So far, the QQQ scenario on the 4 hour chart posted on Tuesday is playing out according to plan. If you reference that previous chart (first one below) you will see the minor squiggle (bounce) that was expected off the T3 level. Although I’m not as confident as I’d like to be at this point, I’m still leaning towards this scenario continuing to unfold as expected: A bounce that draws in some bargain hunter longs & flushes out some shorts, followed by a quick reversal (very likely a gap down below T3 support tomorrow or Monday) and then a relatively quick drop to the T4 level.
As my confidence is not very high though, I’ve lightened up on my short exposure by covering several short positions, including those posted earlier that hit targets today, and I took a modest amount of long exposure in order to reduce overall market exposure although I’m still net short. How this market acts into the close today and follows thru tomorrow will likely decide whether I remove or increase any long-side hedges. Bottom line for now is that I still favor a very muted reaction off this T3 area, followed by more selling although I am keeping an open mind and constantly reviewing the charts and other market metrics for a reason to move to a net long positioning.
