Stock Chart Analysis On QQQQ And Why You Should Be On The Sidelines

I have been reading a lot of talk on today's chart about how the volume on the buy side is really dreadful. This is really not true when applied to the Nasdaq.

Buy side volume has been escalating into the upward move. If you see my vids you understand that I totally fancy buy side volume increasing into a up move. This suggests more and more converts are coming over to the bullish side.

Another reason behind why this is bullish not only for the Nasdaq but the whole stock market is because of sector rotation theory. Technology stocks are regularly the first to lead the market out of a bear market.

Think about it. Where is the improvement coming from to shrink expenses to business? Technology. More and more businesses have increased their use of email and decreased their use of normal postal mail to cut costs. More companies are buying a larger number of computers to advertise for free over the Internet and save money on in-print advertising. Quicker copiers are being bought with instant convert to pdf and email from copier capabilities. Definitely, lean and focused companies will a recession make and tech is the critical factor that makes productivity and cost reduction workable. Therefore it makes sense that technology is the bull market leader coming out of a slump.

From a technical analysis standpoint you should not be trading in this market. You ought to be on the sidelines right now because no prevailing group, neither bulls nor bears, have emerged as the leader. At the end of June the bears held the trend but all that changed in July. Over the last two weeks, the bulls have been so influential that they have negated the downtrend and forced us into a cash and sidelines rating.

Still if we do get a pullback at this time, I wager we'll have a higher low and a new trend channel could cultivate. Bear in mind, most trend channels have lifespans that are to a large extent shorter than the present downtrend channel we have had since April. In other words, this downtrend channel is outside its life expectancy and we should have a fresh one develop before long.

The way to play this stock market is to wait in cash and let the big boys battle this out for control. You are a small fighter and do not wish to get trapped between two attacking armies. Stay in the bush and let the armies battle it out. As soon as one army, either bulls or bears, becomes dominant, then jump out of the bushes and attack on their side. Just place your bets on the winning side when a clear dominance or trend has formed.

In this episode I carry out technical analysis on QQQQ and update you on why you ought to be on the sidelines and in the protection of cash.