I think QQQQ will reverse here. By that I mean the medium-term correction is ending, and will be supplanted by either a sideways consolidation with choppy movement up, or more likely, a resumption of the methodical uptrend that began in 2003. I anticipate the slope of this uptrend will be modest at first, and this will help keep people fooled.
Today's volume was pretty decent, and a narrow-range candle formed in an area of solid long-term chart support with QQQQ closing up just $0.01. That candle has a taller shadow on top than I would like to see, but is still consistent with reversal. Acute BB contraction has now been fully resolved, as QQQQ blew open the lower BB rail to the downside as I had predicted a week or so ago.
stockcharts.com[w,a]daclyyay[dc][pb50!d20,2][vc60][iLyb20,2.0]&pref=G
The technicals are oversold and starting to show buy signals that stochastics have not yet confirmed:
139.142.147.218
I expect confirmation tomorrow, or the next day at the latest. The faster stochastic setting looks very close to confirming a buy signal (below).
139.142.147.218
If you flip between these next two long-term weekly charts, you will see that the regression channels formed by the medium-term correction and the long term trend have now met at the lower rail. It doesn't make much difference how you set the regression channel duration for the medium-term trend, the lower rail ends up in about the same place:
139.142.147.218
139.142.147.218
Both today's volume patterns and the intraday chart suggest a bit of downside at the open tomorrow:
139.142.147.22
I expect that will be followed by a rally in pretty short order because the TICKs are rising, the TRINs are falling, and the volatilities are falling after a tremendous run up.
Furthermore, the CBOE put/call spiked at over 1.40, which is the highest reading in over 3 years. That indicates excessive bearish sentiment, which is characteristic of market bottoms. I have been waiting for this, and how it has happened.
I don't see significant additional downside here. I am long now, and will commit my entire cash position tomorrow as well.
In short, virtually all indicators point to the same conclusion: the end of the medium-term correction is taking place right here.
T |
