A New View

The mega caps in the Dow Jones Industrial Average are clearly outpacing the large cap tech stocks in the QQQ (ETF for the Nasdaq's top 100 market-weighted names). Small caps are defiantly ignoring extended conditions, once again, too. 

I was a net seller into strength this morning, and am mostly looking to see if bears attempt to make a move on the QQQ this afternoon, or whether they prove inept for what seems like the millionth time. 

On the QQQ hourly chart, updated below, we have a rising channel in place since the late-September lows. Recall that we were keying off this chart for most of last month in order to gauge whether buyers could reclaim $144, which they did as it gave bulls a boost in the overall market. 

Now, however, we want to objectively assess whether this rising channel resolves down, as bears are yearning to see. The issue is whether that thesis is a mere pipe dream or can actually hold water in October. 

Thus, the $145 level is turning into a near-term battleground. If bulls can keep defending it, the rising channel breakdown thesis is off the radar. One reason why bears are arguing for the rising channel breakdown, beyond pure bias, is that the dip in the QQQ in late-September had breached prior September lows. With that in mind, bears are noting that QQQ could be in the midst of some type of near-term top. 

While I am reticent to throw my hat in the top-calling ring, I am seeing a decrease in low risk, high quality entry points for swing long setups. Indeed, a few days of resetting the many extended issues in tech, transports, homebuilders, etc. at this point would be fine by me.