With today’s gap & run on the stock indices (so far), we have impulsive breakouts above those 60-minute bull flag patterns on QQQ & SPY. While it doesn’t yet eliminate my preferred scenario from yesterday, as Tuesday’s highs are still intact, the impulsive nature of the break does increase the chances of both the “marginal new high to put in negative divergence on the 60-min chart & then reverse” alternative scenario as well as the “bull flag breakout & rally to around the measured targets” – “possible, but unlikely” scenario.
Anything can & will happen so “increased chances” does not mean guaranteed & about the only thing guaranteed in this market is that volatility with sharp rips & dips that are often reversed and faded have been the norm recently. So basically, a bullish development (breakout) on the 60-minute charts so far today with nothing even close to changing on the more significant daily or weekly charts.
I would suspect that if the bull flag breakouts are going to prove to be whipsaw signals, those breakouts will fail soon, most likely with a reversal & completed fade of the 0.75% gain so far on QQQ today. If the breakout & flag patterns are the real thing, then one would expect to see a relatively steady & impulsive rally going forward throughout today & tomorrow. That is still NOT my preferred scenario as I am leaning towards the “fake out” or failed bull flag breakout would mesh with my preferred scenario that Tuesday’s highs most likely marked the end of the what was likely a counter-trend bounce within an much larger bearish trend with the next leg down now underway. Should that start to materialize with a near or full fade of today’s rally (i.e.- QQQ and SPY fall back to close to & especially below yesterday’s close), that could have longer-term bearish implication as it fewer things are more bearish than a failed breakout of an obvious bullish technical pattern, such as these bull flags.