QQQ :: Markets that Churn Sideways are Hard to Trade...
Quick update. Markets have been oscillating in limbo lately. Trading yields the best results in markets that are trending especially if you intend on using leverage.
Bulls are trying to make a move to previous highs. They were able to hold the 50% retracement from the September lows to the February highs. Also, QQQ has been in a channel since June and has always reacted off the low. Bears should be looking for a break downward of the channel. We are looking for a break of the triangle pattern the framed from feb to mar. A sustained break in a direction may signal that the market has picked a direction to start trending. 307 is a reasonable stop for bulls. 324 for bears.
In regards to the business cycle, the steepening yield curve signals to me that we are approaching the end of a strong growth phase. I would not be surprised if tech/growth make a final bubble up move on a move lower in rates. The March ADP jobs report showed that we added about 500,000 jobs this month. Biden new infrastructure bill will increase taxes on corporations by 7%.
So...what am I buying(conservatively)...: beaten down banks. banks pay interest at short term rates and lend at long term rates. I am very bullish on this spread. I like regional and midcap banks. I like Credit Suisse and SSB. I am still holding my JPM from January.
Remember bull/bear cycles take many years to complete...it may be naive to call a top in the next year or two but, we are a lot closer to the end of this bull cycle than we were 10 years ago. However, with the large amount of bearish divergence a healthy correction could be in order soon.
Bulls are trying to make a move to previous highs. They were able to hold the 50% retracement from the September lows to the February highs. Also, QQQ has been in a channel since June and has always reacted off the low. Bears should be looking for a break downward of the channel. We are looking for a break of the triangle pattern the framed from feb to mar. A sustained break in a direction may signal that the market has picked a direction to start trending. 307 is a reasonable stop for bulls. 324 for bears.
In regards to the business cycle, the steepening yield curve signals to me that we are approaching the end of a strong growth phase. I would not be surprised if tech/growth make a final bubble up move on a move lower in rates. The March ADP jobs report showed that we added about 500,000 jobs this month. Biden new infrastructure bill will increase taxes on corporations by 7%.
So...what am I buying(conservatively)...: beaten down banks. banks pay interest at short term rates and lend at long term rates. I am very bullish on this spread. I like regional and midcap banks. I like Credit Suisse and SSB. I am still holding my JPM from January.
Remember bull/bear cycles take many years to complete...it may be naive to call a top in the next year or two but, we are a lot closer to the end of this bull cycle than we were 10 years ago. However, with the large amount of bearish divergence a healthy correction could be in order soon.
Comment:
The Channel starting in July is the most important thing to watch on this chart.
Comment:
If we break 324 we go to 340