12:33 PM EST
The $VIX Hourly hits oversold
This is the slowest week we've seen in the market since the July peak and much of that has to do with the news cycling sort of decelerating. We have a double-bottom in the markets. Inflation, employment and earnings were good enough. The fed finally cut...
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When are we expecting the QQQ pullback? I believe its due any day this week or early next week?
Timing wise that does make a lot of sense. We should see it happen sometime in the next 7 trading days for sure. That’s what we typically see. But as I’ve mentioned before, forecasting near-term top is substantially harder to get right than it is to forecast bottoms.
Here are some things to think about. First, the QQQ has only rallied $40 off the lows and just barely. We’ve seen rallies go for $50 or $60 before. Let’s suppose this is one of those cases. We can see the QQQ rally up to nearly $500 before peaking.
If that were to happen, we’d likely see a $20 pull-back at that point. The times we had gone for +50 to +60, it has resulted in a 4-5% pull-back right after. So we’d be looking at close to $480 for an entry if that were to happen.
But that would be the extreme high end of the range for the QQQ and we ‘d gain a ton of confidence on the buy side of the trade. Meaning, if the QQQ did rally to $500 and then pulled back to $480, we’d have a lot more confidence buying at $480 than we would buying at $470 on a pull-back from where we are now. Why? Becuase it would mean the next leg up has started with a near certainty. The next thing to likely happen is a surge up to $520-$530 with the rally fully maturing at $550.
So I don’t view a rally up to $500 as necessarily a bad thing. Overall, it would be a net positive.
That being said, nothing in the recent trading action gives me a ton of confidence that this is what we’ll see. If anything, the trading action is further supporting our viewpoint that we are getting closer to a near-term peak and that this peak will happen at a round these $486-$487 levels. We may get a surge up to the lower gap-line at $493.
But I think overall, we’re more likely to see a peak somewhere near the levels we’re at right now. Once the QQQ does pull-back, everything will pare back with it. We’ll get opportunities in broad range of stocks.
I am just wondering how you will be confident when to buy on that pullback? I mean maybe it pulls back to 485, maybe to 475. Either way like you said, they would be great entries, but how would you know to pull the trigger, without the market going substantially lower or taking off again without having bought?
Is it just using the RSI and average pullback sizes?
Slightly confused in your second to last paragraph saying, “It does bode well when the markets make new highs and then look anemic right after.” Is it a typo, and you actually mean does NOT?
Yes. Missing a “NOT” in there.