Market Update: Patience Is Still the Name of the Game

I have some interesting charts forming pretty fast in the NDX/QQQ and what makes them a bit of an unusual situation is the parabolic move down this morning, again, I don't trust parabolic moves up or down. Let me get to the charts, this will specifically be a QQQ update as proxy for the broader market since it is looking the best right now.

 This is the 15 min QQQ, the move down this morning was very parabolic, the NASDAQ Biotech Index was slammed, down over 5% today alone and that's the index..

In any case, the Q's are close to a "W" and are showing accumulation, more so and faster than the other averages thus far.

Here's a closer look at the QQQ 15 min and where the "W" support would be and...

This is the same in the IWM which seems to be holding up a bit better as far as rrelative performance and letting the other averages catch down to it. You should be able to make out the "W" pattern, although FAR from textbook.

This is the QQQ 1 min as of just a little bit ago, it has since made another leading higher high

The 2 min chart is seeing migration as a normal healthy divergence should, this has also improved since the capture ...

And the 3 min is extremely impressive this fast.

 The 5 min chart is now seeing migration to the timeframe so it appears this is a solid, real divegrence, but is it part of a wider divergence as we suspected it may be...

Looking at the 5 min chart with more perspective (as well as the 10, 15, 30 and 60 on an intraday basis), this looks like a separate divegrence NOT connected with the initial positive divgerence/base that was used up in to the knee jerk on the minutes yesterday.

We had two very good trades the last two days, the QQQ Call closed Wednesday for a 45+% gain and the IWM put from yesterday closed today for a nearly 62% gain, I don't want to get cocky/over-confident.

My problem with this area is the lack of a reversal process in appropriate size, but then again the parabolic move down tends to the following make reversal process tighter. It's not the ideal situation for a Call position in the QQQ or say a leveraged long QQQ-based ETF and that's because of the size of the footprint.

I do think I'd have any short term shorts from yesterday (meant for the move down we already saw today) wrapped up by now, I don't see the edge in holding them as TRADING positions, as longer term probability trend positions, that's a different story.

If today's action (poisitve) near the lows was part of the larger "W" base, I wouldn't have that much of a problem with it, but as it appears it is distinctly unique, I'm a bit worried about it.

So I think the best course is to be patient, see if this gives us a larger footprint which would have even better 3C signals and go from there. Remember tomorrow is a weekly op-ex max pain pin so it's hard to say what this divergence is about, perhaps moving the Q's to the max pain level before tomorrow or by tomorrow around the open or is this something else? I don't think the question is as important if we have the larger reversal process.

I'm going to take a closer look at the NDX Biotech Index and see what might be available there.