A Closer Look at the Q's and the Market

All of this week and part of last week I've been asking myself and putting the question to you, "What's the best possible fill worth vs. maybe missing the big picture?"

Normally this wouldn't be a question, but we are at that stage in the market where it could gap down and take out 2 months of longs on any seemingly meaningless morning, this isn't the normal market action so we are now faced with a more important question of are we being too myopic and focussing too much on details and getting lost in the lines and missing the big picture right in front of us.

We are at that point in the market where we are standing so close to the big picture, that we are seeing pixels more than the picture so I wanted to use the Q's as an example. 

I don't think there's any 1 right answer to this question, I think it is what is right for you, your risk tolerance, your ability to watch the market or not, your risk management, etc. There's always the chance of a better fill like with AAPL around the $700 area, there was the chance of a better short position fill, but then all hell broke lose and being too myopic in looking to get $5 or $10 better fill may have cost you 300+ points.

So considering I'm on vacation tomorrow and Friday, I wanted you to know at least what I know and you can make your own decisions, of course I'll still always look for the highest probabilities and the best positions and if you miss one, there's always another, but in most bear markets there are about as many up days as down days believe it or not, it's just the size of a few of those down days that makes the difference, in other words, trying to get too fancy and trade around this kind of market can cost you that big 1-day move down.


QQQ from short timeframe to longer

The 1 min chart shows what I'm always talking about in yellow, "The reversal process", reversals aren't events, they are a process and this is a large one, they tend to be proportionate so that implies quite a large move down.

3C 1 min was clearly leading negative and price did what it should when you have that kind of distribution (which includes short selling as selling and short selling both come across the tape as a sale).

The 1 min chart zoomed from trend to intraday, there was clear distribution on the open today, who wouldn't take that gain (I mean pros) ? 

We have a very small positive divergence that bounces the Q's, that gap is still open.

 2 min at the intraday level, you can see the accumulation zone, I talked about this yesterday and last night as being disguised in what a lot of retail traders would call a H&S pattern, although this is nothing like a real H&S formation.

At "A" that distribution is just steering intraday to bring the Q'd back down to the accumulation zone, even in to the close we have strong accumulation intraday. That was dumped on the open this a.m. as there's no confirmation. "B" is leading, but this is still a 2 min chart, not that strong and mostly intraday moves.

 3 min: "A" shows in line, "B" is the accumulation zone (with the longer charts details are less, but trends are more clear, yesterday's accumulation, although small scale, is clear and more than enough for today's open). "C" is the distribution of the gap up, the same way I wanted to take advantage of it.

At 3 min QQQ is in line, not positive.

5 min is the first strong institutional timeframe, during the topping process you can see that distribution was heavy and throughout, you see what it lead to, but there's a lot more to go.

Right now intraday action is flat, that "Could and normally would" allow for the gap to be filled, but don't lose site of a new leading negative low while price is still elevated.

 At 10 mins, we see the entire cycle-the 4 stages (accumulation, mark-up, distribution and the start of decline).

"A" is accumulation which we saw VERY clearly on the 21st, just go back and look at the archives for June 21, we were calling a bottom 1 day before the actual bottom. 

"B" is mark-up. "C" is strong distribution, on a 10 min chart and leading like that, this is way stronger than anything we'd normally see or anything we've seen over the last 4 years. "D" is how low 3C was leading negative BEFORE price dropped. You can see a clear topping process at the yellow area and "E" is not positive, if anything it's a breather to maybe fill the gap. 

THERE'S TOO MUCH DAMAGE DONE HERE FOR IT TO BE UNDONE WITHOUT SOME MAJOR SHIFT AND SOME TIME, I DON'T THINK IT HAPPENS.

The 15 min chart shows the leading negative at a new low, this is very serious for a 15 min chart, how deep it is, how quickly it lost all of that ground.

If I were looking at QID for instance, (QQQ 2x short)...I'd really have to weight the big picture, the lower risk, the higher probabilities against a better entry. This is why I said phasing in at this point isn't a bad idea.

 This is QID 60 min chart, if a divergences isn't strong enough it WILL NOT show up here. There was a negative divergence sending QID lower, but it doesn't show up, what does show up is heavy accumulation. In fact so heavy I decided not to draw on these charts at all.

 The 30 min chart starts to show more detail and the negative divergence sending QID lower, but it's still no match for the current leading positive.

THIS IS THE BIGGER PICTURE I WANT TO PRESENT SO YOU DON'T LOOK AT IT AND SEE A HUGE MOVE AND SAY, "WHY WAS I WAITING TO GET IN AT THE GAP FILL?"

AGAIN, THERE'S NO RIGHT OR WRONG ANSWER HERE, IT'S WHAT FITS YOU.

 QID 15 min, the bottom process which always ends with a sharper right side than left (with tops as well). This is very strong leading positive, the market has been VERY diligent about filling gaps, but this strong chart shows no sign of that, shorter term charts can, but again it's how you want to look at the tactical vs the strategic.

QID 1 min intraday is accumulating all weakness so far, that's bullish for this inverse 2x bear QQQ ETF.