To The Moon

Hi everyone! Today I’ll be looking at a highly technology-driven ETF:

Invesco QQQ Trust, Series 1 (NASDAQ: QQQ)

On the weekly chart, the trend is fairly obvious. Note the series of higher highs and higher lows (green ascending trendline), suggesting a long-term uptrend is still in play. However, I note that in the past few months, we have seen declining volume, and the possible formation of a bearish divergence. An uptrend that is not fully supported by volume is not a good sign moving forward.

On the daily chart, let’s recap a little. The market consolidated for 3-4 months last year during the seasonally weak window in a descending channel, before breaking out and being in a sustained uptrend with higher highs and lows. We currently find ourselves in an ascending channel pattern. That’s where the music stops though.

Notice how we are starting to form a bearish divergence within this channel at the tops and bullish divergences at the bottoms. What we are looking for right now is a trend change in either direction (i.e. a breakout or a breakdown).

A breakdown below this channel would see a move to 416s, while a breakout could see a push above 440s. However, given that the bearish divergences have not played out fully, I’m expecting this channel to break down into the seasonally bearish window into early-March. It’s possible that we manage a marginally higher high, but that should be exhaustive in nature to form a final leg of bearish divergence, before RSI is run back down to oversold levels.

As I’ve covered in my previous newsletter, seasonality favours bears over the next few weeks. Moreover, sentiment is still extremely bullish, which is a cause for caution.

Source: CNBC

Could we remain at Extreme Greed for prolonged periods of time? We certainly could. But I urge extreme caution, as again I reiterate that the market tends to swing to extremes in both directions.

Sentiment: SELL

Summary (with Price Targets - NFA):

• Ascending channel pattern with bearish divergence forming that has not fully played out. Near-term target for a downside move would be 416s, with a longer-term target being the 50% Fib retracement level at 390.75 (assuming 439.14 is the swing high and 342.35 as the swing low).

• Investors are not recommended to buy here for the long term. There will be opportunities at a lower price, and after the seasonally weak window is over.

Alright, that’s all for this newsletter. See you in the next one!

@TigerStars @TigerEvents @TigerWire @CaptainTiger @MillionaireTiger

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