Following a brief momentum-fueled overshoot of the 136.55 support level, QQQ kissed & bounced off this uptrend line on the 60-minute chart (shown in yesterday’s video) & has been dancing on the 136.55 level so far today. Next sell signal in QQQ to come on a break of 136.55 as well as the uptrend line just below.

QQQ 60-minute May 18th

QQQ 60-minute May 18th

Zooming down to a 5-minute time frame, we can see that the reversal came following a divergent low when that 60-minute uptrend line was hit. Overhead resistance levels & potential end-points for what is likely to prove to be a counter-trend rally in a larger downtrend with more room to run are shown on below. Hard to say where the bounce will end but with OpEx tomorrow, we could see one more thrust up towards the 137.70* area to complete an A-B-C 3 wave corrective pattern although I wouldn’t be surprised in the least if the bounce has already terminated with the tag of the 137.40 level earlier today. *Correction: I had erroneously typed 136.70 earlier & in the commentary on the chart below although that level is clearly shown as 137.68 & QQQ was already trading above 136.70).

QQQ 5-minute May 18th

QQQ 5-minute May 18th

While the intraday charts above can be useful in trying to determine the near-term rips & dips, this daily chart shows the bigger picture which, as of yesterday, is a confirmed divergent high that is likely to end no differently than nearly all of the divergence highs before, i.e.- in a ‘swing tradable’ correction. As of now, I still favor a move down to at least the 132.90 level before any substantial reaction (3% or more), quite likely to be followed by another thrust down towards the 129.50ish level in the coming days to weeks.

QQQ daily May 18th

QQQ daily May 18th

Keep in mind that tomorrow is standard options expiration (OpEx). As such, it’s in the smart money’s (who are the typically writers of options) interest to hold or rally (if they can) the market until the close tomorrow. Ultimately, it boils down to one thing: Will there be more (net) buyers or sellers over the next couple of days? Hard to say but I can say that numerous sell signals, support breaks, trend indicators flipping to bearish, etc… occurred yesterday & remain intact as of today.

Finally, please note that I will be away from my desk this evening & all day tomorrow as I’ll be fishing an a charity tournament & attending the Pre-Tournament gathering later today (for anyone that happens to also be attending drop me a line in trading room or via private message).- Ding Darling Tarpon Tournament –  I will reply to any questions or chart requests over the weekend.

Best of luck on your trades & have a great weekend.

-Randy Phinney