Tim Bovee, Private Trader: Tuesday's Prospects: Round 2

Tuesday, August 19, 2014

Tuesday's Prospects: Round 2

The analysis for Tuesday is late because I've spent most of the day on a trans-Pacific flight from Japan to the United States. This analysis is based on the small universe of 261 symbols that I used while travelling to speed processing. I'll return to full operation and a normal posting schedule on Wednesday, Aug. 20.

After weeks of quiet, "Tuesday's Prospects" exploded with 16 bull and bear signals. The fuss, however, turned out to be less than it seemed at first blush. Out of the five symbols that survived the first round of analysis, only one made past the second round. And that one was a household name: The Qs.

One of the five first-round survivors failed, CCL, failed confirmation, and MO had a chart that was insufficient to support its bull signal.

One symbol, PSQ, is an inverse fund tracking the Nasdaq 100 and so got booted from the stage.

That left QQQ, which tracks the Nasdaq 100 without any inverseness or leverage, and PSX.

I then turned to Zacks Investment Research, the service I use as a short-cut to fundamental analysis, and learned that it has given PSX a bearish rating, leaving QQQ as the sole survivor.

I'll take a closer look at QQQ on Wednesday to see if it really is worth a full analysis.

The Qs, like the S&P 500 fund SPY, last had a correction of significant size in April 2014. In percentage terms, QQQ had a sharper correction than did SPY.

Both faltered to the downside in July, and then rushing back to the upside, SPY with a squeaky laugh and QQQ with a roar.

The last major correction for both was in 2010.

Since both QQQ and SPY are broad measures of the blue-chip stocks. They won't march in lockstep -- they call the NASDQ "tech heavy" in market commentaries for a reason -- but I generally expect them to conform in their broad outlines.

And they aren't entirely doing that, as QQQ shoots to a new higher high and SPY stays below its July peak.

I consider both charts to be bullish, but whether I want to trade QQQ will depend upon a detailed analysis.

By Tim Bovee, Portland, Oregon, Aug. 19, 2014

References

While traveling, I'm performing my analysis on a smaller universe of symbols and on an altered schedule. See "August Schedule" for details.

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

My chart assessments are based on Elliott wave analysis, which tracks patterns in price movements. The principal practitioner of Elliott wave analysis is Robert Prechter at Elliott Wave International. His book, Elliott Wave Principle, is a must-read for people interested in this form of analysis, as is his most recent publication, Visual Guide to Elliott Wave Trading.

Several web sites summarize Elliott wave theory, among them, Investopedia, StockCharts and Wikipedia.

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.