Buying Opportunity

This week's pullback in the Nasdaq 100 QQQQ and the Russell 2000 IWM is a buying opportunity. The 15 dema crossed up the 30 dema on 8/11/08 and these markets are now pulling back to support at the 30 dema. The Qs are also sitting at support on the 200 dema and the 50 dema while the 50 dema is about to cross up the 200 dema. A simple entry trigger would be to buy above the last two days high, currently at 47.59 in the Qs and 73.83 in the IWM.

Sentiment as measured by various gauges has not yet reached an overbought extreme, and the negative drumbeat on the financials continues to keep the pessimistic mood alive. So, not only do bulls have sentiment on their side from a contrarian point of view, but the upswing in the 22 week cycle (second half of the 10 month cycle) has not yet peaked.

The lagging performance of the SP-500 and the Dow 30 cautions that once this rally is over lowers prices will be seen.

Targets are 51.47 for the Qs and 79.84 for the IWM.

As a side note the volatile VLE system has not yet given a sell signal with this pullback.