Last week I beat the S&P 500 SPDR (SPY) at a clear resistance level. A fall in 2022 could be a correction after a big rally, but the ETF is far from a breakout or trend reversal. The Nasdaq 100 ETF (QQQ) also has clear levels to beat and is challenging resistance.
The chart below shows that QQQ surged about 140% and then retreated about 61.8% of this rise. This is basically two big advances and one setback. However, this setback has not yet been reversed and the long-term trend is still downward.
QQQ found support twice in the 258 area in early November and late December (green line). These two equal lows form a potential double bottom and a breakout of the intermittent highs confirms the pattern. As I write, QQQ is challenging December highs and a breakout at 300 confirms a double bottom.
The indicator window shows that the Trend Composite turned negative in late January and remains negative. This means that the downtrend is continuing. In addition to the confirmed double bottom, we would like to see the trend composite turn positive before becoming bullish on QQQ. The Trend Composite aggregates the signals of 5 trend following indicators and is currently at -5. This means that all five have bearish signals.
TrendInvestorPro uses the Trend Composite as part of the Trend Momentum strategy for trading the All Weather List, a basket of ETFs. The strategy is described in a 10-part series with backtesting results and signal tables. Click here for immediate access.
Trend Composite, Momentum Composite, ATR Trailing Stop and 8 other indicators are part of StockCharts ACP’s TrendInvestorPro indicator edge plugin. Click here to learn more and take your analytics process to the next level.
————————————————– —-
Arthur Hill (CMT) is the Chief Technical Strategist at TrendInvestorPro.com. Focusing primarily on U.S. stocks and his ETFs, his methodical approach to identifying trends, finding signals within trends, and setting key price levels has made him a respected market technologist. I was. Arthur has written articles for numerous financial publications, including: Barons When Stock & Commodity MagazineIn addition to his Chartered Market Technician (CMT) qualification, he holds an MBA from Cass Business School, City University, London.learn more