10 days ago we were pondering whether we have seen the bottom in the Qs (QQQ). That was because the declining-since-the-beginning-of-the-year price of the QQQs hit a wall in the form of the 169-week EMA body support line.
That line held the QQQ through all nosedives since September 2009, including:
- 2010 flash crash and bear market
- August 2015 flash crash
- China’s economy turbulence Q1 2016
- Q4 2018 crash
- COVID-19 Q1 2020 crash
In the following day, a Friday and a closing session of the trading week, the Qs put on a show with an impressive bounce and a close way above (well, it’s all relative isn’t it?) the support line:
The big mystery was how the Qs would behave the week after around this support line: a sharp bounce? a crash through? resting on and flirting with?
Up and down, down and up, volatility all around- nothing new here. But again it was Friday that stole the show.
On Friday itself the Qs traded as high as $293.80 before they dropped to a low of $280.21, about 2.5 hours before the bell.
But then, the inconceivable happened.
QQQ started flipping, and in the last 30 minutes of the session it ripped high to close the day and the week at $288.68.
Here is the visual on a weekly chart, with the 169-week EMA laid over:
Zooming in:
And zooming in even further, for a close up:
Technically, the Qs closed below the 169-week body support line. That’s a first since September 2009.
However, the close is not convincing. The closing price is merely 0.44% below the line, which is recalculated with this week’s close to stand at $289.95 (one cent below the previous value).
Can we say that the line was acting as an armor and blocked, or if you will, absorbed, the lethal impact? Meaning, yea, it got the hit, it got dented, but the bullet didn’t go through to cause damage.
Naaaoo, not at this point. Still not there. We need to see the price reversing for a few candles for that to make a case, and- we do have the set up in place.
With the recent weekly close the QQQ pushed the body support line down and the new line that the Qs respect is now the 172-week EMA, registered at the same time as the 169-week did: September 2009.
We know that support and resistance lines are to be treated as areas and not be judged strictly on the cent. Together with that, the fact is that the 169-week EMA held for so long on the cent until today is something to note and be aware of looking into the future. Some would even say that if the line that held through all these nosedives for 13 years broke – then support broke and forget about the ‘area of support’ concept.
Here is the updated chart, now with the 172-week EMA as the body support line:
Zooming in:
Volatility has not left the building yet. The QQQ price is now at an area that may be strong enough to act as a historical support. Front line is down (the legendary 169-week EMA, ‘lost’ by a merely 0.44%), however, the 172-week EMA ‘sub’ stepped right in to cover.
We’re in for another fascinating week in the market. Let’s reconvene next week.