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Sunday, May 23, 2010

NASDAQ 100 Index: -11.24% Below 2010 High

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QQQQ Overview
The NASDAQ 100 Index is traded as the Powershares ETF QQQQ.  QQQQ is down -4.45% for the week, down -8.94% for the month, down -1.94% for the year, but still up an amazing +74.34% since the March 9, 2009 market bottom. In addition, QQQQ is down -11.24% from the April 23, 2010 YTD closing high of 5.52.  QQQQ, along with the Russell 2000 ETF "IWM", are leading market indicators.  IWM and QQQQ  have led the S&P 500 and Dow Jones Industrials 30 upwards since the March 2009 market bottom.

QQQQ Daily Chart
Below is the QQQQ daily chart for 2010.

Noteworthy Closing Prices on Daily Chart below:
Current Close 44.84 (Higher yellow horizontal line)
YTD 4-23-10 High 50.52
YE 12-31-09 45.75
10 Month EMA 44.07 (Lower yellow horizontal line)


QQQQ: Down -11.24% Below 2010 High




Intermediate-Term Trend
The intermediate-term signal, the comparison of the 25 day and 50 day simple moving averages, signalled a bear market for QQQQ on Friday, May 21.  That is, the 50d sma is greater than the 25d sma. An intermediate term bull market had previously been in effect since March 15.

Resistance
The current closing price, the higher yellow horizontal line, has pulled back from the April 23 YTD high of 50.52, a -11.24% decrease.  There are now multiple levels of recent resistance above, including the late December 2009 and January 2010 peak.  The benchmark price of 50.00 has had a lot of price interaction as short, intermediate, and long term resistance.

Support
QQQQ is at the small peak of February 18 and 10 which were 44.85 and 44.83, respectively.  There are multiple levels of support below.  There is also long term support from the July and early August 2008 sideways trading range, QQQQ is trading presently.  However, with the recent price volatility, support may be tenuous.

Moving Averages
QQQQ is below the 25, 50, and 100 day simple moving averages and closed just above the 200d sma on Friday, May 21, after closing below the previous day.   The 25d sma is now descending and below the 50d sma.  The 50d and 100d sma's are descending and the 200d sma has almost leveled off.  QQQQ had remained above the 200d  sma since May 18, 2009 until the one day breakdown on Thursday, May 20, 2010.

Uptrend Line
The yellow uptrend line, a rate of price ascent, is from the March 9. 2009 closing low of 25.74 up through the February 4, 2010 closing low of 42.62. The February 4 closing low was the bottom of the previous 2010 pullback. QQQQ plunged downwards through this uptrend line on Flash Crash Thursday, May 7.  QQQQ has now remained below since Friday, May 14. 

Downtrend Line
The yellow downtrend line, a rate of price descent, is from the October 31, 2007 peak closing high of 55.03 down through the April 23, 2010 closing high of 50.52, the peak YTD closing high so far. QQQQ is below this downtrend line.

Long Term Downtrend Line
The lavender downtrend line, a rate of price descent, is from the March 27, 2000 all-time adjusted closing high of 114.30.  QQQQ is below this downtrend line.

Relative Strength Index (RSI)
RSI 14 day = 30.26 is oversold, but higher than the recent 27.99 low on May 7
RSI 28 day = 38.27 is oversold, just higher than the recent 37.49 low on May 20
The RSIs indicate marginally oversold conditions.

MACD (12,26,9)
The MACD has been bearish since April 27 and is downtrending.

Long-Term Trend
The lower yellow horizontal line is the 10 month exponential moving average from the monthly chart, which I have overlayed on this daily chart. That is the line in the sand, so to speak, for the long term signal of a bear market. QQQQ is just above this signal at the current close, the higher yellow horizontal line.

Conclusion
QQQQ set a 2010 YTD high on April 23 and then was pulled down by the overall market downdraft.  The overall market has been volatile, so high beta QQQQ is bouncing up and down accordingly.  The technology sector Q1 revenues, earnings, and outlook have been very good.   I remain bullish on QQQQ in 2010 and still predict there will be more 2010 YTD highs.  The RSI 14d & 28d indicate marginally oversold conditions.  The MACD is bearish as a result of the general market pullback. The intermediate-term trend is now bearish and the long-term trend remains tenuously bullish.

Economic and Market Commentary
For a review of the general fundamentals of the USA and Global economies, click here.  For a review of Nouriel Roubini's summary of the EU Crisis, click here.

QQQQ ETF Portfolio Holdings
The NASDAQ 100 Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. The QQQQ will, under most circumstances consist of all the stocks in the Index.  The QQQQ portfolio is rebalanced quarterly and reconstituted annually.. The Powershares QQQQ portfolio holdings are here.  QQQQ is heavily weighted to the Information Technology sector (62.56%), then Health Care (15.30%), then Consumer Discretionary (15.10%).  Those 3 sectors comprise 92.96% of the entire portfolio.  Therefore, the QQQQ is a tech weighted, nonfinancial Index and related ETF.  Also, Apple Inc., AAPL, is the most heavily weighted stock in QQQQ at 18.27% and is reviewed in detail here.

Disclosure
We are long AAPL which is in the QQQQ portfolio, but do not have any long or short position in QQQQ stock.


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