When we look at some of the biggest news stories of the year, the argument can be made that the most significant can be found in the new record high that was established in the NASDAQ 100. This move was important for a variety of reasons, as this marks the first time in 15 years that we have seen a record high in that index. As many traders know, the NASDAQ 100 is heavily centered on the tech space, so any positive activity here suggests that we are seeing widespread strength in the tech sector, according to recent flow activity from Searching Profits. For these reasons upside activity in the NASDAQ is generally a good indication that buy positions should be taken in stocks like Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG)
So those that have been holding bullish positions in the PowerShares NASDAQ 100 ETF (NASDAQ: QQQ) have really been benefiting investors for the last several years. But the real question now is whether or not it still makes sense to be playing things from the long side. And when we look at things in terms of risk to reward ratios, it actually looks as though it makes more sense to play things from the short side given the propensity to take profits when prices are still elevated. With this in mind, we will now look at the major support and resistance levels that should be used to define strategies in assets related to the NASDAQ 100.
_____________________________________
PowerShares NASDAQ 100 ETF (NASDAQ: QQQ)
Critical Resistance: 120
Critical Support: 106
Trading Stance: Looking for Short-term PUTS
NASDAQ 100 / QQQ - Stock Trading Strategy: Long-term momentum in QQQ remains positive, but we are now coming into levels that are elevated enough to justify short positions in the ETF. Look for prices to move into the 120 area to initiate new PUT options.
The positive trend in the QQQ continues to move forward but momentum has started to slow and we are now seeing mounting evidence that bearish reversals are imminent. The daily MACD indicator is still in positive territory but is showing a bearish structure so it is unlikely that we will be seeing any major upsurges any time. Look to establish PUT options in the QQQ or any of the other NASDAQ-related assets as it is much more likely that we will see downside retracements before new rallies in the index.
