Looking at QQQQ volumes, the short-term charts suggest further upside of about a week or less is a possibility. The long-term charts are very bullish, and indicate the foundation of a bull market is forming. But this is a long-term (multi-month) process. The medium-term charts are all quite bearish.
Taken together then, the picture that emerges from this perspective is that we may see more upside over the next few sessions, but the medium-term (more than one week up to 6-9 months or so) is very bearish, and most consistent with a medium-term "correction". In the long-term (1 or more years), things look increasingly bullish.
So my interpretation is that we will see a pullback that either has already begun, or will begin shortly. That pullback will very likely take QQQQ to a new low below $25. We could flounder around these low levels for a while to rip the remnants of bullishness out of this market, and create capitulation. That, in turn, would be the final bottom that would begin a long-term bull market again.
When the put/call is spiking to extreme highs, and the news is filled with stories of "yet another rough day on Wall Street" and film clips of despondent traders with their heads in the hands, and everybody you know is disgusted with stocks and wants nothing to do with the market, and the financial press is talking about the best CD and bank savings account rates and how to preserve your money during hard times and how to be sure a bank will remain solvent, THAT is the time to throw caution to the wind, break out all the dry powder you can find and throw it into the markets.
So now there are indications from multiple perspectives of the same thing: imminent pullback, probably eventually reaching new lows below the March 9 lows. This will probably last through August and could well last into October. But I expect by November, the bottom will be behind us for good, and we will be in the initial stages of another bull market.
I can't say what that bull market might look like really, but I think it will be different from those of the past 10 or 15 years; these were very atypical. My guess is that it will emerge stealthily, and will not show its intentions by immediately charging forward very strongly. Rather, it will probably hover here and there, and look undecided, while it gradually drifts further and further upwards. This will be enough to keep most people fooled, and hesitant. Then, by the time people begin to wonder if we might have already bottomed, we will already be up significantly from the lows.
All IMHO of course,
WS |
