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QQQQ and NASDAQ 100

Description: A short discussion on what should be analyzed and what should be used to generate signals when it comes to Exchange Traded Funds (ETFs) trading.

NASDAQ 100 Charts, Quotes, Technical Analysis and Signals

Many traders use QQQQ charts and undertake a QQQQ technical analysis while completely forgetting about the NASDAQ 100 index and the fact that QQQQ is not a public company. Even if the QQQQ stocks (shares) could be traded as stocks of a regular public company, it would be wrong to apply the same technical analysis to QQQQ as you would to a public company’s shares.

QQQQ is the NASDAQ 100 index tracking stock!

QQQQ stock is an Exchange-Traded Fund (ETF) that tracks the performance of the NASDAQ 100 index. The QQQQ stock was developed to track the Nasdaq 100 and the QQQQ price is set at approximately 1/40th of the NASDAQ 100 index price. If you check the NASDAQ 100 and QQQQ prices, you will see that for as long as QQQQ has existed, its price has been about 1/40th of the NASDAQ 100 price.

The QQQQ price trend is not driven by supply and demand!

You can say that the price of a regular stock is driven by supply and demand. If there are more buyers than sellers and buyers are willing to pay more than the stock's bid price, the price of this stock will rise. Conversely, if the number of sellers is greater than the number of buyers, and sellers are willing to sell for less than the stock's asking price, the price of this stock will decline.

YOU CANNOT SAY THE SAME ABOUT QQQQ STOCK. The QQQQ price is always calculated to match 1/40th of the NASDAQ 100 index price. No matter how many QQQQ sellers and buyers there are in the stock market, if the NASDAQ 100 index declines at the end of the day, the QQQQ stock will also be down. It does not matter what the supply/demand balance is for the shares of this ETF - its trend moves in the index trend direction. This is the nature of Exchange Traded Funds - they are set to track benchmark indexes.

QQQQ or NASDAQ 100 Technical Analysis?

Now, a logical question is, "Why should you apply technical analysis to QQQQ, completely forgetting about its benchmark index???" Index technical analysis and index charts are more suitable for ETFs trading then ETFs analysis and ETFs charts. If the technical indicators that are applied to the NASDAQ 100 index point to a trend reversal, QQQQ will follow the index trend, even if the same technical indicators that are applied to QQQQ point in the opposite direction.

The trap in which many traders are caught is that the index and ETF prices are tied and they have the same trend and, in most cases, the price-based technical indicators that are applied to ETF and the index will generate similar signals. HOWEVER, in the case of volume-based technical indicators, you may have different signals because index volume covers volume of all stocks from this index basket, whereas ETF volume covers only one stock. This is the mistake made by many investors. When analyzing QQQQ volume, they forget that the flow of the money in QQQQ does not reflect the money flow in the entire NASDAQ 100 sector!!!

Why fool yourself by looking at QQQQ charts?

So, why fool yourself by looking at the QQQQ chart? Why shouldn’t you take a look at index charts, if the only way to analyze ETF is to use technical indicators that are applied to the benchmark index? Yes, you may use ETFs charts, but you will be limited strictly to price--based technical analysis. So, don’t waste time, Start using the NASDAQ 100 charts and NASDAQ 100 technical analysis for trading QQQQ stocks.

With the NASDAQ 100 chart, you may receive something that you will never get with QQQQ or any other single stock. Don’t limit your analysis. Start using:

• NASDAQ 100 price technical analysis
• NASDAQ 100 volume based technical indicators
• Money Flow in the NASDAQ 100 sector
• Analysis of the advanced and declined stocks
• Advancing and declining volume analysis
• NASDAQ 100 TRIN analysis
• McClellan analysis of the NASDAQ 100 index

Most of the analyses above cannot be done on a single stock. As you can see, the index technical analysis can deliver a much greater benefit to your QQQQ trading than a simple analysis of the QQQQ price. Without an index analysis, you are trading like "a blind cat in a dark room." Do not hesitate -

Start using the advanced techniques
that are used by professional and institutional traders

The Index Analysis is SIMPLE:
GET IT - LEARN IT - PROFIT FROM IT

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