April 19, 2011
Shares of the ETF Powershares Nasdaq 100 QQQ Trust (NYSE: QQQ) hit intraday lows close to 3% from its prior close before reversing and erasing much of those losses on Monday, April 18.
The selloff was across all sectors after Standard and Poor’s, before the open, turned negative on U.S. debt from a stable rating.
Most sectors remained down for the day, but the late day rally in the Q’s created an interesting chart pattern.
A rising line drawn from the March 16 lows through today’s lows and continued to the right on a daily chart creates a rising trend support line.
Connecting the February 16 and April 4 highs in the same way and extending the line to the right creates a declining trend resistance line.
This is a pennant pattern.
A break of either of these lines (closing price) would likely be followed by a continued move in the direction of the break.
Typically, when a pennant pattern forms after a long term advance, the break is to the upside.
That does not have to be the case of course so this pattern is extremely important looking forward.
The Fibtimer.com (http://www.fibtimer.com) Stock Timing Strategy holds a position in the Powershares Nasdaq 100 QQQ Trust.