Saturday, May 24, 2008

Qs Weekly Update

Above, the 3 linear regression study (30,11,3) of the daily and weekly bars.
For the week the Qs were down 1.81 or 3.6%, almost a perfect reversal of the previous week's gain. The markets are now moving lockstep with both DIA and SPY showing almost identical % declines this week.
My decision at the last update to stand aside any bullish Q moves this week turned out to be a good one. Fred's take on the hanging man formation was a good one, so. . .thanks, Fred. Many of the technicals that were positive last week have now turned menacingly negative on marginally increasing volume. With the Qs poking below the LR30 lower channel on the daily and back to the upper LR30 channel on the weekly, things could get interesting next week. At this point both the DIA and SPY have broken through daily LR30 lower channel support, though the IWM is a mirror image of the Qs. If this is a harbinger of emerging weakness, then the Qs have some catching up to do on the downside.
The A50 has fallen through the 20MA (no surprise) and looks poised to retrace at least back to the 50. The developing A50 pattern looks suspiciously like mid-Oct 2007, so we shouldn't put too much faith in the overbought RSI as you can see how the last turn down through the 20MA got resolved.
The A200 has also turned down, both through the 200 and 20 MAs. What's of note here is the magnitude of the drop relative to the A50. The "weaker" NDX components are clearly falling faster, suggesting that the run up mid-May may have reflected more short-term technical "piling on" than longer term investing. Again, the skew for next week looks negative.
I still have to review the Qs pivot high/pivot low position and the Qs relative trend position on the 60 minute RSI that I discussed yesterday.

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