Happy thanksgiving – let’s look at some weekly charts of the indexes.
QQQ looks like it wants to test the February lows in the 150-155 range (labeled as support 1 above). Support 2 (135-140) and support 3 (110-115) are the next two support levels to watch for. A possible long term buy and hold strategy would be to buy more at each support level (value investing) and have automatic monthly purchases in order to keep the most money in the market. This is a balance of both market timing – buy low and sell high, and dollar cost averaging (DCA) – buying the same dollar amount of stock at predetermined intervals. For example, your DCA strategy could be to buy $1,000 worth of QQQ once every month or two weeks.
The weekly chart of SPY looks quite similar to QQQ. SPY looks like it wants to test the February lows in the 250-255 level. A convincing drop below the 250-255 support level could mean prices in the low 200s.
If DIA drops below the 230-235 support level, we could be looking at prices below 200.
In conclusion, look for a strong reaction (either up or down) when we near the support levels I’ve indicated in the above charts. I favor a strong move down if we approach the support levels near the February lows.
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