QQQ Likely to Rebound at $600; But the Rally is Likely Over As Sell-off Extends to 5.4%

Today’s Trades

Trades here

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As we mentioned yesterday, a big consequence of the QQQ losing the $610 level and selling off down to $600 a share is that it would require a large segment just to get back to the highs. Nevermind making new highs, just to get back to the highs would require a large segment. This is likely to lead to one of two outcomes. We either end up with a QQQ that has formed a double-top on teh next segment or a QQQ that has formed a three push pattern. Both are bearish. Both lead to an inevitable correction.

Also, as we explained when the QQQ broke out above $613, the most likely outcome was a run to $630-$640 — as we’ve seen in every other past century breakout — a top at around that $630-$640 zone and a large pull-back to $600. From there, it’s often either THE correction has already started or the QQQ forms a double-top. This was all telegraphed way before the QQQ even broke out. It’s why our target for adding to the $500 puts was at $632-$633 a share. We set that target well before the QQQ even broke out.

The reason I mention this is to stress that this was the foreseeable and logical outcome on a breakout above $613. That’s the entire point. The market had a clear-cut default projected path and it has followed it to the letter on the breakout from$613 up to $637 and down to $600. For those who have been reading the briefings closly, you know this already.

There were all types of alternate ways the QQQ could have played out. It could have bottomed at oversold at $620. It could have held support after gap-fill at $610. Totally logical places. But the default path. The most likely path was always rally to $637 and pull-back to $600-$605. That was the main default path seen in prior century mark breakouts.

Now that we’ve seen the breakout happen the QQQ reach $603, here’s where we stand strategically. First, the QQQ is simply not oversold enough for us to trade out of our puts temporarily and buy calls. We were barely at a 25-RSI at today’s lows. What we want to see ideally is a 20-RSI. WE get a 20-RSI, then it makes sense to close half of our puts and buy September $700 calls. Right now the QQQ is in the middle of an intraday rebound. What we want to see later today is a push down to the $600 level. That would be ideal. At $600 a share, the pull-back extends to 5.81% which is a serious pull-back. There we might want reduce our September puts. Here’s where the QQQ is in terms of oversold levels:

This is the third push down into oversold, but we’re not quite deeply oversold. We need to be careful not to exit right in the middle of what could be a correction. That’s why we really need deeply oversold conditions as that lowers the risk of us getting out in the middle of a correction.

Also, as we mentioned, even in MOST corrections, deeply oversold leads to a rebound.

So just keep in mind we *MIGHT* close out half of our September $500 puts at around the $600 level on the QQQ.  Notice how they’re trading at $17.55 with the QQQ at $604.  Last time the QQQ was at $604, they were trading closer to $15.85.   Ever since the QQQ broke out above $613, it’s like the options market called bullshit on the entire move.  We should have been able to buy at like $11-12.  The lowest they ever got was $13 at $633 and then they didn’t drop at all from $633 up to $637. The just sat there $13.  And when the QQQ peeled back to $633, it went up in value.  

Anyway, the point is we might look to sell at $600 as long as the QQQ is deeply oversold at that point.  If it’s not deeply oversold, then what we might do given that $600 is key support is simply just close out 10 contracts or 25% of our position at $600.  That makes the most sense if it’s not deeply oversold at that point.  Especially as we’re heading into a weekend. 

We definitely CANNOT buy calls unless we’re deeply oversold.  We’re absolutely not going to do that.  

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Nvidia has reached deeply oversold territory today and it might be time for us to close out our NVDA November $170 covered calls we sold against our long Nvidai common stock positions in Tarly, Tyrell and Frey.   In all three portfolios, we’re holding Nvidia common stocks – 200 shares in Tarly and Tyrell and 100 shares in Frey – hedged by a mix of puts and covered calls.   Now we sold the November $170’s at $20.00 a contract.  So if the QQQ close south of $190 at November expiration, we make money on those. With Nvidia down to $183 and now deeply oversold, there may be an opportunity for us to close those out and resell them on the bounce.   So we might do that today if the QQQ ends up pushing down to $600 and Nvidia ends up paring back to $180.  That’s an opportunity.   See chart below:

The key thing we need to remember, however, when it comes to Nvidia oversold conditions is that in bearish environments like the April correction, it has been known to stay deeply oversold for a while before ultimately rebounding.  Meaning, we could see more downside or Nvidia simply dilly dally along for several days before actually rebounding.   Hence why we’d like to wait until it reaches $180.  We may do nothing as the options were sold at $20.00 a contract putting us at break-even at $190.  Nvidia can close out November 21 at $190 and we’d ve even on those.  It would allow us to roll forward to December.  Eventually we’re going to collect a massive premium once the correction hits.  Considering we bought the shares at $100, a $20 sale is an enormous reduction in basis.   

            

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Here’s the current trade watch.   

(1) First, depending on whether we get a test of the $600 level today and whether we reach deeply oversold when that happens, it will impact position sizing.  

If the QQQ is DEEPLY oversold (20-RSI) once it reaches $600, THEN…

We sell HALF of our QQQ September $500 puts in Arryn, Stark and Lannister 

AND 

Buy an equal number of QQQ September $700 callsin Arryn, Stark and Lannister.  Doing so would put us at a 1:1 ratio of puts to calls.   We’d own 20 Contracts of the September $500 puts in Arryn for example – having sold 20 – and we would own or buy 20 contracts of the Sepember $700 calls.  The goal would be to close out the September calls on the bounce an re-purchase our puts.  

(2) Second, if the QQQ is NOT deeply oversold when/if the QQQ reaches $600 a share, then we are only selling 1/4^th of our September puts.  We’d shave our position slightly.  That’s it.  IN Arryn, we’d close 10 of our 40 contracts for example and then wait.  

If the QQQ breaks down under $600, reaches deeply oversold at that point, then we sell the other quarter position and get long.  We’d follow plan #1 above in that case.  

(3) Buy to Close/Cover our Nvidia November 21, 2025 $170 calls we sold at $20.00.   The goal is to cover those at a price level far below where we sold them short.  We’d then wait for a bounce and re-sell them giving us extra premium ahead of November 21 expiration.  

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Take a close look at the segmented rally table below.  This is now the largest pull-back of the entire rally at 5.36%.   At $600 a share, that extends to 5.81%.  And notice if the QQQ closes near $600 today and gaps down on Monday, then we’re already nearing correction level selling.  At $595, the Segment extends to 6.6%.   The 8% mark sits at $586.04 a share. That’s where we’d have to initiate long positions for the next rally. This is why we hedge ahead of time.  After this entire rally, we’d have to start getting long at $586.   A hedge allows us to do that without feeling as if we’re buying right in the middle of a correction.   

Table 3.0: NASDAQ-100 (QQQ) Segmented Rally Cycle

Table 3.0 analyzes the Segmented Rally Cycle. Market rallies don’t simply climb steadily upward from one correction low to the next market peak. Instead, rallies typically unfold in a stair-step pattern, which we refer to as “Segments.” Each segment typically involves the market rising sharply by around 8–10% over a period of 10–15 trading sessions, followed by a pullback of about 3–5% lasting 3–7 sessions. A full intermediate-term rally usually consists of 3–5 of these segments, spanning roughly 40–70 sessions between corrections. Table 3.0 details the size, scope, and duration of every Segmented Rally within the 2023–2025 bull market.

Segmented Rally Date	Rally Days	Rally Pts.	Rally %	Peak Price	Low Price	Pt. Loss	% Loss	Trading Days to Bottom
Oct 2025	13	$47.96	8.14%	$637.01	$602.85	-$34.16	-5.36%	7
Oct 2025	12	$24.68	4.19%	$613.18	$589.05	-$24.13	-3.94%	1
Sep 2025	15	$43.98	7.87%	$602.87	$588.50	-$14.37	-2.38%	4
August 2025	9	$31.60	5.73%	$582.64	$558.19	-$24.45	-4.20%	6
July 2025	28	$50.98	9.74%	$574.63	$551.68	-$22.95	-3.99%	2
May 2025	13	$31.17	6.17%	$536.18	$523.65	-$12.53	-2.34%	8
Apr 2025	11	$46.16	9.69%	$522.41	$505.01	-$17.40	-3.33%	3
Apr 2025	10	$62.98	14.72%	$490.91	$476.78	-$14.13	-2.88%	4
Feb 2025	12	$29.72	5.82%	$540.01	$508.68	-$31.33	-5.80%	5
Jan 2025	8	$34.07	6.83%	$533.03	$509.39	-$23.64	-4.44%	3
Dec 2024	21	$44.67	8.29%	$539.16	$509.00	-$30.16	-5.60%	3
Nov 2024	8	$31.88	6.60%	$515.58	$494.49	-$21.09	-4.10%	5
Oct 2024	9	$21.48	4.50%	$498.88	$485.05	-$13.78	-2.76%	7
Sep 2024	15	$46.20	10.32%	$493.70	$477.40	-$16.30	-3.30%	4
Aug 2024	14	$62.09	14.66%	$485.54	$467.89	-$17.65	-3.64%	5
July 2024	12	$29.70	6.27%	$503.52	$473.94	-$29.58	-5.88%	7
June 2024	12	$43.74	9.89%	$486.09	$473.82	-$12.27	-2.53%	6
May 2024	16	$39.89	9.50%	$459.85	$442.35	-$17.50	-3.81%	6
Apr 2024	7	$20.66	5.01%	$433.07	$419.96	-$13.11	-3.03%	4
Feb 2024	9	$22.28	5.36%	$437.86	$420.40	-$17.46	-3.99%	7
Jan 2024	13	$34.41	8.73%	$428.60	$415.58	-$13.02	-3.04%	6
Dec 2023	18	$31.13	8.18%	$411.72	$394.19	-$17.53	-4.26%	6
Oct 2023	24	$51.51	15.13%	$392.01	$380.59	-$11.42	-2.91%	4
Sep 2023	13	$22.26	6.37%	$371.72	$357.00	-$14.72	-3.96%	5
Aug 2023	11	$25.94	7.36%	$378.22	$365.12	-$13.10	-3.46%	4
July 2023	17	$30.18	8.50%	$385.32	$371.77	-$13.55	-3.52%	4
June 2023	8	$24.22	7.01%	$369.78	$355.14	-$14.64	-3.96%	6
May 2023	8	$27.71	8.48%	$354.56	$345.56	-$9.00	-2.54%	4
April 2023	20	$28.55	9.29%	$335.89	$326.85	-$9.04	-2.69%	5
Mar 2023	8	$30.25	10.71%	$312.66	$302.27	-$10.39	-3.32%	5
Feb 2023	7	$32.18	11.56%	$310.62	$294.35	-$16.27	-5.24%	7
Jan 2023	8	$24.11	9.35%	$281.91	$271.22	-$10.69	-3.79%	2
Jan 2023	3	$16.16	6.00%	$287.38	$278.44	-$8.94	-3.11%	3
Averages	12	$33.84	8.67%	–	–	-$16.17	-3.75%	5

One thing also worth nothing about this segment pull-back is the number of trading days. We’re now at 7-days for the pull-back. That’s actually on the longer side of the spectrum. Segmented rally pull-back simply don’t last much longer than this. In fact, we should be rallying on Monday morning. If this is just a segment pull-back, we should see the market gap-up on Monday and then begin a rally back to $637.

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We decided to ultimately sell half of our September puts at $18.30. That’s a fairly big gain in 7-days where they were once trading under $13.00. So here’s what we decided to do. Instead of selling a quarter, we decided to just sell half and wait on the call side of the trade. If the QQQ becomes more oversold and hangs around these levels throughout the day and as we head unto the end of the day, we will buy 1/2 of our call position. What I don’t like. What I absolutely hate about getting long is that it’s Friday.

I can easily see the QQQ close at $598 today only to then gap-down to $589 on Monday. That would suck. So I think we just need to be careful about the long swing trade. I think it’s a good trade because the QQQ very consistently rebounds off of oversold conditions and that’s exactly what should happen right here. But I don’t like that it’s Friday and that we could be potentially heading into a very bearish Monday. If this were any other day of the week, we’d be getting long at $600.

SO let’s observe for bit. Wait for the hourly RSI to stretch into deeper oversold conditions. From there, we’ll buy a quarter long position putting us at 2:1 put-to-call ratio for September. By the way, here’s where we’re at on the hourly now:

Ideally, we want the QQQ RSI down to 20 and for an extended period. We want a thick red oversold area. Kinda of like what we see between August 18 and August 25 on the chart above. Note where it says “watch oversold” in blue annotation on the chart. That’s the ideal oversold set-up. Thick bar down to 20 or under. That gives us plenty of evidence that a rebound is coming. And the QQQ should rebound up to around $612-$615 a share. Enough where we could end up collecting 2-3 points. Those 2-3 points act as a full reduction of our basis when we buy back the puts at a reduced price. That’s how we can really knock this out of the park in a correction. We just need to get it right by waiting for the optimal set-up here.

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We’re getting exactly what we want now. With the QQQ having fallen under $600 a share, we have a clear-cut thick oversold bar on the hourly now. The probability that we’ve entered a correction has now also skyrocketed. That doesn’t really change the calculous much as we still should expect large rebounds in corrections. So here’s what we’re going to want to do now. We want to consider buying the calls. But it’s still early in the day. I’m hoping the QQQ will get messy and we can end up down near $596 or something. That would be great. That’s actually far far less threatening than if the QQQ closes at $600 or above. A close at $600 just begs the market to gap-down 10 on Monday. But if we close under $600 — at like $596 — it’s less like to go through that rug-pull as we’ll have already broken support. There’s no Sergeant Doakes yelling, “Super MFer,” when the market opens.

Instead, if we close down deeply oversold, we’re more likely to either gap down small on Monday followed by a sharp rebound or we’re straight up likely to see a gap-up on Monday.

One thing is very clear though. If the QQQ closes well under $600 today, it’s a pretty big statement from the market that we’re in a full blown correction. There’s no reason for the market to do so other than its in a correction. That’s because as a the segment goes, the QQQ has done everything required to set-up a new rally. In fact, that was completed at $610 with $605 being the extreme oversold. But falling under $600, it’s pretty much an indication that we’re in a correction.

As for how long to play the bounce, it’s to the mid-line. The QQQ should bounce to the mid-line.

Strategically, just so everyone is aware ahead of time, we’re not closing the September calls unless we’re profitable. Straight up. Since corrections are on the shorter side and since we already own an equal number of put contracts and most importantly, since the calls are cheap, the allocation is small. We’re not going to buy them at $596 or something and then close them at $582. That’s not going to happen. Instead, if the QQQ continues selling off ignoring oversold conditions, we’d hold them together with our puts until the QQQ did rally at which case we’d only close if we were green or close to even. As they expire in 10-months, there’s zero incentive for us to close at a loss at any point in time. That’s how we’re doing it here.

The way we see it, if we got long at $596-$597 with a 20 contract position ($40k position), we would either close them on the bounce or after the correction during the net rally. We’d incorporate it as part of our core long position.

For example, suppose we entered a “full-blown” bear market where the QQQ fell 40%. That would be a drop from $637 down to $380 a share. Our September $500 puts would rise to roughly $130 per contract × 20 contracts = $260,000. We could quite literally burn the remaining $143K of capital on the sidelines and it would have zero impact. Our portfolio would still be north of $260K, which would mark an all-time high.

What if the QQQ only falls to $440-450 a share? Not quite a bear market, but big sell-off. In that case, the puts would rise to around $75, and our capital on the sidelines would be invested in 2027 LEAPs that would both retain value and skyrocket in the next rally. The puts at $75 × 20 contracts = $150,000. We currently have $183,000 in cash on the sidelines, by the way. $40K of that would be in the September 2026 $700 calls. We can assume those go to $0.00 (they won’t, but we can assume it). The remaining $140K would be invested in long-term LEAPs that might lose 50% of their value (again, they likely won’t, but let’s assume it).

Even on a drop to $450, we’d be at $150K + $70K = around $220K in a worst-case scenario.

What if the QQQ only drops to the low $500s? Then it’s just a big correction—there’s no reason to think we’re in a bear market, and the QQQ would likely rally to $700 or at least back to its all-time highs in the next move up, probably by April. Our September $700s would rise to around $25–$30 per contract.

The point is if we got long at $596-$597 there really aren’t a lot of circumstance leading to any sort of loss. We’re hedged and we’d likely make money on the overall trade

I mention this because I don’t want to field 100 questions about exit strategy. Our exit strategy—if we go long 20 contracts (Arryn) in the September $700s—is simply to hold that position until it’s profitable. These contracts are most likely to see a profit at some point between the time we buy them and the time we exit. We’re not going to buy them, watch the QQQ drop 10 points, and then close them. We’re not doing that. We’re not playing that game.

As the QQQ has rebounded to $602, it could be a moot point, we’ll see. We still have 3.5 hours of trade remaining.

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The Arryn Portfolio is back above $240,000—right where it was before we ever put on the spread trade. In fact, Arryn was sitting at $240K in July, before a single put-spread position was opened.

This is precisely why allocation matters. We’ve had to deal with a lot of unnecessary noise—emails, comments, and anxiety—that could have been completely avoided by following strict allocation discipline.

Would Arryn be higher right now if we hadn’t made the spread trade? Sure. It might be sitting closer to $260K. The September puts produced roughly $14,000 in profit, while the spreads resulted in about a $29,000 loss—a net $15K hit on a $255K portfolio. That’s a 5.88% drawdown, which is insignificant in the context of a LEAPS portfolio.

A 5–7% daily fluctuation is standard when fully invested in LEAPS. So a 5.88% drawdown after a 155% gain over the past 12 months is nothing. The frustration and emotion some have expressed come down entirely to poor allocation. When positioned properly, a small setback like this shouldn’t cause anyone to lose perspective.

And keep in mind, Arryn’s position size was small, but the potential payoff was huge if it worked. For example, with just 6% allocated, if the September 30, 2025 puts failed but the October 17, 2025 spreads succeeded and the QQQ closed fully in the money, we would’ve made about $60,000 in profit while taking only a $7,000 hit on the September trade. That’s a $53,000 net gain. Add back the $29K loss, and you’re talking about an $82K swing—the portfolio would be sitting near $325,000, up 225% overall.

We didn’t need a massive allocation to have that kind of upside. And when the next rally comes—and it will—we’ll put on the same type of trade again and capitalize. Future rallies will likely end in the 80–100 day range, and when they do, we’ll be ready.

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First, we’re no longer planning to cover the Nvidia $170 calls. They’re simply too expensive right now. They’ve only dropped 5 points to $15, and at that level, it makes more sense to just hold them.

If Nvidia closes above $190 by November 21 (10 days from now), we’ll cover the position and sell future calls—rolling the position forward. The reality is that the market is going to sustain a correction, and eventually one of these covered calls will expire worthless.

If they drop to $10, we’ll cover them—because at that point we’d be locking in a 10-point profit. But at $15, we run the risk of leaving 15 points on the table and being unhedged at $180. That’s not a risk I like. So for now, we’re holding the Nvidia covered calls that were sold against our common stock positions.

Second, we’re watching the September $700 calls, currently trading around $19.00–$19.50.

• Arryn: 20 contracts @ $19.00–$19.50 (16.7% portfolio allocation)
• Stark: 10 contracts @ $19.00–$19.50 (15.2% portfolio allocation)
• Lannister: 19 contracts @ $19.00–$19.50 (19.2% portfolio allocation)

Those are the trades we might be putting on soon.

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The QQQ has rebounded off of the $600 level largely as expected. Now you see the effect plain as day hopefully. The QQQ reached deeply oversold near a 20-22 RSI at today’s lows and proceeded to rebound aggressively back up to $610. We could have easily gone long on it. We probably should have pulled the trigger and bought the Sep $700 calls under $20.

But at least we closed half our put position and we’ll shave cost-basis off of our entry as a result.

Here’s our plan for the September puts. First, we will probably look to buy back the position we sold at the mid-line around $615-$617 a share. If the QQQ continues higher in a new segment we will buy a 10 contract position in the Sep $550 at around $625 a share and add another 10 contracts at $630. We will add a final 10 in the high $630’s. That’s how we’ll approach things.

With the QQQ having fallen 5.8-5-9%, the odds of a correction have skyrocketed and so we need to be thinking in terms of being more aggressive with the put purchases than we were prior to the segment pull-back. Originally, we want to be 40 contracts long the $500’s and 20 contracts long the $550’s. W e’ve increased that to 40-30. We’re targeting 40 contracts long the Sep $500’s and 30 contracts long the $550’s. Then on the way back down we’ll reduce down our $550’s and look to hold 20 total contracts in the Sep $550’s by the bottom of the correction. That’s our general plan for Arryn with Stark/Lannister following the same allocations but on a smaller absolute scale Fewer contracts but the same overall ratios and allocation sizes. Here’s where the QQQ ended the day. Well off of oversold conditions: