QQQ remains above the key mid-June & early Oct lows, so a decent case for a significant bottom can still be made although I continue to favor another major leg down (~13%) towards the 235ish level (T4 on the weekly chart). The gap down today following the late-session breakdown below the 60-minute bearish rising wedge pattern was impulsive, quite likely trapping a fair amount of longs, thereby providing more dry powder for another wave of selling should the market continue lower, triggering stop-loss orders as well as “feeling the pain” selling from those long positions. Based on my continued expectation of another big leg down in the coming days to weeks coupled with the recent price action, I would consider even the most minor bounces back to resistance objective levels, such as /NQ 11350 or QQQ 275, to initial or add to index shorts. 60-minute charts of QQQ & /NQ below.
QQQ 60m Oct 7th
NQ 60m Oct 7th
Again, based on the fact that both the S&P 500 as well as the Nasdaq 100 both recently made slight undercuts of their key mid-June lows followed by a reversal back above those levels (and still remain above) and with positive divergences in place on those lows to boot, it would be hard to make a stronger bullish case based solely on those factors (excluding others such as market breadth, sentiment measures, etc..). However, my focus has also been to use multiple time frames & in doing so, I give a higher weighting to the longer-term time frames & primary trend, both of which remain bearish at this time IMO.
As such, I suspect that the aforementioned bullish developments on the 60-minute to daily time frames are likely to fail to result in a significant (double-digit) rally or a more lasting bottom. Of course, I most certainly can’t rule that out & as such, I will do my best to pass along any significant development and/or changes in my outlook asap. As of yet, I still haven’t seen any decent evidence of a significant bottom in the market. I continue to prefer using some indirect hedges to my index shorts such as long positions in Treasury bonds, precious metals, & crypto even though those normally inversely-correlated assets have uncharacteristically been positively correlated with the stock market for most of 2022.
On an admin note, we finally had power restored last night although my internet service is still out & although temporary cell towers were brought in after the Hurricane, the bandwidth (extremely slow upload/download speeds while tethering off my phone) and spotty connection (frequent disconnecting of the tether to my PC) still makes it quite difficult & timely to get posts with charts posted & videos all but impossible at this time.
I’m also trying to juggle 5 separate claims (homeowners, flood, auto, boat, & FEMA) and had to turn most of my focus this week towards getting our roof tarped (finally done yesterday) and removing “flood cuts” of the drywall on most of the nearly 3000 sq ft of living area & garage on the first level of our home which was flooded by the storm surge at the mouth of the river. As it has proven extremely difficult to get a company or contractor to come out to do so as I had planned after the storm, I was forced to do the work to prevent the inevitable mold which begins to grow once drywall has been exposed to flood waters.
I can say that we are now ‘over the hump’, with the roof tarped & drywall removed as well as having contracted with a public adjuster to take care of most of our claims going forward & the rest of the claims now submitted & in process. I only share this to let you know why my posts have continued to be relatively light so far this week. I expect to be back up & close to fully running (full-time at my desk) next week & possibly over the weekend if my high-speed internet is restored (either home internet or normal cellular speeds), at which point I will also be able to catch up on any questions or feedback in the comment sections.
Again, thank you for your patience & best of luck on your trades.
-rp