Outlook for the Week 12/22/14

The QQQ has been chopping around as of late and the last two weeks have taken us on a ride. The downward drop has been a bit less severe than I had thought, and the bounce back has been sudden, which shows that the bulls are fighting with the bears.
But what will the outcome be for the week? How is one supposed to trade? Lets take a look.

First, lets look at the weekly chart of the QQQ which will show us the underlying mechanics of the market as it shows us what is going to happen in the next 2-3 weeks.

There is a strong tell in this chart, look at all the places I circled. Every circle shows that daily's trading pattern of a candlestick with a long tail on the bottom. This showed to be the bottom point of each pullback before the stock rose again in its upward trajectory. Currently this is where we are at, So now we know what the foundation of the QQQ is currently telling us and lets apply this knowledge to the daily chart, which is going to tell us what the QQQ is going to be doing over the next several days:

In looking at this chart we see a particular situation happening here. During the last dip last week, the RSI dropped all the way to the bottom of the indicator, yet the MACD did not...its kind of hanging near the top of its range.
What this does in seeing this, the weekly and putting it together with the daily chart gives us timing.
We now know a couple of things:
1. The market is going to chop a bit, but overall its going to climb.
2. It however, is not going to climb that much and it is going to peak in 2-3 days then chop
3. From there it will attempt to ghost the cieling and then have a smaller correction as the MACD is compressing.
So how to trade this? Nothing long over 2-3 days. Dont short anything yet because there is going to be a bit more up coming over the next day or two. Pretty much at this point you might want to profit take over the next day or two and then pack it up and enjoy the holidays.

Happy Holidays
Mark