With so many media pundits talking about an imminent bear market, I think that sentiment may be too pessimistic. The QQQ is now in its 4th day of its new short term up-trend and it closed the week back above its critical 10 week average. The latter is a very significant development for me.
Furthermore, AAPL is holding its recent post split announcement gain and looks like it is getting ready for a large move. Its Bollinger bands are forming a pinch, reflecting its recent consolidation. It will likely break big one way or the other, and I suspect it will be up. Why? Because with an imminent 7 for 1 split, it will trade in early June around $85 per share. A lot of people would like to own 100 shares of a cheaper AAPL and it does not take long for a stock to move from 85 to 100. The funds will also likely buy it in June in preparation for end of quarter window dressing. If AAPL has a quick pop to $100, the stock will be back to the pre-split $700 per share. Think what that will do to the QQQ which is heavily weighted with AAPL!
The daily GMMA chart of QQQ shows that the ETF may be moving up out of its recent base. Click on chart to enlarge.
The consolidation is evident in the fact that the shorter moving average (red lines) have all converged above the longer term averages (blue). The dotted line, which indicates QQQ’s daily close, is now above all of its shorter averages, potentially leading them higher.
Note also AAPL’s similarity to QQQ in this enlargement of the daily Guppy chart for AAPL. AAPL looks stronger and is also breaking above its shorter averages. AAPL has the strong RWB rocket pattern on its daily and weekly charts.
With AAPL showing strength and the QQQ short term up-trend about to reach its 5th day on Monday, I am starting to accumulate TQQQ, in anticipation of more upside to come. but I always have one foot out the door in case my positions weaken.
Meanwhile the GMI is at a neutral 3. IBD also still sees the market in a correction. That could all change if we get a high volume follow through day this week.