When the markets are treading water like they are today, it's a great time to take a look at the "big picture" and perhaps some supply/demand charts. Earlier today we looked at the NASDAQ Composite supply/demand chart, now lets take a look at a "traders favorite", the QQQ's.
NASDAQ-100 Index Tracking Stock (Supply/Demand) $1 box.
It's probably not a surprise that the QQQ's reached our first bearish price objective of 53 with what we've seen from these charts in today's commentary. What subscribers should be realizing is that we've seen several long-term bearish price objectives met, not only in some indexes, but stocks as well. This is often times a sign that a bottom has actually been found. That's not a "set in stone" phrase that we can't go lower, but it's an observation we can begin building a strategy around for a longer-term market direction. Traders will note our "first buy signal off the bottom" indicated a bullish price objective of $90. We will make note of this in our trader's logbook. We should also be aware of the recent "sell signal" in the QQQ's indicating a bearish price objective of $56. With these two longer-term levels in our minds, we can begin assessing what levels we want to look at the QQQ's for bullish or bearish trades and how we'll want to monitor those trades in the future. The current "sell signal" simply states that there has been a greater number of sellers than buyers in the QQQ's, especially in the high 60's.
NASDAQ-100 Index Tracking Stock - 60-minute intervals.
Once I've taken a look at the "big picture" and identify levels from that chart, I can begin understanding the big picture better as it relates to how I might be trading the QQQ's. In the back of my mind, I'm taking note of the $56 bearish price objective. I've identified that level as a low in the lower left-hand corner of the above chart near $55.75. I'm also aware of a bullish price objective of $90. If I believe the QQQ's are going straight to $90 (I don't, but I'm posing the scenario) then I'm putting a stop under $63 on my bar chart, just in case I'm wrong and we are going to $56, or the bearish price objective.