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Strategies & Market Trends : Playing the QQQQ with Terry and friends. -- Ignore unavailable to you. Want to Upgrade?

To: J.K. who wrote (257)	5/19/2005 11:48:07 PM
From: Gush	Respond to of 4814

You make some good points. I'd like to see max pain prove it's value tomorrow, ya never know. Peace brutha, Gush

To: J.K. who wrote (257)	5/21/2005 2:08:34 AM
From: Walkingshadow	Read Replies (2) \| Respond to of 4814

Hi JK, RE: <<Terry has made the point that the SOX should be leading this rally, which it has; now maybe we'll see if it leads us down, or if the broader market jumps in to help lead us even higher.>> I think this gives us a clue just how strong this rally is. On the daily chart of the $SOX, you can see that the stochastics are clearly in relatively overbought territory: 139.142.147.218 So, at first glance one might think the stochastics would have to cycle back to below 20. But I don't think this is going to happen. They will cycle back down, but "overbought" and "oversold" are in the process of being redefined for the $SOX (and the indexes as well). So they won't get close to 20, but will reverse at 50 or 60, maybe even 70 (we'll have to wait and see, but Williams will tell us when the stochastics are about to reverse). Why do I think that? Look at the weekly chart: 139.142.147.218 Now draw a line across the two most recent stochastic peaks. Also draw a line across the two peaks in Williams. Note that these lines are downsloping, and reflect the correction that began in December and ended just 2 weeks ago. Both of those trendlines will now be broken to the upside. The next peak in stochastics on this chart will be above that trendline. If you ballpark those charts, I think you'll agree that in order for this to happen, the $SOX will have to continue what has already been a tremendous rally, and also that this will easily carry the $SOX right through the chart resistance at $445 that turned back the $SOX in December and again in February. Now, I think the $SOX must take a breather and pull back a bit on the daily chart, but the weekly chart tells me that will not be much of a pullback, because the pullback/breather has to occur in such a way that the upwards momentum in the stochastics on that weekly chart cannot reverse---until that downsloping trendline is broken to the upside. So why am I posting about the $SOX? Because the fortunes of QQQQ are inextricably linked to the fortunes of the $SOX. If the $SOX is rallying, then the rally in QQQQ will be strong. This weekly chart now tells me that the $SOX is very likely to blow right past $445. That means there is nowhere to go from there but up to test the next resistance (although there could first be some consolidation above $445). The next resistance is $490: stockcharts.com[w,a]waclyyay[de][pf][vc60][iLg!Lp14,3,3]&pref=G By that time, the stochastics will be ready to reverse, so that resistance might hold, at least for a while. But it will take a while to get up there, several months probably. During this time, QQQQ will be rallying strongly as well. THAT process will allow QQQQ to easily reach my projected end-of-year target of +20% over the lower support levels by the end of the year, and in fact that will probably happen around September or thereabouts. So.... once again, we have a golden opportunity here, and the place to be in the medium and long-term (I am not talking short-term trends here) is long this market with every single penny you can find. T