Ahead of Apple Earnings Tuesday, QQQ Chart Set-Up Crying Wolf Again

07/30/2018 12:38 pm EST


Michael Paulenoff

Founder, MPTrader.com

The chart set-up that cried wolf — my weekly chart of the PowerShares QQQ Trust ETF (QQQ) — is at it again, threatening to stalk overzealous holders of technology long positions, writes Mike Paulenoff over the weekend.

I really don’t know if the wolf is a real threat this time or not, but the attached chart set-up certainly is warning us not to be surprised if it is the real thing.

QQQ hit its confirmed (by momentum) price high on Jan. 26 of this year at 170.95, but after that, every subsequent high has been accompanied by a lower high in momentum. Last week’s all-time new high at $182.93 (Wednesday, July 25) represented the third unconfirmed new all-time high since January.

In my experience, the greater the number of consecutive upside momentum divergences, the more vicious the ensuing correction. This occurs in any and every market set up, which is especially true on a big picture weekly timeframe (as is the shown on the attached QQQ weekly chart).

In addition, let’s notice that last week’s candle exhibits a potentially very bearish new all-time-high, long-tail downside reversal accompanied by the third glaring weekly momentum divergence since January.

The technical conditions are in place for a wicked bout of weakness in the QQQ.  

Two of the 5 charter members of FAANG have been badly wounded: Facebook (FB), Netflix (NFLX), not to mention drubbing of non-FAANGs Intel (INTC) and Twitter (TWTR).  

We are wondering about the Amazon (AMZN) 4% downside ricochet off of its post-EPS, unconfirmed new all-time high at $1896.40, at its 9-month upper channel boundary line (see link to AMZN chart below)

And, I think we could have more to worry about than most people suspect heading into the Apple (AAPL) earnings Tuesday after the close. 

See charts illustrating the technical pattern of the QQQ and AMZN.

Mike Paulenoff is a veteran technical strategist and financial author, and host of MPTrader.com, a live trading room of his market analysis and stock trading alerts.

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