I received an email from a reader, Adam. He asks,

“Take a look at QQQQ weekly chart…won’t a move above 47.88 trigger a buy signal
for one of your favorite 3-5 pullback patterns?
Right now I’m on the sidelines. And I think that is where I will stay until I
see good technical evidence to choose a side. My instincts tell me we havent seen
the bottom..but I’m curious to see what you think about that buy signal on the
weekly chart of the q’s.”

Good eye Adam. That buy signal did trigger on Friday.

First, we’re dealing with a bigger time frame on the weekly chart. The first question, I’m going to ask myself would be, “is this the beginning or the end of a run.” The highest odds for a 3-5 pullback to work, are on that first pullback. If you look at the first QQQQ weekly chart, there really isn’t enough information to give a clear picture. For longer periods I like to extend it out with a few trendlines.

In the second weekly chart, it displays price action back about three years. There’s been a definite uptrend. In the last couple of months, that uptrend was taken out to the upside. While this wasn’t a new high for the QQQQ, the market did see new highs for the SPX and DJI.

Because this QQQQ buy signal is occurring after such a run, it would make me hesitant to buy the QQQQ based on solely the signal.

In this case I’d wait for next week’s weekly candlestick. If it “sticks”… puts in a higher high and higher low, I’d be more inclined to believe this signal. Until then, I’d shift down to the daily chart for signals. I’m actually doing that, but using ProShares Ultra ETFs instead of the QQQQ.

When you look at the daily QQQQ, it’s now traded back to the 50dma. It’s also put in a V bottom. They usually don’t hold up. With September historically being one of the weakest months, there’s nothing wrong with staying on the sideline here. Next week, a stand by the bulls is crucial.

Could you hear me attempting to cheer the futures higher pre-open this morning?  Fading the Nasdaq open was the correct call today. Too bad my mouse decided to freeze right as the opening bell was sounding.  It happens.  You disconnect the mouse.  Throw it against the wall, and plug in your spare.

Five candlesticks since the bottom tail low, and the Nasdaq places an outside candlestick around yesterday’s price action. It’s interesting to see that the close was on the daily trendline and 20-day moving average support. Two consecutive closes above the 20-day is mildly bullish.

Today’s lower low is a sell signal. It may be a false signal, and the 50 dma a target. The 200 ma on the 5-minute chart seems a line in the sand for now, as it held steady all day.

Trade below Nasdaq 2530 will have me considering a long in UltraShorts, QID and MZZ. Intraday charts that show some relative strength will have me watching QLD and MVV. Choppy action will allow me a 3-day weekend. I’m leaning toward option two. Suck a few more bulls in.  We’ll see what the market gives us.  Oh ya.  I didn’t really throw my mouse against the wall, but I definitely thought about it.