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Market Comments for August 18, 2014

 

On Friday the market gapped up and was met with quite a bit of selling. At one point both the QQQ and the SPY had large red bars and the SPY was particularly bearish as at it had engulfed the prior days trading range and then some. They both traded higher toward the end of the day leaving bottom tails, and the QQQ closed significantly stronger than the SPY.

We commented on Friday that there would be a very good chance that prices would stall at these resistance areas leave red bar on the chart. This sets up the respective highs at “1” and “3” as very firm focal areas as prices will likely continue to react to these areas. The failure of these areas to contain prices will mean the resumption of the stage II on the SPY and the continuation of the stage II on the QQQ daily charts.