QCOM illustrates how the bottoms will tend to play out for most of the AI tech stocks, for if you are not already invested then you will likely end up waiting for the second chance to buy near the bottom all the way towards new all time highs. For instance I would be surprised if we see anywhere near $118 on Qualcom again, I may be wrong but I am assuming there are a lot of investors now wishing they had bought near $120 and are thus eager for another bite at the cherry.
The higher the current Qualcom price swing travels then the higher will be Qualcom’s next swing low. Of course there is the chance of a lemmings induced panic event that results in the so called CAPITULATION, as if CAPITULATION is a magic word! Abracadabra the bottom is in! Yes, maybe in hindsight after stocks have bottomed and rocketed higher, which is the problem with technical analysis in that it tends to be EXCELLANT when used in hindsight, but the present is always deemed to be a near coin flip, i.e. so called analysts nearly always resolve in that the market form where could go either higher or lower. That’s what TA delivers, a COIN FLIP going forward but which is crystal clear in hindsight! Instead there needs to be a road map of sorts against which one can at least have a measure strength or weakness without the benefit of hindsight.
Late last week the S&P briefly managed to nudge above 4000 before closing Friday at 3962, which as of writing is where the S&P futures remain little changed pre open. The bear market rally is now getting a little long in the tooth and so despite setting a new swing high it clearly does not want to go significantly higher ahead of Big Tech earnings, FED Meeting AND Q2 GDP data, so a busy and probable volatile week ahead.
In terms of the impact of earnings (see below) the stock market should see the bear rally continue early week, probably into Wednesday to deliver close to my S&P target of 4080, after which the market is going to be buffeted by earnings and economic data with likely Thursday and Friday being rough days for the market following release of what I expect to be BAD Apple and Amazon results that will act as fuel to deliver the next swing down, unless both stocks deliver positive earnings surprises (which I doubt).
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By Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem’s forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook’s in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
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