The intraday QQQQ-SPY spread

By Thom Hartle
The article “Index vs. Index: The QQQQ/SPY spread” (Active Trader, September 2005) introduced a trading strategy for the S&P 500 tracking stock (SPY) that used the momentum of the QQQQ/SPY ratio to pinpoint bullish or bearish conditions. This article examines some recent examples of the strategy and creates an intraday approach built on the same concept.

The technique is based upon momentum, or the rate of price changes over a specific time period, to identify bullish and bearish trends. Let’s begin by reviewing the concept of momentum and how it can reveal the trend’s potential direction.



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