QQQ Nasdaq ETF Weekly Chart Rising Wedge Overbot Negative Divergence Price Extended

A television pundit is telling everyone to buy QQQ with both hands. Instead, run from it. The overbot conditions, rising wedge and negative divergence (red lines) say the top is forming, or in, and 2014 will likely be a tough year for the Nasdaq and the tech sector in general. AAPL has developed a sour mood over the last couple days. The MACD line remains long and strong so one last jog move is needed to roll her over. Thus, a jog move of 1 to 3 weeks is not unreasonable to place the top. Two scenarios are shown in the right margin, either a recovery move next week to print a matching or higher high, or a further drop down to the 83-85 support, then back up for more of an M Top formation. In either case, you want to verify that the negative divergence remains in place, and more importantly, that the MACD line rolls over to the downside to verify bear times ahead. Price is extended above the moving averages requiring a mean reversion.

It comes in handy for television cheer leaders, perhaps in collusion with the fund houses, to pump it so it can be dumped to Joe Retail, who shows up like a sap at all these tops to hold the bag. QQQ should place its top, perhaps for the year, this month. Exit and take profits if long and move on, or, short the rallies. An attractive strategy is to exit QQQ by scaling out in chunks moving forward, and to roll those moves into a long QID position. QID is the inverse ETF for tech (QID moves higher as tech and the Nasdaq moves lower). The QID chart is the mirror image of the QQQ chart above. QID is positively diverged across the board including the MACD line so it can be scaled into here forward and is a very attractive long play. The chart above says the market bears are ready to growl moving forward. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.