FirstAlert(tm) Daily 1/20/11: Bearish Outside Reversal For QQQ Trust

- Technical Market Commentary -

January 20, 2011 (FinancialWire) (By Frank Kollar) (Go to http://www.financialwire.net/?s=cmmtry for all recent commentaries.) — In yesterday’s trading, the PowerShares QQQ Trust (QQQQ – NASDAQ) reached both a higher intra-day high and a lower intra-day low than the previous day’s session, then ended the day closing near its intra-day low. Such a trading pattern is considered a “bearish outside reversal,” and typically such trading days are followed with more losses.

The stock market, and certainly the QQQ Trust, has been moving higher with almost no let-up for two months. The Nasdaq 100 Index (^IQX) is very overbought, and has been due for a correction. And this may be the start of that correction.

The Q’s has strong support at the $55.03 level, which was the high reached back on October 31, 2007. A decisive close below that level would point to this being the beginning of a corrective period that would probably continue for several weeks. If we instead see a reversal to the upside, at or above $55.03 per share, that would signal a likely resumption of the rally.

The FirstAlert(tm) “Money Index” is an indicator of the depth of market direction or indirection. While not always including the same stocks, the combined NYSE, AMEX and NASDAQ 25 most actives and combined NYSE, AMEX and NASDAQ greatest percentage losers and greatest percentage winners (weighted against pure monetary loss/gain) indicate the direction in which the mass of money is flowing, as well as the general focus of the market. Go to http://www.financialwire.net/?s=frstlrtmnydx for today’s NYSE-AMEX-NASDAQ summaries.

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Exchange Links: PowerShares QQQ Trust (QQQQ – NASDAQ)

(Go to http://www.financialwire.net/2010/05/01/about-kollar/ for more about Mr. Kollar, and go to http://www.financialwire.net/?s=kllrfby for more of Kollar’s commentaries.)

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Disclosure: Frank Kollar’s Fibtimer.com (http://www.fibtimer.com/) ETF Timing Strategy has a position in the PowerShares QQQ Trust.

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