Saturday, June 27, 2009

An Elliott Wave In QCOR


I first noticed QCOR back in September 2008 when it showed up for several weeks as the top relative strength stock in the Russell 3000. As market conditions improved, it fell out of the top spot, but I have a hunch that QCOR may be under stealth accumulation, and I have been slowly building a long term position. If QCOR breaks out to new all time highs, it will likely move up dramatically to 25 and possibly higher.

The recent low in May may mark the completion of a large 2nd wave flat correction (not shown). Since then QCOR has traced out a nearly perfect impulse wave with 5 clear non-overlapping waves, a flat correction and a triangle. Wave 3 also clearly subdivides into 5 non-overlapping waves. This may be the beginning of a powerful 3rd wave. If so, the critical level is the May low, which must not be breached. After the current 5th wave is complete, we would expect a 50% to 61.8% correction of the move up from the May low, which would provide a low-risk entry point to initiate a new position or add to an existing position.

Given that waves (1) and (2) took almost two years to complete, wave (3) may take one to three years or longer, so this definitely has the potential to be a long term position with significant upside potential. Intermediate term traders can simply trade for the next rally after a correction, which may approach the all-time high around 10.

Please do your homework before entering a trade, and as always, use appropriate position sizing and risk management.

2 comments:

dave said...

Craig, i am posting this comment here because it is your most recent post, but it is not in response to your post.

Step back & take a look at a potential really Big Picture & a pox on both of our houses.

There is a potential S&P500 H&S top forming to the March rally. If so, we would face an agonizing trendless July forming the right shoulder (left shoulder May 09).

That H&S top would then break in the fall to bring us down to form a very large scale potential inverted H&S bottom (left shoulder Nov 08; head March 09).

Both of the above would fit seasonal stock market trading & indecisive low volume trading.

Regards,
dave

R. Craig Pritchard said...

Dave,

Please see my post of June 26 on the Dow head and shoulders top. This could play out, but until we see conclusion evidence to the contrary, I will be working under the premise that the post election year cycle is in force with a high in August+-.

The key is not so much the current correction, but the extent of the subsequent rally, that will tell us how severe the fall selloff may be.

At least that is how I am viewing it at the moment.

As always, I am trading from what the market is doing, while speculating as to what it may do.

Thanks,

Craig