Order Of Magnitude
The weekly chart of QQQ
continues to stand out in my work, specifically as it relates to
symmetry of these countertrend rallies. Since Dec. 8, 2001 we have had four rallies (including
this one). Each rally was 5 to 6 points from low to high. That price action
has created a steep downtrend and has also created a symmetry resistance zone
that ends around 26.00.
I refer to this first resistance zone as Magnitude 1.
This simply means that we continue to rally in increments like the previous
rallies in this immediate trend. However, if QQQ clears this price zone then
the next symmetry zone is up around 38-40.00. I refer to this as Magnitude 2.
If the current downtrend is broken with a higher rally, it is quite often that
a stock or ETF will rally to the second magnitude of countertrend rallies. What
is even more mind-numbing about this scenario, if it really does come to fruition,
is that this move from 20 to 40 (100% rise) would all be in the context of a
bear market decline. Obviously we are a long way from that point, but again,
we need to consider the possibilities and keep an open mind.
Why was the skeleton afraid
to cross the road?
It had no guts…
Oh man, I crack myself up!
Happy Halloween