Is the popular Tech ETF (QQQ) forming a “Head & Shoulders” topping pattern? Low odds, yet possible!
What would it take to eliminate that this pattern is sending a bearish message to the tech sector? A strong rally at (1), would blow up the likelihood that tech is topping here.
Below looks at the NDX 100 Advance/Decline Line-
The NDX Adv/Dec line did not break below the February lows, while the NDX 100 index did. This created a short-term bullish divergence.
Of late the A/D line is breaking out to new all-time highs at (2), which sends a positive message to the Tech Sector.
With the A/D line breaking to new highs, a rally at (1) in the top chart would greatly reduce the odds that an important topping pattern is in play. Tech bulls should keep a very close eye on what this key sector does the next couple of weeks!