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QQQ & SPY Rally Into Resistance, Pullback Likely

While I'm maintained a consistent bullish bias & position since the early April lows & while I still see the likelihood of another  1.5% - 3% upside for QQQ in the coming days to weeks, it appears that odds for a pullback at this time are substanially elevated. Today appears to have all the makings of a trend day although I favor a pullback of the 165.70ish level followed by another test of the uptrend line off the early April lows & backfill of today's gap before a resumption of the uptrend.

Keep in mind this is a micro-call. Calling the very short-term zigs & zags in the market can be a difficult task at times but I'm just passing along what I see as the most likely scenario for the next few days. Today smells a lot like the short-covering rally plus natural buying that I had anticipated would occur once those key resistance levels on the SPY (266.95) and QQQ (161.70) levels were taken out & my expectation and while the near-term trend off the early April lows is still very much intact without any signs of a reveral yet, I do favor a reversal here soon as both SPY & QQQ have run into resistance while oversold on the intraday time frames along with the QQQ official long swing trade hitting both today's revised (slightly lower) final price target as well as the original final target which was strategically set just below the 165.70ish resistance level when the trade was entered back on April 4th (from the 15-minute chart below):

QQQ 15-min April 4th

QQQ 15-min April 4th

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2018-04-17T11:51:26+00:00Apr 17, 2018 11:51am|Categories: Equity Market Analysis|Tags: , , , |3 Comments

3 Comments

  1. FrancisQ April 17, 2018 12:23 pm at 12:23 pm

    Also QQQ back fills opening gap? Better sooner than later…

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    • rsotc April 17, 2018 1:07 pm at 1:07 pm

      Quite likely, just depends on how many shorts are left to squeeze out as well the wannabe longs that wanted nothing to do with the market when it was 6% cheaper a couple of weeks ago but somehow reckon that now is a better time to buy. Although I favor a pullback soon as we head into the final 3 hours of trading, I can still see a decent chance at another 2-3% upside from here before a meaningful (2%+) pullback but it’s all about risk vs. reward. I very well may reload my /NQ & QQQ longs on a pullback, ideally a backfill or possibly the top of today’s gap (the open), which is 1.25% below or 1.85% if the gap is backfilled, but I don’t care to risk giving back 2%+ in an attempt to try to squeeze out another 2-3% upside.

      Closing those /NQ & QQQ swing trades freed up a lot of buying power & with earnings season starting to get underway, I love watching out for over-reactions on stocks following their quarterly earnings announcement & guidance. Big over-reaction pops or drops up to a solid resistance level or down to support for a quick pullback or bounce trade with a day trade (oversized) position as day trades don’t entail the overnight risk that swing & trend trades do. I’ll post some of those quick hit & run trading opps in the trading room although the majority of the reversals on the post-earnings over-reactions come in the after-hours or pre-market trading session. As such, one has to move quick & also be familar with trading stocks outside of regular trading hours.

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