Very Important Market Test Coming Up

On Friday we mentioned that several major market indices produced a weekly buy signal. In particular, the tech sector has been at the front of this move as both the semiconductors and broader tech market represented by the QQQQ closed firmly for the week. Of even greater interest is the fact that the sector is now consolidating directly below major overhead resistance; the same resistance that has fenced in prices over the past two years. A break above this resistance would have very significant implications on our trading success rate. Over the past year especially the market has been trading in a coiling pattern as prices bounced between support and resistance without making any forward or negative progress. This has left many trades cold as breakouts and breakdowns have been faded, causing both to fail. Should the QQQQ break through overhead resistance, we will find that stocks will start to make some good moves, develop better trade set ups, and actually follow through from those setups. We look forward to the next few weeks to see what develops out of this situation. Note that the QQQQ is trading just below weekly resistance. A break here could have a significant impact on trade development. (A failure here would have prices moving back towards $36 support where we would expect a regrouping effort followed by another attempt at $40 resistance.)