Where Are Tech Stocks Headed For June 22 2010 |
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| By Dan Williams. |
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| After starting my computer early this morning I sat ready to
put together the trade. The trade was a buy on a tech sector company. Within minutes the technology stock I was looking at was up strong on increasing volume. I was in the trade on the long side quickly. I got up and went to the kitchen to get a drink of water. By the time I returned to my trading desk, I just about spit out the water I was drinking all over my computer. In seconds I was behind 3%, then 4%, then 7%... Provided you went long a technology stock today, then the same thing happened to you. It was the grand daddy of all headfakes and it had my pet name printed all over it: sap! In this video, I take a glimpse at the technology sector and the atrocious bloodshed that occurred today by looking at the chart of QQQQ in four different time frames. Looking at the weekly chart of QQQQ, you had the 8 week moving average breaking below the 13 and 21 week MAs but it is not be frightened time. Not until the 13 week joins the 8 week in crossing below the 21 week MA should we start to worry. The weekly chart shows that QQQQ is still within a very weak uptrend. The key support level we don't desire broke is $45. The daily chart of QQQQ seems forbidding with that Bearish Engulfing candlestick that took shape today. Remember that this is just one candlestick. Also you can not just focus on the dive today without too focusing on the extremely optimistic gap up open. Also the MA lines are still widening giving us the bullish alligator jaws opening pattern. The hourly chart of QQQ reveals that the support established on Wednesday, June 16, 2010 held as great buying took place right off this $46.30 support line. We want this support level to hold on the hourly chart. The 8 hour moving average line dropped beneath both the 34 and 55 hour MAs but the 34 hour moving average is still above the 55 hour moving average. We took technical damage today, no doubt. But the hourly chart says that we are still within a very weak uptrend on QQQQ. The 15 minute chart shows that at approximately 11:45 AM Pacific time, massive selling happened as evidenced from the flight of steps formation on the volume as a greater and greater amount of sellers stepped in and bailed out of this market. But then something incredibly bullish took place. In the last hour of trading, great buying took place off the $46.30 mark. In fact, more buying occurred in the last hour than in the previous hour. This huge amount of buying saved the tech sector today and kept it in a very weak uptrend rating. |
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