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The QQQueen is Dead

After refusing to succumb to the clearly bearish technical developments over the last several weeks, QQQ looks to have finally rolled over, thanks to a one-two punch combination from GOOG & MSFT. Still some work to be done to firm up the bearish case, starting with a solid break below the 108.50ish support shelf but once/if that level goes, the next stop will likely be the 106.90-106.40 area. SPY started out trying to ignore today's technical damage in this market leading index but has since giving back all of today's gains & will likely join QQQ on a move lower in the coming days and possibly weeks+.

QQQ 60-minute April 22nd

QQQ 60-minute April 22nd

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Apr 22, 2016 10:34am|Categories: Equity Market Analysis|Tags: , |12 Comments

12 Comments

  1. snp April 22, 2016 11:03 am at 11:03 am

    time to buy the dip then

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    • rsotc April 22, 2016 11:13 am at 11:13 am

      I’ve made a few comments in the trading room today. Basically, I recognized that has been the M.O. over the last couple of months (dips get bought up hard to close green) but based on my analysis, I don’t think that will be the case this time. How we close today could be pivotal for the markets. Should we sell off into the close, closing below the 2% loss that QQQ is at right now, that will do some major technical as well as psychological damage to the bulls/bullish case.

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      • snp April 22, 2016 1:59 pm at 1:59 pm

        just a day trade…I recognized the potential pull back with a post 2 days ago about a TL on spy at 210. it gets frustrating watching it destroy Tl and TL but that one seemed worth mentioning since it was so extended on the daily too. I think in the early stages of a pull back the buy the dippers are reliable for a bounce when its oversold on an intraday basis. I thought about posting a target of 209 today but didn’t.

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        • snp April 22, 2016 2:23 pm at 2:23 pm

          ok, that was easy. how about 209.48?

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    • snp April 22, 2016 1:44 pm at 1:44 pm

      bought some chips to go with that dip

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  2. Omdavis21 April 22, 2016 11:50 am at 11:50 am

    Maybe a 110 backtest?

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  3. snipertrader April 22, 2016 4:42 pm at 4:42 pm

    @rsotc – SPY and DIA also have gaps below from 4/12 – 4/13 price action. Interesting how QQQ simply stepped exactly and completely over it’s 4/12 – 4/13 price gap on the way down today. Wonder when SPY and DIA gaps may turn “magnetic”.

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  4. snp April 22, 2016 7:32 pm at 7:32 pm

    @snipertrader-that pattern on qqq is the rare and famed ‘abandoned family with dog and cat”

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  5. snipertrader April 25, 2016 9:24 am at 9:24 am

    @snp – Funny! We shall keep an eye out for this newly famed candlestick pattern then in the future!

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  6. pangblood April 26, 2016 2:18 pm at 2:18 pm

    @rsotc
    Instead of going SQQQ long (TQQQ short) or TZA long (TNA short), what are your thoughts of playing volatility,
    ie: going UVXY long, I’m not quite sure how well vix correlates with market declines, what are your thoughts

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  7. rsotc April 26, 2016 2:30 pm at 2:30 pm

    @pangblood A long on the VIX should work just as well if not better than a short on the Q’s or IWM if my bearish scenario begins to start playing out soon. The $VIX is still at that same support level that I highlighted a couple of weeks ago (S1 support level) with bullish divergences in place to boot.

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  8. GetItRiight April 26, 2016 2:31 pm at 2:31 pm

    Let me add my experience. Back on Mar 1, when we were arriving at important SPY resistance levels, I bought my first batch of TVIX, to use as proxy for the upcoming downturn. Two days later, after a fall in TVIX of about 10%, I added the second batch, at the next important resistance level. Since then, SPY advanced probably 2-3%, but TVIX fell in that time period about 35%. Lesson learned here, volatility products are definitely not good for hedging against market drops. They are good when you have confirmed trend change. This will be one of the hardest trades I had to manage without loss.
    My advice is wait for important supports to break, once a downtrend is confirmed and only then use one of these leveraged products. Just look at today: SPY unchanged, TVIX down 4+%.

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