$$ Weekly Stock Report

Jan 11-15, 2010
For annotated charts of $SPY and $QQQQ please go here.

1. SPY

Price closed up $3.13 for the week at $114.57, just 56 cents shy of the outer Keltner Channel (50,4,25) and well above the main trend line on price (~$109). This is the highest weekly and daily close since the current up trend began in March of 2009.

Momentum: RSI made a 3 month momentum peak at 68. There exists some long term bearish divergence on the RSI between the current momentum peak and the September momentum peak. There is some short term bearish divergence between Price and %B. Overall, the up trend looks very strong.

Volume increased this week as evidenced by the rising short term accumulation average.

Volatility: SPY spent most of December in a squeeze pattern, with Std Deviation below its long term Bollinger Band (125,1.5) and ADX hovering below 15. After forming a squeeze base, Std Deviation and ADX are now starting to rise which could easily power a nice rally.

Last Week's Outlook: The consolidation pattern could last awhile. Not a horrible time for entry, although I'd prefer to wait for a pullback. Overall, the picture remains bullish.

Next Week's Outlook: SPY seems to have broken out of its consolidation pattern powered by increased volatility and strong accumulation. I expect SPY to exceed its outer Keltner Channel soon.

2. QQQQ

Price closed up 80 cents for the week at $46.55, a high for the up trend that started in March of 2009. Price continues to hug the outer Keltner Channel (50,4,25), and is well above the main trend line (~$43.25).

Momentum: The up trend is strong. Short term bear divergence has appeared on both RSI and %B which, combined with price at the outer Keltner Channel, could forecast a normal correction coming soon.

Volume shows short term accumulation last week.

Volatility: QQQQ showed classic signs of a squeeze play in the first half of December, with Std Deviation hugging its bottom Bollinger Band (125,1.5), and ADX well below 20. We got a breakout from the low volatility consolidation pattern late during the week of December 14, and QQQQ has gained ~6% since the breakout.

Currently, Std Deviation is above its 125-day average, and ADX has climbed from 14 to 23. Volatility appears average.

Last Week's Outlook: Prudence suggests waiting for a pull back before entry.

Next Week's Outlook: Given the bearish divergence at the outer Keltner Channel, we are due for a pull back soon.