The fact that the Q’s rallied hard today does not impress me. I have traded QLD for years and have been trading TQQQ since in came out, but I’m not messing around with the Q’s here. All that has to happen is for another AAPL bad hair day and any and all gains that may have been made will just evaporate. I still think AAPL has a long way to go before it bottoms and it’s very possible that I’m totally wrong about this but for now I’m just going to avoid Big Tech in favor of small caps and $SPX.
Next, I see nothing in breadth indicators that shows the market to be overbought here. Even the RSI 14 for QQQ, IWM, SPY, & DIA in the 60min time frame backed off from the 70 area going into the close so none of these ETF’s is really showing overbought. But that doesn’t change the fact that today’s candle on the $SPX is very similar to other topping candles that have formed over the last several months. I’ve highlighted all that appear in up moves and you can see that, with one exception, these candle types have marked turning points in the market of one type or another, either pull backs or consolidations.
This is a large chart and apparently it’s too large for WordPress. If you click on it, it will open in a new window but even then it’s not that easy to read.
I don’t know why the market rallied today. Not a clue. If it was because of the Fed meeting, then what’s newsworthy about that? Everyone already knows what the Fed is going to do: buy more bonds. What’s going to happen tomorrow when this is announced? Rally like it’s 1999? Well, I guess we’ll have to wait and see.
GL & be careful.