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Strategies & Market Trends : Ask Vendit Off-Topic Questions -- Ignore unavailable to you. Want to Upgrade?

To: MJ who wrote (4792)	2/10/2005 12:22:41 AM
From: Walkingshadow	Respond to of 8752

Hi MJ, Believe it or not, I never gamble. I hate Las Vegas. I have never bought a lottery ticket. No interest at all in poker or blackjack. True story. If Doug insists, I sometimes will participate in a Super Bowl pool, and that's about the limits of my gambling career <ggg>. Anyhow, what I posted over the weekend regarding the lower target for QQQQ was subject to change because the lower BB rail and 200 sma that define that first target zone fluctuate from day to day. So currently, the lower BB rail sits at 36.35 and the 200 sma is at 36.24---within $0.11 of one another. stockcharts.com[h,a]daclyyay[dc][pd20,2!b200!f][vc60]&pref=G So that's the first and most likely reversal zone: $36.24 - $36.35. If that support fails, $35.00 is the next lower long-term chart support where reversal would be extremely likely. I cannot see QQQQ breaking support there (other than possibly a brief intraday spike). So how are the volume patterns shaping up? Today there was considerable supportive volume generated but the market mostly did not react----yet. AAPL's chart shows what I am talking about pretty graphically. 139.142.147.22 You can see a moderate surge in volume as AAPL traded down in the morning, and this volume peaked at about 10:30am. That stopped the decline, and AAPL reversed modestly for the next hour. Then in the afternoon, AAPL dropped precipitously, and generated a huge spike in volume between 2 and 2:30pm. But this only stopped the decline; normally, such a volume surge will cause a stock to reverse and rally. So AAPL has not yet reacted to this supportive volume, raising the distinct possibility that it will react tomorrow and rally. In other words, the freight train is taking on coal. The chart for AAPL is a more pronounced version of what happened with QQQQ. In the case of QQQQ, the supportive volume generated happened at the same time in the morning, but the pattern in the afternoon was a bit different. Still, it is basically the same thing on a smaller scale---there was significant supportive volume generated that QQQQ has not yet reacted to. Two things dictate the strength and persistence of the subsequent reaction: the delay in processing and reacting, and the magnitude of the volume pool. You can easily see that with QQQQ this is more modest compared to AAPL: 139.142.147.22 By the way, this pattern (AAPL vs. QQQQ) is pretty typical of what has been happening over the last 6 months to a year. That is why, as I posted last night, AAPL has less volatility to the downside, and much stronger moves to the upside compared to QQQQ. That explains why AAPL never corrects very far down (usually mostly sideways)---when it moves down, it generates huge spikes in supportive volume that stop it in its tracks, and usually cause a rapid reversal and rally. That's what makes it a freight train. So similarly, I think there is a good possibility that we will see the markets react tomorrow (i.e., rally and probably finish the day in plus territory), but it will be a moderate reaction if it occurs. AAPL will respond more vigorously than QQQQ because the degree of supportive volume generated by AAPL is much more than that of the general markets. The take-home message here is that the market is generating a healthy amount of supportive volume in rather orderly fashion as it corrects. It must generate substantially more before the long-term uptrend can continue, but it now looks to me like that will happen sooner rather than later (assuming the pool of supportive volume continues to expand, and that appears very likely now). That's one reason I think the first price target will hold, and QQQQ will not retest long-term chart support at $35. Things are shaping up very nicely. T