My imagination has failed whenever I’ve tried to predict the potential Mother of All Tops. We’ve nailed some nice peaks along the way, usually making a few bucks on the short side before the inevitable reversals occurred. However, the 377.14 target shown in today’s chart (see inset) looks like the most promising so far for delivering a big winner. The three coordinates I’ve used to draw the pattern are elemental and even historical, comprising the 2009 start of the longest bull market in U.S. history, and then the start and finish of the mind-blowing pandemic collapse last February/March. The 377.14 target is simple and compelling, but also an ambitious stretch for anyone who may have thought the radical change in political leadership would get no honeymoon on Wall Street. This chart allows for a further 12% rally even though 2021 is fraught with potential economic pitfalls and vaccine disappointments that should have made investors far more cautious.
Few doubt at this point that they are out of their minds, or that a bear market worthy of the name is long overdue. It will become even more overdue if and when QQQ hits 377.14. The equivalent rally target for the E-Mini Nasdaq is 15351, shown in this chart. To be extra cautious, let me mention two numbers for the QQQ and the Mini-Nasdaq that reflect, respectively, the midway points between p2 and D: 350.51 and 14262. I am flagging these price points because it would not be unprecedented for a bull market to sputter out in, so-to-speak, the middle of nowhere. Finally, there’s this promising target at 13836 in the E-Mini Nasdaq. For short term plays, the pattern looks hard to beat — not only for shorting D with a very tight stop-loss, but for ‘mechanically’ buying a pullback to p=13,281. Use a 13096 stop-loss if the trade pans out. (Note: You can interpolate the trade by using SQQQ, the QQQ ultrashort. But use a tight stop-loss and don’t jump in until such time as QQQ or the Mini-Nasdaq is trading very close to the target. _______ UPDATE (Feb 10, 8:11 p.m. EST): The E-Mini Nasdaq looks like it’s fixing to dive after missing my 13,836 rally target by 67 points, or 0.4 percent. If so, you can use this chart to get short mechanically on the way down. The equivalent downside target for QQQ is 328.08, which correlates with a midpoint support at 330.95. Here’s the chart. _______ UPDATE (Feb 11, 7:05 p.m.): The futures never got close to setting up a mechanical short, instead taunting us with the buoyancy of a beach pull pushed underwater.The good news is that we may get to squeeze off the short at our original target at 13836. The QQQ equivalent is 337.10, as noted above.