wpe50.jpg (1913 bytes)     TigerSoft News Service    10/31/2008      www.tigersoft.com    
Predicting The QQQQ Using TigerSoft's
                   Opening Power, Closing Power and
                   Tiger's Day Traders' Tool: 1999-2008.

                   See also:
Measuring Public versus Professional Buying. 
The Six Stages in A Market Cycle.    

  by William Schmidt, Ph.D.  - Creator of TigerSoft
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                                         Predicting The QQQQ Using TigerSoft's
                               Opening Power, Closing Power and
                           Tiger's Day Traders' Tool: 1999-2008.

   by William Schmidt, Ph.D.  - Creator of TigerSoft

                    History teaches us.  Presented here are the TigerSoft charts of the QQQQ since 1999,
           its inception.  Three charts are shown for each year, moving forward six months at a time. 

                              1)    the initial TigerSoft chart with
optimized Buys and Sells and showing
                              Price, OBV, Tiger's Accumulation Index and ITRS, Intermediate-Term Relative Strength;

                              2)   the second chart is of
TigerSoft's Opening Power and Closing Power;

3)   and the third is
Tiger's Closing Power. 

                        We pay especially close attention to the Opening and Closing Power charts.  
          Opening Power
is more apt to reflect US public and  over-night Asian buying or selling. 
          The direction of Opening Power is very often proven wrong by how the QQQQ moves. 

          Closing Power more reflects professional buying or selling sentiment.  It is more often proven
          correct by what happens to prices.  Its trend-breaks, from down to up and from up to down,
          are significant as signs of a trend-change and traders should watch for them.

                      Opening Power and Closing Power often move in different directions.  When this
          is seen on a chart, it is a

                          Bearish divergences
show a rising Opening Power and a falling Closing Power.
                          Bullish divergences show a falling Opening Power and a rising Closing Power. 

          The bullishness or bearishness is explained by the central idea here, namely that the
          public is more likely to be wrong, as it tends to react emotionally to news that may already be
          priced into the market.  It often is reacting simply to the fear and greed that extreme price
          changes create and which experienced professionals anticipate.  Moreover, the public tends to
          buy or sell at the opening or soon afterwards, having made a decision overnight or early in the
          day, while professionals buy/sell more carefully, later in the day, especially as they accumulate
          or lay-off their larger positions and have the advantage of watching the market all day long. 

                     These are tendencies, not iron-clad rules.  Of course, professionals may decide to buy
           at the opening when they see that is advantageous, just as non-professionals may finally
           awake to the fact that there has been a long series of higher "false" openings and, accordingly,
           they may, for a change,   put in "limit"day orders, rather than pre-opening "market" orders. 

Opening Power and Closing Power may also be moving in the same direction.  This usually
            brings on fast and furious action.  "
BOTH-UP" and "BOTH-DOWN" are useful conditions to
            screen for with the TigerSoft programs, because this is where the quickest and biggest gains
            are seen.  When we see that both Openng Power and Closing Power are newly rising, normally
            we should buy.  If the QQQQ is at resistance, it is likely to be penetrated.  When we see that
            both Openng Power and Closing Power are newly falling, normally we should sell short.  If the
            QQQQ is at support, expect that support to be penetrated.  At the same time, we should know that
            the BOTH-UP and BOTH-DOWN conditions are usually short-lived.  So, we have to watch for
            trendbreaks of the Closing Power to close out our trading positions.

Closing Power Trend-Breaks Are Significant. Trade the trend of the Closing Power.
            Bigger sustained moves take place when Closing Power is strongly trending.  Trend-breaks
            of Closing Power are significant, especially if the Closing Power trendline is well-tested,
            has last more than a month and, even more, if it is horizontal.  Opening Power is often
            misleading, though it may show you a pattern for Openings that continues for a while.                       

Closing Power Can Fail.  But This Is Rare.

Professionals are sometimes wrong, but they limit their losses.  That's the sense I make 
            of the cases where they have been bearish, judging from a falling Closing Power, but prices
            somehow continue to climb because of higher and higher openings. For an example, look at
            the QQQQ chart just below for January 2000.  If you find yourself in this position, accept a break
            in the downtrend of the Closing Power as a signal to buy.  Later you can use the break in either
            the Closing Power or the Ppening Power to take profits.  These phases, where Openings dominate
            and over-power weak closings, are often very speculative and take on the characteristics of
            a bubble or a selling wave that is approaching  a final climax.   Notice that the QQQQ had risen
            more than 50% in only 10 weeks when the Closings turned weak in January 2000.  And this was
            very near the top of the internet bubble.   

            QQQQ002.BMP (1004018 bytes)

Use TigerSoft's Other Tools, Too.

                         The more key indicators are pointing up, the more certain you can be of profits
           by being "long".   The same thing applies in reverse to identifying profitable short selling
           points in time. 

Accumulation Index measures a related concept: insider buying or selling.
           We want to use all our tools together.   Intense accumulation (readings above +.50) adds bullishness
           to a pattern of professional buying and public selling.  Intense distribution (readings below -.25)
           adds bearishness to the pattern of professional selling and public buying.  Similarly, a rising
Day Traders' Tool (DT Tool) adds bullishness to a chart, while its declining trend should 
           be a warning .
 Relative strength indicators by ITRS, RSQ or the NASDAQ's NASDJI
should also be added to the matrix of technical tools applied, along with Volume, OBV and OPCT for
           measuring aggressive buying power.  

Tiger Day Traders' Tool can be very helpful.  Watch for QQQQ moves up and
             down which are not confirmed by the Day Traders' Tool.  Below you will want to see the charts
             for these Day Traders' Tool divergences from price.
   Notable QQQQ Price and Tiger DT Tool Divergences                         

             1.      January - March 2000 Bull Market Top - Prices were rising and Tiger DT Tool was falling.
             2.      Sept 2000 Top - Tiger DT Tool did not confirm the rally to a 4 month high.
             3.     September 2001 bottom in prices was bullishly not confirmed by the Tiger DT Tool.
             4.     October 2002 bottom was bullishly not confirmed by the Tiger DT Tool making a new low.
             5.     February 2003 4 month low was bullishly not confirmed by the Tiger DT Tool making a new low.
             6.     August 2003 - January 2004 QQQQ advance bearishly saw the Tiger DT Tool declining.
                                   This was several months' premature, but it proved a correct warning that
                                   2004 would generally decline until the fourth quarter.
             7.    December 2006 - QQQQ price high was not confirmed by the Tiger DT Tool.   This
                                   was an accurate warning that a top was being made.
             8.    January 2007 - QQQQ price high was not confirmed by the Tiger DT Tool.   This
                                   was an accurate warning that a top was being made, but only for 2 months.
             9.    June 2007 - QQQQ price high was not confirmed by the Tiger DT Tool.   This
                                   was an accurate warning that a top was being made, but only for 2 months.



                       In a bear market, steep price downtrends often end only briefly when the
Day Traders'
breaks its steep decline.   If the resulting uptrend for the Day Traders' Tool is short-lived
            and  is quickly broken, get out and sell short again.
Use the Peerless DJI system's major
            Buys to see when a recovery is likely to last a much longer time.   Once the QQQQ starts
            making new yearly highs, you can profitably trade breaks in the DayTraders' Tool more confidently.


                                       QQQQ Bear Market: 5 Years' Weekly Chart

---------------------   QQQQ 1999 - 2004  ---------------------------------------------

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The QQQQ (Nasdaq-100) peaked in March 2000 at 120.  By September 2001, it had fallen to 28.
          This was a drop of more than 75%.   The decline ended dramatically and climactically a few weeks
          after the attack of 9/11/01.   Notice from the chart above that the QQQQ, and the market more generally,
          did not go straightdown to the September 2001 selling climax.  Within this 18 months's 75% decline,
          there was a temporary bottom at 75, in May 2000.  This first leg down saw the breaking of the
          internet bubble. The next leg down took prices down 50% more,  from 75 to a bottom at 38 in
          March 2001.  The third leg down took the QQQQ to 28 in September 2001.   

                    The QQQQ rallied from 28 to 42, about 40% and then stalled out at its declining 52-week ma.
          Thereafter, it fell steadily to a bottom at 20 in October 2002.    All through the long bear market,
          the Opening Power was rising.   I theorize the public kept believing that the decline would soon
          be over and was buying all the way down until May 2002.  You can see this in the QQQQ charts for
          2000, 2000-2001, 2001 and 2001-2002.  Only as the QQQQ was nearing its final bottom did Opening
          Power start to fall, showing that the public was turning bearish.  This was exactly the opposite of
          what would have brought them success.  Professionals, judging from the mostly falling Closing Power,
          remained bearish until October 2002.   At that point,  they recognized the bottom much more quickly
          than the public.  Closing Power turned up smartly. 
Look at the chart of 2002 just below.

            ------------------------------------ QQQQ - 2002 -----------------------------------------------------------------

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                                             QQQQ - Bull Market - 2003-2007

                         ---------------------   QQQQ 2004 - 2008 ---------------------------------------------
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  Trading Tactics Applied to The QQQQ Chronlogically.

            General trading tactics for Opening and Closing Power:

             1.   Closing Power Trend-Breaks   Upwards is Bullish.    
                         More bullish if Opening Power is already rising.
              2.  Closing Power Trend-Breaks   Downwards is Bearish.
                         More bearish if Opening Power is already falling.
               3.  Closing Power Breakouts above earlier peaks that are nearly flat is Bullish.
More bullish if Opening Power is already rising.
4.  Closing Power Breakdowns below earlier bottoms that are nearly flat is Bearish.
More bearish if Opening Power is already falling.
               5.  When Closing Power has been declining for some time, it is very bearish
                                     when Opening Power breaks down.

When Closing Power has been rising for some time, it is very bullish
                                    when Opening Power breaks out.

      QQQQ 1999
June breakout was past a declining resistance line going through 4 earlier peaks.
                                        Note bullish price gap and steady blue Accumulation before it. 

                                October breakout was past a rising resistance line going through 4 earlier peaks.
                                        Note bullish price gap and steady blue Accumulation before it.
                                        The OBV Line confirmed each of the new highs.
                                                                                                                                    50% rise in 3 months

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        QQQQ 1999-2000 (1)
                     50% advance...and then QQQQ broke rising (blue) 50-day ma.  This was a
                     suitable place to take profits.  The red price bar on this occasion showed
                     that this was a very high volume down-day.  That was a bearish sign.
                     Having broken the 50-day ma, prices often fall to the zone between the 30-week
                     ma (purple) and the rising 200-day ma (black).  It did so heavy (red) volume.
                     Volume after this much decline quick decline represents support.

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         QQQQ 1999-2000 (2)
Notes on Using Closing Power:
(A) Both Opening and Closing Power are rising.  This is often a very bullish condition
           (B)  Closing Power breaks out over its flat resistance.  Opening Power rising. Bullish.
           (C)  Closing Power breaks out over its flat resistance.  Opening Power rising. Bullish.
           (D)  Closing Power breaks out over its declining resistance line.  Opening Power rising.
                   This is a bullish Bullish conditons,
           (E) After 10 week period when Closing Power was declining and Opening Power was
                  falling, it is bearish when the Opening Power breaks its uptrendline.
          (F)  Closing Power surpasses its downtrendline while Opening Power is flat to rising.

                                                              A    B         C                D                  E                     F
QQQQ002.BMP (1004018 bytes)

QQQQ 1999-2000 (3)

Prices Doubled from July 1999 to March 2000,
                        while Tiger Day-Traders' Tool was falling.  This was
                        an early warning of the coming bear market.  When
                        prices top out, they must come down a long ways.

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QQQQ 2000 (1)  
                                            Traders could have generally judged the trend of the QQQQ
                                  by which side it was on of the blue 50-day ma.   September is
                                   the most bearish month.   Seeing the QQQQ fail to get past its declining
                                   50-day ma should have been taken as a bearish sign.  Note the bearish
                                   November breakdown below the well tested support at 74.  The worsening
                                   OBV and Accumulation Index confirmed the decline. 

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QQQQ 2000 (2)

Note how in April 2000, both Opening and Closing Power are falling. 
          This is quite bearish.  This condition is called "

          From Septmber to December, the Opening Power is rising while the Closing Power is
          falling.  This is a bearish phenomenon after a long advance.
  It is a "Bearish Divergence".
          To be significant divergences should last more an a month or six weeks.  With this rule,
          it is bearish that there were no "
Bullish Divergenes."

         (A) Closing Power surpasses its downtrendline while Opening Power is flat to rising.
           (B)  Closing Power breaks its uptrend.  Opening Power is flat.  Bearsh.
           (C)  Closing Power breaks down below its flat support.  Thought Opening Power
                   is rising, Closing Power proved correct.  Bearish.  Consider bearish context.
           (D)  Closing Power breaks down.  Bearish.
           (E)  Opening Power upside breakout in context of declining Closing Power is         
                  misleading.   Bearishly Closing Power rules. 

                                                                         A    B     C         D       E
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   A -  Break in long declining trend for  Tiger Day Traders' Tool was bullish.
                  B -  Break in rising trend for Day Traders' Tool was bearish.
                  C -  Break to new lows by Day Traders' Tool after hesitation is bearish.

QQQQ 2000 (3)                  A                          B     C
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     QQQQ 2000--2001 (1)   
Notes -
                        When a strong trend develops, it pays to respect the blue 50-day ma. 
                  Above it is bullish.  Below it is bearish.
  The trend of the Accumulation Index
                 and the OBV Line should also be watched.  The worsening red Accumulation
                 Index readings were clear signs that the downtrend was being confirmed.
                 Watch the ITRS.  It was negative for almost the entire year in the chart below.
                 Its turning negative offered additional good points to sell short.  The bearish
                 head and shoulders pattern from April to June 2001 was a distinct warning,          

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     QQQQ 2000--2001 (2) 

            A) Break-out above downtrendline by the Opening Power has only short-term significance.
                 It should tell traders to expect a some higher openings for a few days
               B) Steep Closing Power downtrendline was broken bringing a rally to the resistance of the
                 falling 50-day ma.
            C) Breakdown below rising Closing Power uptrendline was bearish and a renewed

                 Sell signal, especially as it occurred after an unsuccesful effort to get past the
                 falling 50-day ma.  
            D) Both Opening and Closing Power are declining.  Very bearish. 
            E) Break-out above Closing Power's downtrendline with Opening Power rising is bullish.

                                                                 A          B       C   D                 E
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                       Breakdowns of Tiger Traders' Tool to new lows and below rising uptrends are bearish
                   when the market is topping out or in a steadily falling trend.  See A, B and D..

                                              A                                      B                         C           D
     QQQQ 2000--2001 (3) 
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                       The continuation head and shoulders patterns should have been taken a a sign of further
              weakness ahead.   You can even anticipate these patterns and sell short on the apex of
              the right shoulder or at the red 21-day ma. 

          QQQQ 2001 (1) 
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          QQQQ 2001 (2)   

                         Compare the trendbreaks in the Closing Power with the red Buys and Sells
                     of the Closing Power of its 21-day ma.
  The red signals based on Closing Power
                     garnered a profit of 61.9% over the year 2001.
  Its trend breaks are usually better.

                  A                           B             C       D                                      E                           F
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                      Compare the breaks in the trendlines for the Tiger Traders' Tool with Closing Power
                 signals and penetrations just above. Steep price downtrends often end when the Day
                 Traders' Tool breaks its steep decline.

          QQQQ 2001 (3)
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          QQQQ 2001--2002 (1) 
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          QQQQ 2001--2002 (2) 
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          QQQQ 2001--2002 (3) 
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         QQQQ 2002 (1)
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         QQQQ 2002 (2)
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         QQQQ 2002 (3)
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      QQQQ 2002-2003 (1)
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        QQQQ 2002-2003 (2)
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        QQQQ 2002-2003 (3)
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   QQQQ 2003 (1)
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   QQQQ 2003 (2)
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   QQQQ 2003 (3)
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         QQQQ 2003-2004 (1)
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        QQQQ 2003-2004 (2)
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         QQQQ 2003-2004 (3)
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           QQQQ 2004 (1)
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QQQQ 2004 (2)
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QQQQ 2004 (3)
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            QQQQ 2004-2005 (1)
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QQQQ 2004-2005 (2)
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QQQQ 2004-2005 (3)
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         QQQQ 2005 (1)
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QQQQ 2005 (2)
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QQQQ 2005 (3)
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          QQQQ 2005 -2006 (1)
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QQQQ 2005 -2006 (2)                 
                   See the mildly bearish divergence from November 2005 to April 2006.
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QQQQ 2005 -2006 (3)
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          QQQQ 2006 (1)
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QQQQ 2006 (2)      Bearish Divergence is seem from April 2006 to Augusat 2006.
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QQQQ 2006 (3)
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         QQQQ 2006-2007 (1)
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QQQQ 2006-2007 (2)
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QQQQ 2006-2007 (3)
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QQQQ 2006 -2007 (1)
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  QQQQ 2006 - 2007 (2)
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QQQQ 2006-2007 (3)
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   QQQQ 2007 (1) 
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QQQQ 2007 (2) 
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QQQQ 2007 (3) 
                         The October new high was not matched by a new high by the Tiger
                         Day Traders' Tool.                                                  
                                                                                                         NH not confirmed
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QQQQ 2007 -2008(1)
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QQQQ 2007 -2008(2)

                        Just as the peak in October 2007 did not see an Closing Power
                  new high, the March bottom dod not see a Closing Power new low there,
                  Watch for these divergences and then take the trend-breaks of the
                   Closing Power to take trading positions.

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QQQQ 2007 -2008(3)

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QQQQ - 2008 - through October 30, 2008
          TigerSoft Opening and Closing Power

                                The trend-changes of the TigerSoft Closing Power keep you in position to profit most from
                  the market trends.  The trends that last a month or more and that are well-tested usually
                  bring the biggest price moves.  The breakdown in September below the Closing Power's horizontal
                  support proved especially significant.  Watch closely for these.  Don't be afraid to take a
                  modest loss.  It will often prevent a huge hit!. 

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TigerSoft Day Traders' Tool
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