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.
Posted by R. Craig Pritchard at 1:40 PM