mean (41.50) include both the A50 chart above and the A200 chart below. Although the A50 was able to impressively pierce the 200DSMA, strength was short-lived and a retreat back to the 20 DSMA now looks likely.
The A200 was even more volatile, and following Monday's pierce of the 50DSMA, has retreated to below intermediate support at the 20DSMA.
The RSI in all 3 charts continues on a downtrend, and while approaching short term oversold levels, suggests more downside to come.
Net results for the week. . . an exhilarating Monday, with immediate follow through Tuesday followed by a long fade into Friday's close. I continue to focus solely on intra day trades (see Tuesday's post for my typical screen shots and trading logic) and believe fading the rallies still provides the best risk/reward returns (and peace of mind) for the near term.
FINALLY. . .being an ole guitar player (for the past 50 years). . . I always appreciate some of the unique talent that pops up. . . this is one of the best:


BUY ON THE DIP said...

Guitar, stocks, san diego.

we have a few things in common.


nice site, cheers.

bzbtrader said...

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