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The major indices are currently at very critical levels and the market is now perfectly set up to make a decisive move, one way or the other, on the employment report today. The NASDAQ and QQQQ (click the symbols for my annotated charts) have already broken out of their upper trend lines of this correction and the S&P500 continues to flirt with breaking that same upper trend line which coincidentally happens to be right at the 200-day moving average. The trend line, in my opinion, is the single most important technical indicator with any consistent predictive value. All the other indicators simply suggests how a particular leg up or down in the market might take shape. Remember, the trend is your friend.

QQQQ (Nasdaq 100 ETF)
Two main indicators are suggesting that the QQQQ might have already bottomed and how we close tomorrow will tell us exactly where the QQQQ is likely headed.
(1) Upper Trend Line Breach: If you look at the chart below, you'll see that yesterday the QQQQ had broken its upper trend line. In the previous 5 corrections this year, the day the QQQQ broke its trend line, was the day the market bottomed and was in fact the day that the markets broke out into a new and powerful rally. A break of a trend line is a very strong predictive indicator and I think the action in the QQQQ yesterday is telling us that it wants to move higher - that its ready for a summer rally.
(2) MACD Positive Convergence: Positive convergence on the MACD of the QQQQ have tended to occur a day or so before the market has bottomed. We got positive convergence on the QQQQs Wednesday and follow through yesterday.
Ok, so what what we need to see now is a strong up day and close today on the employment report. If we get a big up day, I think that is conclusive evidence that the market has in fact bottomed and a new rally has just begun. So it's do or die time for the QQQQ.
If we get a major sell-off on the employment report, I think that will probably lead to a very weak, short-lived and shallow leg down. We could see maybe a double bottom on the QQQQ but on this particular 3rd leg down (if we have one), I view it as a buying opportunity rather than an indication that the breadth and length of this correction is still in question. However, if the markets do in fact rally on the employment number, that should be enough evidence to suggest the market has bottomed.

The S&P 500 Index
The S&P 500 has not clearly breached the upper trend line in the same way we're seeing in the NASDAQ and QQQQs. Yet, we have a large enough of a breach to raise major concern for the bears here. If we see a rally today on the employment report, there seriously cannot be that many technitions who wouldn't say that this correction is over and that we've bottomed. A strong breach of the upper trend line and the 200-day moving average on employment is a decisive end to this correction and presents with a relatively strong buying opportunity. The MACD on the S&P500, like the QQQQs and NASDAQ, has recently (1-2 days) turned positive and it appears we're set up for a climax employment report.
The Dow-Jones Industrial Averages (DJIA)
The DJIA is still trading within its downward channel which is actually relatively normal. The market leaders tend to take directional moves in the market before the Dow and I expect some leadership in the S&P500 before the DJIA heads in one direction or the other. However, the DJIA continues to bounce along its lower wedge line which is a good thing for the bulls as this tends to suggest that there's some floor under this market.

If the markets do in fact bottom today with a strong employment report and if we get a good rally going for June and July then it can very positively impact individual names such as Apple (NASDAQ:AAPL). Apple is the big winner in this correction as it has shown tremendous resilience against major market headwinds.
In the past, when we would see a major correction in the markets, Apple would tend to fall much harder than most other stocks as market participants seemed to always jump at the opportunity to dump its biggest winners. That didn't happen this time around and it should be viewed as very positive for Apple.
How Apple acts in response to the release of the iPhone will be very telling for the direction it will take this summer. If Apple investors resist the urge to sell on the news of the 4G iPhone release next week, we could see Apple hit $300 just before or after July earnings provided that we do in fact get a good summer rally.
Bullish Cross Accurately Predicted the May Correction: In April, using the same technical indicators above, I accurately called for a major correction in May. This call was published at Fortune by Philip Elmer-DeWitt on April 26 which happened to be the top of the market. You can read this comment here.
Source: Do or Die Time for the Markets