I’m opening a new category called, “Stock Market Snapshot”. This will be a bookmark of charts I want to study for future reference, and patterns.

111207 Decline QLD

Were there clues that this decline was coming? Yes.

Using the Ultra QQQ Proshares ETF - QLD, the first clue came on November 1. QLD had just broke out to a new 52 week high of 122.75. Followthrough should have come the next day. Instead, the ETF had an almost 180 degree turn. Red flag #1.

The following two trading sessions put in lower highs, which was followed by a buy signal. I have said it before, “fast moves can occur from a failed buy or sell signal.” That applies on any time frame. Red flag #2 came when not only was there no followthrough, but the candlestick after the buy signal, broke under the pivot support.

Red flag #3. The break below the trendline all but sealed the fate of QLD… a fast trip to 200 ma-land .

I’m not saying waterfall declines can’t be played for bounces. There’s been plenty of intraday volatility for this. If you can find a downtrending stock, and a setup, choosing the short side has provided a bigger bang for the $1.

I like that volume we had in QLD today. A bottom is near. Wait for strength, and a setup before buying.