The Dow Industrials have managed to hold the critical 9,800 level again today after trading as low as 9,810 and managed to post a 100-point gain right underneath their 200-day moving average. The 9,800 level is perhaps deemed "critical support" as it is the bearish vertical count from the point and figure chart that has not yet been achieved.
One stock I'm monitoring closely today is shares of Dow component Microsoft (NASDAQ:MSFT) $49.92 +2.67%, not only because it is a Dow component, but the stock also carried the heaviest weighting in the NASDAQ-100 Trust (AMEX:QQQ) $29.18 +0.72%. This weekend, in the OptionInvestor.com market wrap, we set up a potential trade in the QQQs for a partial position in the September $30 calls (QAVID). In this morning's market monitor I profiled this trade as actionable and now we wait.
Microsoft Chart - Daily Interval
In recent session, I've mentioned that the NASDAQ-100 bullish % ($BPNDX) was in "oversold" territory and now reads 19% after yesterday's trading. We've also noted in recent sessions that the NASDAQ-100 Index (NDX.X) has reached the lower end of its downward regression channel. This is also what we're seeing in share of Microsoft (MSFT) has the stock edges lower to the lower end of its regression channel.
I've marked on the above chart the $44 level. This is the current bearish vertical count of Microsoft's (MSFT) point and figure chart.
Now, make no mistakes. I'm not BULLISH on MSFT as an individual stock, but understand that not all bearish vertical counts are achieved. I also understand they can be exceeded, but the technicals from the bar chart do show some past technical significance at/near the $47 level.
My profiled 1/4 or 1/2 position bullish in the QQQs probably isn't for everyone. However, I am using the bullish %, the retracement and regression from MSFT and similar technicals to find potential bullishness in the NASDAQ-100 before September expiration.
Some feel I "should wait" on this trade. Fact is, I've been waiting since December when the NASDAQ-100 Bullish % was "overbought" above the 70% level and bulls thought we were too bearish when we were advising caution. I agree... I'm very early. This is why I've only profiled with 1/4 or 1/2 positions.
My "individual" stock for QQQ representation in technology has been Applied Materials (NASDAQ:AMAT) $22.67 +2.66%. I liked this stock as bullish last week on a break BELOW the $23.00 level, just above the stock's bullish support trend from the point and figure chart.