The 5 wave pattern did not complete in the Qs. Instead, the Qs rallied in 3 waves into the close. The Dow and the SP500 did appear to complete 5 waves down. This leaves us with differing wave counts for the Qs and the Dow and SP500. With RIMM disappointing after hours, lower prices are likely. The question is whether or not one more 5 wave move down in the broader indexes will complete the pullback. The Qs may require at least another 3 wave move down. After those moves complete we can look at the subsequent rally to get a handle on whether or not the correction will extend.
If you are long RIMM tonight, the question is how to handle it tomorrow morning. You could just sell on the opening and be done with it, but oftentimes it pays to give a stock like RIMM 15 to 30 minutes to settle out. Then a stop can be placed below the opening range low. Sometimes the stock will recover and you will have avoided being unnecessarily stopped out. The most important point to decide ahead of time what your are going to do and stick with it.
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4 comments:
Do you have any theories on why the 20 & 50 dma's were of so little use since March for the stk mkt indices ?
If you're meaning a support for pullbacks, I think because the rally has been sharper and stronger than most expected.
From a pure trend following perspective, they have been bullish since March and remain so.
"...because the rally has been sharper and stronger than most expected" would definately apply to the 50E or 50S but hardly to the 20E or S.
If anything, breaking the 20d was a contrary sign or trap. The only expalanation that i can come up with is it's "common knowledge" (overuse) that 20 & 50 are the MA's most often used under 200d.
The mkt trended very well, but neither 20 or 50d's adequetely described the trend...ironically, too, despite so much algorithmic trading.
It would be helpful to me in understanding you first question on the 20 and 50 dma's if you could give me an example where you think they were most useful.
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