PowerShares QQQ Trust (QQQQ) Chart

I looked back on my past two charts on the QQQQ and saw how accurate I was.  This is the kind of thinking that makes me lose at blackjack in Vegas.  I’m right two times so I up my bets as if that makes my next bet a lock to win.  Now I’ve started thinking of buying options on the QQQQ.

OK, maybe I exaggerated my accuracy a little, but it got you to start reading the second paragraph.  I said the QQQQ would come back down to the 50-51 range.  It actually had intra-week lows in the upper 48s, but the low close was only 49.84 two weeks ago, so I’m claiming that for being in my 50-51 range. Anyway, the pressure is on now for sure.

I charted the six month daily chart this time. A bullish cross-over of the 10 day and 20 day moving averages seems to be only days away.  If that happens I’m getting more bullish.  Once the QQQQ crosses over the 50 day moving average I’ll really go back to being a QQQQ bull and maybe that’s the time to buy index options. The other opportunity will be if the QQQQ drops back down to the low 48 range and once again finds support as it has done since mid-September. 

The biggest threat I see with the QQQQ is hanging around the 52 area.  The 50 day moving average I just mentioned needs to be breached and I also want to see two consecutive closes above 52.  The two areas I circled below show how 52-ish was a floor throughout most of October only to become a ceiling the past two days.  If/when we do break through the 52 barrier we’ll also start seeing a better defined trend line that can lead us to a better prediction of where we’re headed in the near-term.

Since I’m not throwing down my money on the blackjack table today with an exact call on where we’re headed, I do suggest watching the 48 and 52 levels to see how the price action works.  A solid move above/below those prices will decide where we’ll go for the weeks after.