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QQQ & SPY Rising Wedge Breakdowns or Fakedowns?

In this video I provide an update to the recently highlighted bearish rising wedges on the 15-60 minute charts of QQQ & SPY along with my expectation that not only with those wedges breakdown today, but the breakdowns will likely provide false sell signals, aka bear-traps, with the stock market reversing & going on to rally shortly after the breakdowns. Video length is under 10 minutes. Playback speed can be increased in the settings to reduce the duration of the video as well.

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2018-04-13T10:53:45+00:00Apr 13, 2018 10:53am|Categories: Equity Market Analysis, Unofficial Long Ideas|Tags: , , , |11 Comments

11 Comments

  1. hengliu0714 April 13, 2018 11:13 am at 11:13 am

    I view this breakdown as an opportunity to long. We were overbought in the 60-min time chart, plus we have raising wedges on the 15-min chart, so a pullback is necessary for the bulls to take a rest. This false break down actually provides bulls a healthier path moving forward.

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    • brandk3 April 13, 2018 11:15 am at 11:15 am

      I’m eye-ing it also.

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    • rsotc April 13, 2018 12:04 pm at 12:04 pm

      Great point. Pullbacks after a fairly strong advance (QQQ has rallied 6% in just over 6 trading sessions) are healthy & necessary to work off near-term overbought conditions as well as clear out some of the increasing bullishness plus suck in some more shorts to provide fuel (in the form of short-covering) for the next leg up, assuming that the market are headed higher, of course.

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  2. FrancisQ April 13, 2018 11:15 am at 11:15 am

    I see a cup formation in either SPY or QQQ since 23/3. Can this fake-down (if it’s) is just the handle of the cup & handle development?
    I hope the market turns around later in the day for the more bullish scenario to be played out. I hope for bullishness assuming there’re more long people than short people here (i mean people who go long than people who go short. In that case, hoping for bullishness will make more friends than enemies).
    The day is still young (adolescent-ish). So anything can happen as the market ages.

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    • rsotc April 13, 2018 12:25 pm at 12:25 pm

      Nice spot. There does seem to be a potential cup & handle formation on the SPY & QQQ 60-minute time frames. We’ll most likely have to wait until next week to see if it plays out but certainly worth monitoring.

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  3. pkm48193 April 13, 2018 11:38 am at 11:38 am

    I don’t believe anyone can predict the next move. My only prediction is that the next move will be impulsive. Holding a straddle.

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    • brandk3 April 13, 2018 12:17 pm at 12:17 pm

      Agreed and I hate being like this. I like direction and volatility and I have none.

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      • rsotc April 13, 2018 12:28 pm at 12:28 pm

        I have a saying that I made up years ago which says: “While patience is a virtue in life, it is an absolute requirement in trading.”

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        • rsotc April 13, 2018 12:37 pm at 12:37 pm

          Remember, the stock market is not an ATM in which you can steadily & consistently extract money from on a daily basis. Most of my profits come in streaks lasting days or week, followed by a lull while the market or the sectors/stocks that I am trading consolidate or aren’t set up in clearly bullish or bearish posture. Good things come to those that wait & from personal experience, I can say that one of the most detrimental habits that I had in my early years of trading was the urge to ABT (Always-Be-Trading).

          The urge to over-trade or always be in the market is especially strong after a big winning streak, such as the market presented to a lot of traders over the past few months. In my early years of trading full-time, I found that my biggest draw-downs usually came on the heels of my biggest winning streaks. The reasoning was two-fold: 1) Over-confidence and 2) over-sized positions (largely a function of the former). Now, after a big run, if my read on the market isn’t very strong, I’ll reduce both my position size & overall trading activity as well as becoming extra-selective on the trades that I do take.

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        • FrancisQ April 13, 2018 12:53 pm at 12:53 pm

          Life’s funny because if you’re a trader, you need patience even though trader deals with short time-frame.
          Long term investor deals with long time-frame and yet requires little patience.
          Remind me that young people like to drive fast even though they have a lot of time left while old people drive slow even though they don’t have much time left. Shouldn’t old people drive fast and young people driver slow?

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        • FrancisQ April 13, 2018 1:09 pm at 1:09 pm

          Yeah, i’m guilty of impatience and over-trade. But i’m reforming now.
          First, i learnt to sell at a loss. Only then i was able to slowly learn to be patient.
          I dunno about everyone else, but i find being patience is far more difficult to cultivate than coping with losing money.
          Sometimes, i found myself in a twisted delight (with an evil grin and rubbing my hands) when i sell stock at a loss because those cash will be free up for my next (hopefully winning) trade.

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