🟨 Ned Davis: QQQ/QQEW Bearish Stance

Hello Traders,
Today, we're taking a look at the 63-Day QQQ-QQEW ROC% Spread Indicator. This unique tool provides us with a perspective on the momentum difference between the Invesco QQQ ETF (QQQ) and the First Trust NASDAQ-100 Equal Weighted Index Fund (QQEW) over a 63-day trading period. Credit for this study goes to Ned Davis Research (NDR), who provide quality institutional research. With my recreation, we now can use it for TradingView.

USE THE INDICATOR FOR FREE IN YOUR ANALYSIS HERE -

Currently, the indicator reading stands at 970, which is above the threshold of 600. According to our backtested data from 2007 to present, this suggests a bearish stance for the next 63 days.

Here's a quick breakdown of the backtested results:

👉When the indicator is under -600, the forward returns are 2.0% over 10 days, 3.1% over 21 days, and 9.4% over 63 days.
👉When the indicator is between -600 and 600, the forward returns are 0.6% over 10 days, 1.2% over 21 days, and 3.6% over 63 days.
👉When the indicator is above 600, the forward returns are -0.1% over 10 days, 0.8% over 21 days, and 0.2% over 63 days.

💡As you can see from the chart, the indicator sits at the bottom, and the Relative Strength of QQQ vs QQEW is at the top. The thresholds of 600 and -600 serve as clear turning points, providing valuable insights into potential market shifts.

Given the current reading, our analysis suggests a cautious approach for the next 63 days. As always, it's important to use this tool as part of a comprehensive trading strategy and consider other market factors before making any investment decisions.

Stay tuned for more updates and happy trading!

(Note: This analysis is for educational purposes only and should not be considered as financial advice. Always do your own research before making any investment decisions.)