NASDAQ Composite Signaling a Turn Lower?

There is no denying that the above chart is at the very least saying its time to be careful being long Tech stocks. Both of these charts use a 13 and 39 day simple moving average as an indicator, and both have crossed over. The chart on the left is signaling a sell signal is the NASDAQ Composite and the chart on the right is ProShares Ultrashort QQQ a leveraged and short (also called inverse) Exchange Traded Fund (Ticker: QID) which is signaling a buy signal. By buying the fund you are effectively shorting the QQQ with leverage.

The 13 and 39 day simple moving averages are used as a basis of many trend following systems, used to manage many billions of dollars. These signals do head fake and reverse often, just as U.S. Oil ETF (Ticker: USO) recently did, so caution is always warranted. The markets often give confusing signals at major turning points and its easy to be in a state of denial and give back hard won profits.