Happy holidays everyone!
Last week I mentioned that the negative sentiment would likely lead to an upwards bounce in the near term, but quite the opposite happened. At least I’m still correct on the longer term bearish call.
QQQ (Nasdaq) has broken the February lows on high volume – a very bearish sign for the medium to long term. I expect QQQ to work its way to the next support level near 135. Also, we are now officially in “bear market” territory since QQQ has dropped over 20% from the recent high.
SPY has also sliced through support (February lows) on high volume. Last week’s trading idea would have had you stopped out at 255 for a small loss. The next two rectangles highlighted are the next supports to watch for.
MU continues to struggle this week (we are down over 11%). If we look at the drop from the last cyclical cycle between 2015 and 2016, MU would have to drop to about $16 to bottom. That seems like a possibility in the next 6-9 months (2-3 quarters).
Here’s the monthly chart of MU. I will be looking for smaller monthly candles to hint at the bottoming process. I plan to accumulate lots of shares in the 10-20 range (middle to the bottom of that range preferably) in anticipation of the next bullish move upwards.
Happy holidays again!