Thursday, September 16, 2010

QQQQ Tee Complete

On the above chart I have drawn two momentum based Tees. To draw a Tee the MACD must break out above it's trendline, preferably from a rising bottoms pattern. The Tee is formed by drawing a vertical line at the higher momentum low and a hortizontal line from the previous price high symmetically about the vertical line. In some cases there may not be a higher momentum low, but a definite low in price is formed. In those cases, just draw the Tee from the momentum low.

We have fulfilled the time projection from the July low based on the above Tee. I suspect that the market will continue higher into next Tuesday, 9/21 before some sort of top forms. It may be a short term top or an intermediate term top. The Qs have reached significant resistance at the Keltner channel and the parallel channel for the rally. We are at another crossroads. A strong breakout above the currently for parallel channel would create a bullish base channel that would project significantly higher prices. On the other hand, if the market tops in the next few days and falls to the lower channel line, then a lower correction low would be probable. I believe that will be the case.

I've also shown a larger potential momentum Tee. It could fail or project a lower high after an intermediate top. It's significance will not become evident for some time.

The McClellan Oscillator is already forming a negative divergence, and the small caps continue to lag. Volume has remained muted, which is surprising during the month of September and it suggests that this is a B wave rally as has been suggested since July. It would have been nice if the triangle pattern had played out, but we have to take what the market gives us, and for now, it looks like a double zigzag.

RIMM beat its lowered earnings estimates handily, but after a sharp $4+ pop after the earnings report, the afterhours price is now only up $1.31. The pattern suggests at least a retest of the August low will be seen, and if the market does top out, the March 2009 lows will be next.

MA popped as expected based on the wave count. It should hold its recent low after a pullback and then rally into the end of the year. Thereafter, I expect more selling.

Oil looks ready to extend its decline. A move below 72.63 should accelerate the selloff.

Negative divergences have formed in gold. However, we will either see a sharp pullback or a strong breakout to much higher prices. It really could go either way here. The key will be the Dollar. It looks as though it may make another low for the recent decline, but then turn higher. This should put the breaks on gold, silver and stocks.

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