Stock Chart QQQQ

Stock Chart Analysis QQQQ

PowerShares QQQ Trust, Series 1 (ETF)(Public, NASDAQ:QQQQ)

I decided to analyze the Q's tonight, because the markets are at a critical juncture right now. I mentioned in a previous post how I felt the markets were becoming overbought, after rallying for the better part of a month following the November lows. The markets have since been pulling back and are at or close to some levels of support. I have highlighted several areas of interest on the chart below showing how I see the price action. Overall, QQQQ has been trading in a descending broadening wedge, which is neither bullish nor bearish. It is simply a consolidation pattern.

The Q's fell out of a small bearish rising wedge a few weeks ago which led to a small pullback and was then followed by new highs. It can also be classified as trading within a trading channel (shown in red). Price never made it to the upper range of the channel on the last high, and was followed by a break of the channel. The break occured with a bearish cross on slow stochastics, and MACD is also close to confirming the move lower. These are all bearish signs, showing current weakness in the Q's.

However, the Q's are also approaching some support levels and most of the recent price action has been on muted volume. The key will be how the Q's handle these levels in the coming days and whether they will hold as support. There are plenty of catalysts right now with earnings season kicking off, the presidential inauguration approaching, and options expiration this week as well, so it will be interesting to see which way things go.

Good Trading,

Joey