Tuesday Nov 23 2010
The fourth wave is in progress in stocks. Note that Wave Two was down sharply, so Wave Four is likely to be a sideways affair. We expect this to last until mid December.
Meet the new IBM. AAPL is 20% of the QQQQ, which is a big reason the QQQQ refuses to go down. Apple has already sold 7.5 M iPads since its April introduction and is expanding production facilities for many more. And unlike Dell, none of them are heavily discounted at Wal Mart. We see there may be some sales at $399 for the upcoming season but still….AAPL is working off its overbought condition by moving sideways.
The head and shoulders formation projects 1220, which is about the 200 day MA. This is quite realistic, as gold and silver have risen too far above those respective MAs. This is setting up a buy and a final blow off in commodities in early 2011. The low here should coincide with the near term high in bonds and the US Dollar. This is why we targeted December 17, options expiration as an exit date.
Our entry into TLT and IEF is working very well; TLT is overdone on the hourly chart, which may allow us to add more on a pullback early this next week. We will have more to show you this weekend as commodities and stocks set up for a real fireworks fifth wave display into 2011.
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