June 15, 2011
Shares of the ETF Powershares Nasdaq 100 QQQ Trust (NYSE: QQQ) rallied on Tuesday, June 14 after two straight weeks of steady losses.
There are several reasons to be concerned that this rally might be short lived.
First the selling preceding it has done substantial technical damage. One day does not come close to repairing it.
Second the QQQ reached its 200-day moving average on Monday in intra-day trading. This level was expected to bring in profit-taking in the extremely oversold market.
MACD was broken on the downside on Friday, June 10. This was potentially a buy signal for swing traders. But they will abandon the QQQs quickly if they see any weakness ahead.
There is resistance at $56.40 and then again at $56.86. We would be surprised if the QQQs can close decisively above these levels before again testing the correction lows.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy holds a position in the Powershares Nasdaq 100 QQQ Trust.