Possible scenarios for this week.
It appears as though we're in wave 4 of wave 3's wave 1.
Translation: The corrective wave we're seeing should end in the .333 (2125) to .382 (2117-2118) range.
It looks like there's been 4 of the 5 corrective waves, and may be another wave down Thursday morning to test those two Fibonacci support levels. If the NASDAQ breaks 2133-2135 (.500 retrace of 2125-2148-ish), than there should be one more 5 wave corrective wave down to test the 2117-2118 level. If it bounces hard off of 2133-2135, than wave 5 up should develop, but it's likely to be 2118.
Wave 1 was 105-110 points, Wave 3 was 160-170 points, so wave 5 should be the same length as wave 1, which is the 105-110 points up.
I'm looking at 2228-2233 as a short term top, which would mean a retest of 2100-2105 (1974-2233). But if we get to 2233, that would be significant, because that would break the .618 retrace of 2193 (2328 to 1974), and after the re-test of 2100-2105, the NASDAQ could slice right through 2328 to 2380 and go right after 2500.
If these scenarios play out according ot plan, the NASDAQ could really explode this month, going as high as 2800-3100.
Of course, if the charts break down there would be a retest of the lows. Not the 1974 low, but the 1619 low but that's a very very remote possibility.
I'm considering buying July calls on RFMD, QLGC, EMLX and BRCD, the 4 stocks with the best charts and best percentage gains on the NASDAQ.
QLGC could extend huge, but there has to be a test of 56 (QLGC shot up from 46-47 to 66-67 if you weren't looking!!), if there's a huge bounce off of 56, the sky's the limit. Same with BRCD and EMLX. Those 3 stocks have really got something cookin'. All 3 got large extended bullish waves up last week, and could be a sign of things to come.
But my favorite is RFMD. The chart is OUTSTANDING, and watching the activity on it, every .382, .333 and .500 test has been met with MASSIVE buying. Huge block buys flying by, like this morning. RFMD tested the .382 level of 24.80 and bounced HUGE. If the first wave up was 28-29 points, RFMD could go straight after 41 and 50.25 (Fib retraces of .382 and .500 of 91 7/8, all time high, to 8.75, 52 week low) as soon as option expiration week this July. The relative strength and institutional interest is off the scale. The news with QCOM and NOK could be really really good news for RFMD. Like I said earliler, this stock feels like QCOM did in early 1999, and the two stocks go hand in hand for the future of 3G. I have to admit, I'll NEVER short this stock again, last Friday I got my ass handed to me, mostly because the NASDAQ got fouled up, and I couldn't read the wave charts. The dips on RFMD last literally seconds.
The calls on RFMD are dirt cheap over 30, and I'm strongly thinking about scooping some up. There really isn't a chart better than RFMD's. (Apart from KKD)
Basically, a break of 2193 is pretty significant, and could herald one massive summer rally. |
