Massive rally

It is unusual to see market action like Tuesday's, when the QQQQ rose almost 4%. The three previous sessions were putting our current long signal under pressure, with a sudden recovery yesterday. The rally appears to be carrying through to today. It is impossible to say whether Tuesday marked the bottom of an extended bull or just a short term wave, but we believe the long side is the place to be currently.

Early call to market bottom

Our call for a bottom was early based on the last three sessions, but information from both the QQQQ and a secondary index we follow closely, the Russell 2000, seems to be pointing to a near term market bottom.

Another weak day

After several sessions of positive ground, the QQQQ bucked the trend of the rest of the market and retreated 25 cents today. We believe the "rally" of the last few sessions has been very weak, and this was highlighted today. We seem to be on the cusp of strong selling in the index soon.

Rally fades again

Today, the US Fed acted again with another 50 point rate cut. Intially, the response was positive, with two surges that were quickly met by selling. The weakness in the last half hour of trading, again taking the market to negative territory for the session, shows the unsure footing the market is currently on, and we again believe more weakness is ahead.

Bottom reached Tuesday morning?

The 'panic' that has been sweeping Asian and European markets transferred to the US Tue morning after the Dr King break on Monday. The question is, was Tuesday morning the bottom for the QQQQ near term, or will this low be tested again?

The climb off the bottom during Tuesday's session led us to believe that this was indeed the low, and are predicting a market recovery over the coming days. However, Apple, a key component of the QQQQ, reported results after the bell Tue that disappointed, and at one point was down over 15% after hours. The obvious meaning of this is that it will negatively affect the QQQQ during Wednesday's session, however there have been cases before that one major company's negative results are dwarfed by a market surge in the other direction. It would not surprise us to see strength for the remainder of the week.

Key questions remain as to if this happens, how strongly it happens, and with what duration, so stay tuned, we are in for volatile sessions ahead.

Market downturn resumes

We took advantage of the recovery Wed and Thu to post a SHORT signal this morning. As the session wore on, more damage occurred, with the QQQQ finishing near the session lows. This sets up the possibility of severe damage next week, as in the last few weeks the market has had enormous difficulty finding a bottom. The recovery this week was very weak, although Wed showed "short squeeze" type action.

Market downturn to begin the year

The sessions after December 27th have been very weak, with the first sign of a short term bottom occurring only in today's session. At one point down substantially again, the Q's finished the session down 23 cents.

This appears to be the making of a short term bottom, with a weak rebound expected in the next few days. This would likely provide a selling opportunity in the next few sessions as we would then be entering the next leg of the downtrend.