QQQ

The previous two trading days (Friday the 13th and Thursday the 12th) were just about as flat as it gets.  The daily Average True Range has diminished to less than a dollar.  With the market moving less than a dollar per day it is really hard to make a buck!  As I've said several times recently, it is not the time to be playing with intraday trades, so we are studying the daily charts, and picking stocks with high PHWs to give us something to trade that has some volatility to it. 

The daily QQQ model is currently in a short position, sitting right under the Bollinger Band midline.  We have been moving back and forth between the two attractors 23.00 and 22.23.  That 70 cent range is not worth playing with.  The only thing we should be doing is waiting for a breakout.  RSI has consistently turned back upward each time it hits an upsloping trendline that began in early May.  That's a positive note, and might be cause for the bottoming formation to begin a turn upward.

On the daily chart the next sizeable Attractor is all the way up at 33.00.  But, there is no reason to buy yet.  We are in a long-term pennant formation and will probably aim downward for a while longer, as we reach for the bottom of the pennant formation, which is currently at about 22.20.  According to the experts, pennants formed on diminishing volume (which we have) more often resolve in the direction of the preceding flagpole.  In this case, that would mean more downside action.  In fact, if we use the measured move technique, it should move on down the length of the preceding flagpole, which was a whopping 12 points!  Twelve points down from here would put the QQQ at 10!

I'm certainly no P.Q. Wall when it comes to drawing arches, but if you will click on this chart to enlarge it, you will see the arch that I hope is our current environment.  If that sort of formation is the case, then indeed we are forming some sort of bottom, and albeit slowly, we will make our way out of this slump of the last several years and the economy and stock market will recover.

Everything I see on the chart, from an "intuitive" level says we are forming a bottom and will be going slowly upward.  Yet, the model is short, and we are system traders, so short it is.  And, that is how we will stay until the market says something compelling to change our minds.

Oh--I just looked at my calendar to make sure of today's date, and I see that tomorrow is Yom Kippur.  No wonder the stock market has been flat.  And, one thing that historically seems to happen on Jewish holidays is that the market will be volatile, but very slow, on that day.  So, be very nimble trading on Yom Kippur.

STOCK PICKS

We exit all stock alerts at the end of the week, unless something is compelling in the way of profits or technical formations to tell us otherwise.  Thus, we begin Monday morning with no stock holdings.

To view tonight's picks from our stock search, go to the Weekend Stock Alert page.  There you will find the symbols and their corresponding breakout alerts.  Don't take any trades in those stocks until and unless the breakouts are reached.  Don't jump the gun and try to anticipate the market.