Securities Research Services

Thursday, December 20, 2007

Changes Are Coming

The market typically moves from periods of inactivity to periods of strong activity. Over the past seven weeks, the market has seen one sharp three day drop followed by a weak, choppy, trendless environment, as can be seen in the QQQQ below.

Unless you were aggressively positioned for a short by bucking the trend and guessing the top in early November, you haven't had a sustainable trend to exploit since October.

Those with crystal balls called every turn in the chart above, but the rest of us have either just stuck to the day trade trends or have seen their positions fail to gain traction as strong moves reverse from day to day.

But the good news here is, as stated above, markets move from periods of inactivity, to periods of strong activity.

The QQQQ is at a pivotal point here. It has trend support at its current level. If it can rally from here and move up to take out December highs, we could get a sustainable trend going again.

If, on the other hand, it breaks down here, we could potentially see a bearish trend develop into the new year. Either way, this period of inactivity is drawing to a close and everyone should look for trading conditions to once again provide a trend that is exploitable.

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