QQQ bullish scenario worked out from the projected low before the holidays.
Three pushes down setup points to at least retest year high.
Major resistance building up at 179 and above.
Support near 164.
More wild swings since last update. Here is the QQQ daily chart with some interesting observations.
Red down arrows : Left one is the high of first quarter. Right one is the test of that high and failed to clear the resistance.
Red down trend lines: Drawn according to the 3 pushes down rule and the time is now up by Monday (Tuesday latest) for the down swing.
Green up arrow: QQQ bounced off the midpoint of January.
Purple up trend lines: If we get a measured move up from last week’s low, QQQ may shoot up to 179 quickly.
What do I think?
A bounce is due but it is more likely to be blocked at the orange zone 170-172 because of the channel resistance and January high.
How things develop from there depends on how QQQ behaves these coming two days.
Are the tweets from Trump a well timed effort to pop the market higher right before the mid-term election? I will let you decide.
Following is a 30-minute chart of Nasdaq 100 ETF (QQQ).
Red Arrow Nov 1st around 10:15 am ET Trump tweeted about US-China Trade. US Stock Market took off. And I can no longer find that tweet.
Orange Arrow. Nov 2nd around 2:30 pm ET Trump tweeted again on US-China Trade when both US and China officials denied what his says. I cannot find this tweet either.
Green Arrow Nov 5th all morning rumors and then by 3:00 pm ET, announcement of polls showing GOP was leading.
All three attempts are done right at the moment that QQQ was about to flush lower. Much lower.
Because of the way the market being affected was so subtle, majority of the people who are not close enough to the markets are not aware of the subtle change in the dynamics. I am not going to name names but you all know who they are.
So what to expect from here.
1. As long as Friday low holds up, the red zone above will be in play and could happen very quickly.
2. Pushing into the red zone first without touching the green zone below, if resulted in a close below that, will point to another flush lower to the green zone eventually.
3. A very strong support zone is now built at the green zone below. Any selloff getting into that on the first try can lead to explosive rallies.
The whole situation with such wide target / action areas was the aftermath of the forced change in market direction.
Originally I hoped that we will have a calmer market (i.e. VIX < 15) after the election. Well we do not always get what we hope for, do we?
The messy swings will likely continue for at least a few more months.
QQQ 30-minute chart below. All chart markings the same as the one from Oct 11. Obviously, the double top target is now tagged.
What to expect next? This we have to use STOPD to tell us whether the process is completed.
The start of this selloff was a rejection of 3rd quarter high. It swiftly dropped to right below 3rd quarter low (the higher red line) and bounced.
Then 2nd quarter high acted as resistance and sent QQQ down to the 3 pushes up target. But 2nd quarter high resistance implies 2nd quarter low (153-154) and potentially year low (150) being the targets.
So the price to watch out for is whether 3rd quarter low up to January high acting as resistance or not.
Interestingly, that lines up with the up channel bottom on daily that was just breached this week. See the chart below.
The orange lines highlight the January range. January being the open range for the year has already given us the top of the year so far by its 100% expansion to the upside. Failing to close above the resistance zone mentioned earlier (the cyan box) means we are likely going to see a drop to January low, year low so far and possibly expansion down to 140-142 area.
Quick update on where we stand at this point.
Double top (purple lines) with 100% and 200% targets highlighted.
Three pushes up (orange lines) with starting point highlight by the horizontal cyan line on the left.
In combination we are looking for the cyan box to be tagged soon. My guess is Friday or Monday.
My book The Art of Chart Reading is going to be on sale at Amazon for 3 days only starting tomorrow.
Let’s guess when and where QQQ and Emini Nasdaq 100 will end this rally.
The chart below is just an update of what I posted last week.
Everything lined up now for a showdown between bulls and bears right above.
Looks like it is going to get this done by either the end of this week or beginning of next.
From there it is more likely than not that we will have a month long consolidation / pullback.
This is a follow-up on my post back on the 21st. This is the same 30-minute chart as of today.
Notice how QQQ (and Emini NQ too) holding up at the up trendline (green line) as support even though there was an external sell shock forced the price to move lower.
And now we have tagged the target (orange zone).
This example is a classic case that you hear all these bearish opinions publicized by the media, yet the markets are doing what they are supposed to do. Then the media (and TV personalities) blame the market for moving higher. Instead of telling the truth that they do not know what they are talking about, they make up more excuses to confuse the public.
Don’t let them.
You do not need fancy technical indicators or complicated analysis to trade profitably.
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I was talking about Nasdaq 100 (QQQ and NQ) is ready for gap and go to much higher price level in my real-time commentary.
Here are some of the reasons directly from the chart.
On 30-min QQQ chart:
1. Down channel established as of Aug 13th (blue lines)
2. Intention to produce 3 pushes down (red lines)
3. Bounce from 3rd push materialized but blocked from going higher by the gap and forced to go lower when price re-entered the channel (red down arrow)
4. Up trendline established as of Aug 15th
5. Retest of swing low from Aug 15th also aligned with test of down channel.
6. On Aug 20th closed above channel, as long as price stays above the channel, or a bull flag on higher timeframe, will give us the last swing high (orange zone)
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