Wednesday, April 20, 2011

QQQ MACD Buy Signal Confirmed

The QQQ MACD buy signal triggered today.  This is a valid signal.  Given the strength of the futures in the pre-market this morning and the strength throughout the day there was no reason to wait until the close to go long.  I am long the QLD from 91.00.  There will probably be some more testing of lower levels before the Qs and SP500 clear the February highs, but the Dow has already closed at a new rally high, which is confirmation enough.  The main thing now is just not to get shaken out.  My stop on the QLD is 83.30, the wave [ii] low.

On my April 2nd post I showed a chart of Biogen - BIIB ( as an example of why I did not think it was likely we would be seeing primary wave 3 down any time soon.  Today BIIB closed at new all time highs confirming a powerful 3rd of a 3rd wave that has likely begun a multiyear run.  Even if we count the 10 year long triangle as a 4th wave instead of a B or X wave, the expected duration of the 5th wave thrust would be around 3 years or mid 2013 for completion.  Of course there will most likely be a retest of the old highs, but given the duration of the consolidation that should not be a worry.  It would take a monthly close below 77.65 to change my outlook at this point.  I am long from an average price of 56.69.  AMGN is lagging in the group but the pattern is very similar.  I expect it will follow suit in due course.

Given AAPL's afterhours performance the Qs are breaking above the March 3 swing high this evening.  I would not be surprised to see a test of the February high tomorrow.  Expect a pullback and then an acceleration in wave (iii) of [iii] in May into early June.  Waves [iv] and [v] should finish up in June which could lead to a more extended correction in wave (4) going into the fall depending on the degree of trend.  This rally could subdivide beyond current expectations if we break solidly through 1370 and 1400 on the SP500.

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