The Cubes have achieved escape velocity after triggering a textbook 'mechanical' buy in mid-May at the green line (315.29). Now they looks all but certain to achieve p2=350.90 at a minimum, but buyers will have to impale that pivot to 'guarantee' more upside to D=368.70, a Hidden Pivot resistance that at the moment is no worse than an even bet to be achieved. I am nonetheless tracking a bearish butterfly spread reportedly acquired by a single subscriber: four June 28 280/290/300s. A longshot bet on the unthinkable, he paid an average 0.18 for them. I would advise against trying to buy more, but stay tuned for a possible buy signal on the way up. _____ UPDATE (Jun 24, 8:03 p.m.): The Cubes finally reached the 350.90 rally target I'd said was a shoe-in, but they were unable to hold above it. Let's see what the next day or two brings before we bet the pass line on D=368.70. _______ UPDATE (Jun 26): It took forever, but the Cubes finally achieved the 350.90 rally target I'd all but guaranteed above. No one ever mentions this vehicle in the Trading Room any more, but I'll leave it on the sheets for subscribers who like to butterfly distant strikes. The next one of interest lies at 368.70 (as noted above), but there might be another kind of play if QQQ plummets to p or even x in this updated chart.
I was going to purge QQQ from the list for lack of interest, but it shall remain for now, since it could conceivably yield a decent short when the Grim Reaper finally comes calling (assuming he doesn't keel over dead himself waiting for this bull market to end). For the moment, I'm mildly persuaded that the epic delusion that has sustained the bull trend will carry the Cubes to new heights: p2=350.90, the secondary pivot of a pattern projecting to as high as 368.70. Meanwhile, I am tracking a low-risk short: four June 280/290/300 put butterfly spreads reportedly acquired Friday by a single subscriber for 0.20. No action will be necessary unless QQQ collapses.
The pattern shown implies the Cubes are likely to reach D=368.67, a target 11% above that corresponds to one that I've proffered for DIA. The easy pop through p=333.06 lends weight to this forecast, as does the profitable 'mechanical' buy triggered two weeks ago at x=315.26. The pattern is obviously working for both trading and analysis, and we should therefore calibrate opportunities on the lesser charts to the Hidden Pivot levels on this one. The next would follow a pullback from p2=350.87, but we may be able to design an entry trigger using 'rabc' on the lesser charts to get aboard without having to wait. Stay tuned if you are interested. _____ UPDATE (Jun 3, 9:58 p.m. ET): Anyone home? Bid 0.20 for four June 28 280/290/300 put butterflies, day order. If you don't know how, watch the lesson on butterfly spreading available via your account page. This is a longshot bet on an imminent plunge.
The Cubes have fallen hard this month, but we shouldn't doubt that portfolio managers, being in full control of this tech-salted vehicle, let it happen in order to pick up some bargains. That doesn't necessarily mean it's going to D=355.05, although the gap through p=326.27 (see inset) on April 5 lends weight to that prospect. If so, it would complete a bull cycle begun in November -- a fitting end to a remarkable bull run. It's worth noting that the selloff of the last two weeks would have stopped out a 'mechanical' buy at the red line. We don't often do mechanical entries at p, but if we had, our acquisition at p=326.26 would have come a cropper at 316.68, a mechanical stop-loss 68 cents above the subsequent low. I have inferred strength rather than weakness from this, since QQQ was manifestly unable to fall to the green line (x=311.87), where entry would have been more attractive. ______ UPDATE (May 19, 11:02 a.m. ET): DaBoyz still seem to have pretty good control of this barf bag, since it hasn't even taken out any important lows on the hourly chart in today's selloff of all else. My hunch is that it will, and sooner rather than later. _______ UPDATE (May 21): The barf bag provided precious little relief for bears last week as it remained in the grip of Wall Street's awesome ass-bandits. A pullback to the green line (x=311.87) would trigger a 'mechanical' buy (stop 297.47), but I would not recommend holding out for any more than p=326.27 if you should catch a lift. _______ UPDATE (May 25, 12:28 a.m.): No such luck. The Cubes have lurched higher on short-covering without having gotten within four points of the green line. Now they appear bound for a minimum 347.26 (60-min, A=311.54 on 3/30.
The Cubes tripped a mechanical buy at the red line (326.27) last week, but I did not recommend the trade because it looked significantly riskier than bidding at the green line. The subsequent bounce from the higher level looks likely to reach the secondary Hidden Pivot at 340.66, but I'll be curious to see whether buyers have enough energy left for a quick push to the 355.05 target broached here earlier. If so, they would signal it with a decisive move past p2=340.66, followed by a close above it on the same day. _____ UPDATE (May 10, 5:46 p.m. ET): Honest markets won a rare victory Monday with the drubbing the Cubes suffered. Now they are bound for a minimum 320.06, the 'D' target of this pattern. The A-B impulse leg is textbook-compliant, and that's why the crushing of p=328.36 means that more downside at least to 'D' is a 'definite'. We'll be better able to judge whether bears have run out of guts when we've seen QQQ interact with this fine Hidden Pivot support. Scalpers who know what they're doing and don't flinch when they detect a falling piano coming their way can try bottom-fishing, but the rest of us will be better served by spectating. ______ UPDATE (May 11, 11:01 p.m.): Sellers exceeded my 320.06 target by a not insignificant 1.04 points, suggesting there is more weakness to come. _______ UPDATE (May 13, 12:49 a.m.): Yes, x=311.87 would trigger a 'mechanical' buy signal, but you'd need a stop-loss at 297.47, and a price objective of just 326.27, not D=355.05. This is not to say the bull market is necessarily over, only that 355.05 could be a long time in coming if it is reached at all.
The 355.05 bull-market target broached here earlier remans viable, notwithstanding a two week hiatus for flower-sniffing that has stalled the Cubes at the pattern's secondary pivot, 340.66. The April 5 gap through p=326.27 on first contact tells us that the target is all but certain to be achieved, presumably with an energetic leap from consolidation. You can short there, tightly stopped, but more aggressively if you've made a few bucks on the way up. Well-out-of-the-money put options with 3-4 weeks left on them are recommended, but don't stick with them if QQQ closes for two straight days above 355.05 or trades intraday above 357.50. _______ UPDATE (Apr 30): Another week of flower-sniffing has left the bullish picture unchanged. For the moment, it outweighs a concerning technical picture that has been developing in IWM and the E-Mini S&Ps. _______ UPDATE (May 4, 5:32 p.m. ET): Hard selling drove the Cubes down to the red line (326.27), triggering a 'mechanical' buy. This is riskier than bidding at the green line, so I did not recommend the trade. Even so, my gut feeling is that the trade will be profitable. That implies that QQQ will rally to at least 340.66, where a partial profit would be taken, before falling to the 316.67 stop-loss. If this paper trade were to get stopped out, it would suggest that potentially fatal weakness had crept into the long-term bull market. This means any next leg up, even if it reaches the 355.05 target, could be the bull's last gasp.
After ceding the spotlight for a while to the small-cap IWM, the Cubes are back in fashion, moving toward a 355.05 target with a series of lunatic leaps. One of them created a gap through the 326.27 midpoint Hidden Pivot, leaving zero doubt that the target will be achieved. The pattern is an odd one, with a very elongated A-B segment, but it should be good enough for government work. In practice, this means that any one-level pullback can be bought 'mechanically'. So far, none of the retracements have qualified, but that doesn't mean we can't initiate trades using rABC patterns of smaller degree. Stay tuned to the Trading Room if you care. _______ UPDATE (Apr 19, 9:59 p.m. EST): If the decline steepens and hits p=326.27, that would trip a 'mechanical' buy, stop 316.67. Here's a chart that shows it.
I've scaled back my ambitions for this vehicle in favor of a more practical chart that promises to get us aboard the rally to 355.05 that is likely coming. The 'mechanical' opportunity that would follow a single-level pullback is a no-brainer, but we can hardly count on such good fortune, so we may have to improvise on the fly. Stay tuned to the chat room if you care, since any low-risk 'camouflage' or rABC set-ups that materialize are most likely to happen intraday on the lesser charts. ______ UPDATE (Apr 5, 5:44 p.m. ET): This morning's opening-bar gap through p=326.27 all but guarantees that 355.05 will be reached._______ UPDATE (Apr 8, 8:16 p.m.): The 335.05 target still looks like a winner, but I should have mentioned that p2=346.66 is a logical -- and potentially tradeable -- place for a stall. Here's the chart.
I don't usually call attention to head-and-shoulders patterns because they are everywhere one desires to see them. In this case, however, the bullish reverse H&S shown in the chart (see inset) looks too pretty to ignore. It implies that a rally likely got under way Friday that could push this sack of hot air to a test of all-time highs near 338 recorded in mid-February. If this should occur, the mood on Wall Street would likely be so giddy that we'd need to guard against being suckered into a possible bull trap. It would surely be a doozy, considering how bullish sentiment is.
After topping a micron above a longstanding bull-market target at 337.10, the Cubes have come down hard. They would have tripped a 'mechanical' buy if the selloff had hit x=294.75, but it was not to be. Instead, a weak rally from just above this benchmark pushed the trade out of range. Perhaps this was for the better, since the subsequent rally has so far failed to achieve the p=329.40 midpoint pivot where we might have taken a partial profit. The 'mechanical' buy would still trigger if QQQ relapses to the green line, but I am not enthusiastic enough to recommend a straight limit-bid there. We can use the theoretical 'buy' signal nonetheless to set up a less risky entry, but there's no hurry to settle on a plan until such time as x=294.75 is approached (or perhaps exceeded).
