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QQQ Swing Trade & IHS Scenario Update

The Inverse Head & Shoulders scenario outlined on QQQ last week continues to materialize so far today with a gap up & impulsive rally towards the neckline. Ideally, the Nasdaq 100 should continue to rally impulsively on increased volume up to the neckline, minor counter-trend pullbacks or consolidations aside. Potential targets/scenario shown on this updated 15-minute chart.

QQQ 15-min 1 April 9th

QQQ 15-min 1 April 9th

Regarding the Active Swing Trade on QQQ entered last Wednesday, after a hitting T1 for a quick gain, QQQ pulled back to the entry point to put in a RS of a potential IHS bottoming pattern & still looks good up to T2, especially if it can take out the 161.70ish level.

QQQ 15-min 2 April 9th

QQQ 15-min 2 April 9th

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2018-04-09T10:12:34+00:00 Apr 9, 2018 10:12am|Categories: Completed Trades - Long, Equity Market Analysis|Tags: |5 Comments

5 Comments

  1. rsotc April 9, 2018 10:26 am at 10:26 am

    Should this IHS pattern fully form with the potential right shoulder being finalized by a rally up to the neckline, it could provide us with clues as to the overall health of the market & whether or not the primary trend is still bullish or if we are in the early stages of a larger correction or bear market with more downside to come. What I am referring to is that when the primary trend is bullish, bullish chart patterns tend to play out with a high success rate & often rally beyond their measured targets. Conversely, bearish chart patterns during a primary uptrend have an increased rate of the pattern formation not finalizing or if it does, any breakout (sell signal) often proves to be a whipsaw signal/failed breakout with any sell-off falling well shy of the measured target.

    With increase bearish developments on the daily & weekly time frames, while I remain net long, for now, I am not married to any one scenario & will adjust my outlook & positioning as/if the case for the current near-term outlook starts to be called into question. If nothing else, in recent weeks this market has shown us that it can turn on a dime & do so very quickly. While I’m leaving the suggested stop on the QQQ official trade as any move below 152.30 for now, once might consider raising or trailing up their stops.

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  2. BIGBADWOLF April 9, 2018 12:11 pm at 12:11 pm

    Hi Randy,

    Many thanks for market insight. While QQQ is rallying, the dollar is down about 0.25%. How would you see the impact of dollar on the direction of this stock market rally?

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    • rsotc April 16, 2018 9:41 am at 9:41 am

      The correlation between the stock market & the US dollar has been on & off in recent years. At times, the both the $USD & the stock market have rallied together but for the most part, the correlation between the dollar & the stock market has been inverse (one goes up while the other goes down). A lot of that has to do with the fact that US stocks become “cheaper” to foreign investors when the dollar falls. However, overall the correlation has been so hit & miss that I’m not reading too much into that right now, especially any one or two day move in the dollar vs. the market although I do give a direction of the $USD dollar a very high weighting for gold, silver & the mining stocks.

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  3. kls1022 April 9, 2018 12:44 pm at 12:44 pm

    Somewhat new to trading here… please forgive my ignorance, but what is the bottom indicator 28,68? I am trying to setup my Fidelity ATP charts to look like yours.

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    • rsotc April 16, 2018 9:35 am at 9:35 am

      kls1022 – That bottom indicator is a custom histogram that I created using the 28-period EMA along with the 68-period EMA. In the chart above, the “period” is 15 minutes as that is a 15-minute chart. Essentially, I use the histogram in two ways: 1) As a trend indicator to quickly identify when the faster (28-period) EMA is trading above (bullish/green) or below (bearish/red) the slower (68-period) EMA. I can also use the histogram to identify divergences between the price of the security above and the peaks or troughs in the histogram in order to identify possible trend changes in advance.

      Here’s a video I created a while back showing how to replicate & use this histogram: https://youtu.be/ax6OJ20mmiM I’ve also been able to replicate it on some other charting programs via similar methods but not others. Let me know if you have any other questions.

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