June 16, 2011
Only one day after a strong rally, shares of the ETF Powershares Nasdaq 100 QQQ Trust (NYSE: QQQ) broke below an important support level.
QQQ closed below its 200-day moving average. This average is watched as an indicator of whether we are in a bull or bear market.
QQQ also made a new closing low for this correction, completely erasing the rally of the prior trading day.
Yesterday we wrote, “… 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.”
Interestingly, the Nasdaq Volatility Index (VXN) has broken out above the upper Bollinger Band, typically occurring before a rally.
There is resistance at $56.27 and then again at $56.76.
The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy holds a position in the Powershares Nasdaq 100 QQQ Trust.