The Powershares QQQ Trust (QQQQ) rode the 2:1 descending Gann Angle down and bounced at the 1:1 ascending angle using the March to June range square. Price is now at the 50% retrace line and in a strong position to follow the 1:1 ascending angle up. Of course we still need follow-through. If we get follow though, I will not be surprised to see price hit the 2:1 ascending angle quickly - near 49. Volume was exceptional today as was the price action.
Price is also in a strong position when considering the range from 2005-2007. Price bounced off the 1:1 descending angle in June and appears to be bouncing off the 2:1 descending now. There is a chance for price to hit the 1:1 ascending in a couple days. But the 50% retrace level may be enough support to hold the current low.
Charts courtesy of Stockcharts.com
Post Modified: July 8th, 2008 at 7:59 pm
Tags: Gann Angle Fan · QQQQ · Slope · Square of Range · Volume7 Comments
7 responses so far ↓
Andy
Looks like we could get follow through today. If so do you have a new time frame for the up move.
Robert
Andy - what are your thoughts on a rally that does not follow capitulation or 30+ vix… Lot of people are saying that it won’t last because of the above two reasons…
Robert - Aug 22nd is my new date to watch for a top (assuming we are moving up now). We need to watch what happens when the market becomes overbought. Do we make a higher low? If not, then look out below. If so, then I am watching SPX 1450. Although, 1350ish will be a place to watch also. I don’t expect a move beyond 1500 before a retest into October.
TK - The VIX works when it does pop. But it isn’t required to pop for the market to go up with vigor. The VIX is derivative sentiment. We watch it because it often points to price movement. But there really is no direct relationship between the VIX and equity prices.
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Helene Meisler postulated yesterday that no one is buying puts (and influencing the VIX) because they are not trying to protect their positions. They are selling the equities.
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The Investors Intelligence Survey hit an all-time low this morning. Why buy puts when you are selling the equities the puts could be bought to protect?
its up to earnings now, and guidance…if companies beat, and say things are looking really really bad, then we may have capitulation…but if companies did better than wall street expected, and still give ok guidance, then we may be at the bottom….
i bought some october apple calls, as well as some august qqqq calls as well… lets see if it works this time
Andy there are 3 things needs for change in direction: Time, Price and Sentiment.
VIX represents sentiment.
TK - I disagree that the VIX represents sentiment. The VIX can provide great buy signals. But the market can move without the VIX and has on many occasions.
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If the market is completely sold out and something bad happens, the VIX will move to 50, which has always been a great buy signal. If nothing tips the market it will eventually go up - even without that 4-5 hours of big selling and put buying. In the whole scheme of things that volume traded in that timeframe is minuscule and does not really matter.