A False Breakout in the QQQ Might be Forming

Image of caution tapeFrom Gary Savage: Big money may be counting on retail investors to buy the Nasdaq 100 this week so that they can unwind their positions, in a classic “false breakout” scenario.

Remember all those analysts that have been telling us the market was about to crash? Well, just like I predicted, the Nasdaq is now testing the all-time highs.

Beware of a false breakout early next week. This is how big money gets out of a position. They create a breakout and then sell to the clueless retail traders that buy the breakout. Buying breakouts rarely works in modern markets.

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The PowerShares QQQ Trust ETF (NASDAQ:QQQ) rose $0.20 (+0.17%) to $116.98 per share in premarket trading Monday. The largest ETF tracking the Nasdaq 100 index has gained 4.4% since the start of 2016.

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