The bullish pattern shown has picked up precise hits at p and p2, implying that the next lunge will go to exactly 107.87 before the rally, now in its third week, sputters out. This scenario could conceivably create two trading opportunities: a ‘mechanical’ long from 105.85, stop 105.17, implemented on a pullback to that number after QQQ has exceeded it by at least 0.60 points for at least three bars; and/or a short from 107.87, stop 107.99. You can increase the size of the short if you’ve profited from a long position on the way to it. If you use options instead of stock, stick with near-the-moneys that expire in two or three weeks. If the opportunity presents itself, be sure to lock in ‘free’ $1 vertical spreads by shorting options against those held for the amount initially paid. ______ UPDATE (March 2, 7:59 p.m. ET): No change. Yesterday’s dance at 107.87 further validates the pattern, as well as the strategy recommended above.______ UPDATE (March 6, 2:37 p.m.): The Cubes spent most of the week pussyfooting near the 105.85 pivot without punching through it. The trend was up nonetheless, but not sufficiently so to set up the trade I’d outlined. More aggressive traders should look at this pattern, with an eye toward a ‘mechanical’ entry at p2=105.91, or perhaps even at x=103.66. On the hourly chart, the point ‘A’ low lies at 99.27 on 2/24, with a p at 104.79. The pattern would have worked nicely to get one aboard ‘mechanically’ on Thursday near the lows. _______ UPDATE (March 7, 11:16 p.m.): Back away for now, since the ‘mechanical’ trade failed to trigger at p2, giving way to a downtrend that could snowball.
