Thursday, June 25, 2009

Possible Outlook For The Qs


Today's action, so far, increases the likelihood that the Qs are in a double zigzag correction from the June high. This means that the flat correction interpretation is now a low probability and it is quite likely that the Qs will only test the May lows or stay above them. The above chart shows that the Qs are rising to a test of the broken trendline. The measured move target for this move up from June 23 has been met, although the Qs could go a little higher. The measured move downside target is now 33.85 for the entire correction. Normally, we would expect the MACD to at least test the zero line, but it is not a requirement.

I think it would be premature to say that today's action is a resumption of the uptrend. However, if the Qs fail to take out the June 23 low over the next several days while trading sideways, we might conclude that a breakout to the upside was imminent. If the Qs make a new high in the next few days, then we should expect that a flat correction is underway and a retest of the June 23 low would follow. Only a breakout on significant volume would alter either of these views.

The Dow and the SP500 are only testing the previous June low at this point, and once the test is complete can be expected to resume the correction.

Of course, the big money can be expected to do everything possible to keep this market up until th end of the quarter.

4 comments:

dave said...

"However, if the Qs fail to take out the June 23 low over the next several days while trading sideways, we might conclude that a breakout to the upside was imminent."

The "next several days" still falls within the 2nd Q's ending bias to not go down. Isn't a fairer test of the mkts INABILITY to break down after the 2nd Q ends ...first week or two of July ??

Regards,
dave

R. Craig Pritchard said...

I would agree with that. It is definitely beginning to look like this market will hold up through June 30.

If it does break down afterward, we should see a low by July 10+-.

I had not realized how close we were to the end of the quarter with only 3 days left. (Time flies.)

My original thoughts were that the low would occur before the EOQ, followed by a resumption of the rally, but clearly that was wrong.

dave said...

Think we could be very choppy til end of June. Crosscurrents that you have already discussed & alluded to.

However, Q's backtest of broken uptrendline & SPX H&S top are the bigger picture. Btw, my experience has been that future direction is easier to determine than how far that direction will take us.

An African-American friend of mine told me that when he was in the Air Force, he thought that he was leading a small group to discuss a grievance only to look behind himself & see that no one was following him.

Regards,
dave

Regards,
dave

R. Craig Pritchard said...

In regard to the test of the broken trendline, I have done a median line (Andrew's Pitchfork) study to the Qs, and the last two daily closes have been right on the median line from November 21 through the Feb/Mar swing points.

The bottom channel of the Pitchfork is at the Jan/Feb highs at the moment, so the outcome of the current swing is crucial.

Thanks,

Craig