April 30, 2010
Last Thursday, April 22, both the Nasdaq 100 Index (NDX)and its tracking ETF the Powershares QQQ Trust (NASDAQ: QQQQ) had a strong bullish outside reversal day signaling there was still more upside ahead, even after the already strong gains achieved since the late January to early February correction.
On Tuesday of this week global markets as well as U.S. markets had a meltdown, with the NDX and the Q’s both losing 2.1% in a single day, after debt-ratings were lowered for Greece and Portugal. Spain joined the party the following day.
But surprise, on Wednesday the U.S. markets did not follow-through to the downside and on Thursday, the stock market exploded out of the gate and erased almost all the early week losses.
When the stock market is in the midst of a momentum run, never try to pick a top. There is no way to do so. Bad news is usually ignored or has a limited effect on prices.
Both the NDX and the Q’s do still have a test ahead. Both remain just below important resistance. For the NDX it is at 2055.00 and for the Q’s it is at $50.61.
These are the bear market highs achieved on June 5, 2008 when, after a huge three month long bear market rally, the stock market rolled over and both the NDX and QQQQ declined some 50% to the bear market bottom in November 2008.
Only a fraction of a percent ahead, a solid close above these levels would be a breakout and add more fuel to the momentum run.
Our target for the NDX remains at 2055 and for the Q’s at $50.61. A close above these levels would result in new higher targets being posted.
Disclosure: The Fibtimer.com (www.fibtimer.com) ETF Timing Strategy has a position in the Powershares QQQ Trust.