QQQ - Is It Rally Time? Or Are You Too Early?I have an open call on the Nasdaq NQ CME Futures that theorizes that the markets may have topped in terms of the perpetual bull run, but that we may also get a rip back towards/at new highs.
Nasdaq NQ - Is It Time To Sell The Rip?
The process has been quite slow to play out so far, but the most dangerous thing for bulls with NQ is that 15,000 has not yet been broken.
And yet we are rallying.
Many people have been pining for new all time highs, and yet every equity has slowed down or been significantly bearish in the last two weeks.
It's worth noting key macro points:
1. Fed rates are looking at tasting 6% by the end of the year
2. Jerome Powell says cuts aren't even considered until inflation becomes half of what it is
3. Dude said it will probably take years for this
4. Bond price goes down as yield goes up
5. Money leaves equities to seek yield in this environment
6. Divergences from the above are short signals, not buy for all time high signals
And then there is the ever-accelerating collapse of the economy in Mainland China under the Communist Party. Things for the CCP, and for its leader Xi Jinping, are getting worse by the day.
On top of economic problems the Party is facing are a litany of social problems, and the recent bout of exceptional and unprecedented flooding ravaging the country.
The losses from the pandemic, from the economic calamity, and the natural disasters have weakened the Party significantly. A weak CCP can never invade Taiwan, and international spy agencies will all know this, and so whenever you're hearing "Taiwan War" you should immediately be suspect.
What if the idea is to take control of Mainland China via Taiwan as the CCP falls, instead?
What will happen to the international markets that day? Will they go up, or will they crash?
So, here's a look at QQQ, the Nasdaq ETF that you can trade 0-Day options on.
From the looks of today's price action it would seem as if the bottom was in.
And it may very well be. This is a really key point. Friday may really well have been the bottom and we may be looking at a reversal.
But there's some key points to consider for bulls.
One is that in the Nasdaq call, I point out that NQ raided its January of 2022 failure pivot before the correction.
QQQ has not done that yet, and this leads us to believe that $390 is a very likely target in the immediate future.
Remember that upside should happen fast, since JP Morgan is bigly long SPX 4,200 puts that expire on September 29, and has been underwater since the quarter rolled over at the end of July.
SPX/ES - An Analysis Of The 'JPM Collar'
However, it's also very strange if we're going to see a bounce as massive as $390, that the end of July failure swing didn't result in at least one downside stop being taken out.
Note that today, Monday, was a day with no news drivers, while there is retail sales and Empire Manufacturing Index Tuesday, FOMC minutes Wednesday, Unemployment Claims on Thursday, and no news driver on Friday, which is also monthly options expiry.
The critical Jackson Hole Federal Reserve meeting is also August 23 and 24, next week.
Last year, Jackson Hole is what started a major correction that lasted until October.
So what to expect? Instead of a reversal in fortune being so easy, I would imagine we see a raid of QQQ $360/Nasdaq 14,900 this week before we bounce.
After that, it will be long only until QQQ $385, is my trade thesis.
But keep in mind $390 does not have to be taken. $385 is a potential area of reversal and $391 is an area that only has to print one contract before there's a correction.
So, thanks for reading. The TL;DR is this
Buy a raid under $360-355. Probably just under $360.
Long only until $385.
Get "Big Short" over $390 or on a reversal pattern between $385 and $388.
Good luck.
