QQQ Chart Update

Earlier this morning I was trying to decide whether or not to book gains in the May QQQ $87 put, I think if I had it wouldn't have been an issue and from what I'm seeing on the charts, the fact that I didn't isn't an issue as the expiration is May standard, so the third Friday of May (17th) which is plenty of time.

There was a double digit gain in these this morning, low double digits, but I would have likely re-entered them at a better price. In any case, I think they have enough time and the charts are bad enough, the stage of the current bounce is far enough along that the slight loss that they are at now (about -4%, that's how fast things change with options) isn't a concern and I think these will return a healthy double digit gain in the mid to upper range.

While I was capturing the charts intraday for the QQQ, I just went ahead and grabbed a few more to give you a more complete picture as I did earlier in the week with the SPY.

 This is the 1 min intraday QQQ chart, note the leading divegrence (negative) to the left, simply compare price at two approximately same areas and 3C at the same areas, is it any wonder the Q's lost ground intraday or short term?

There's a small positive divegrence at the time of capture which was probably 30 minutes ago, it has added a bit to it. Remember, the op-ex pin tends to be lifted around 2 p.m. when most option contracts are closed and price will do whatever it wants and have very little to no bearing on next week's action, however the last two hours of 3C signals on Friday have been very useful to set the theme for the start and sometimes the entirety of the following week so despite price action, it's the 3C signals that contain the most useful information.

Now look at the same chart (1 min QQQ) over the bounce cycle. You may recall as I have reposted it this week, April 11th we knew there was going to be a bounce and I even posted the upside targets I expected which have been hit in 3 of the 4 averages.

This is a pretty nasty leading negative divergence for this cycle.

 This is the 5 min chart with the same "bounce" cycle, note the head fake move BEFORE the upside began and the head fake move BEFORE the downside began, this is why I look for these moves as "Timing markers".

This 5 min is leading to a new low on the chart (3C).

The 10 min covers almost all of the February cycle, which is probably what I'd consider to be the sub-intermediate trend, nearing a more important intermediate trend. There's a clear succession of lower lows and lower highs and as you may recall, one of the last "lower highs" was my upside target to break up the trend and change sentiment to bullish from bearish. However, any bulls are likely to be fleeced as 3C is at a new leading negative low for the 10 min chart going back through the entire February cycle that has also been completely retraced by price,

 Here's a closer look at the 10 min chart within the context of the recent 4/11-15 bounce , note the head fake moves BEFORE the move starts on the upside and as the move starts on the downside, this is the noisy area of the last few days I've been trying to steer clear of.

From this chart alone I feel it's safe to hold the May 17th QQQ puts.

 The 15 min chart with the April 15th bounce, again the head fake moves stand out at the yellow trendlines and we have a deep leading negative divegrence and a very small relative positive to the far right today.

I suspect the most probable trend would be a series of lower lows/highs on a leg down in stage 4, but if there are some extreme moves, that's where we want to get involved and there's usually something.

 30 min with the accumulation of the February cycle (January 27th - February 5/6th) and stage 2, 3 and 4 as the Q's bounce off the Feb cycle lows on the 15th with a leading negative divegrence currently.

By this time it should be pretty clear the probabilities are with the QQQ puts, so I'm okay that I didn't cash in a smaller gain and I think they can do better.

While I was capturing I thought, "Why not show some of the larger, real important trends?"...

This is the Daily chart of the QQQ, check out the depth of the leading negative divegrence through 2014, even BOP (Balance of Power) that I rarely use because the signals are not very clear, is sending a very clear negative signal right now at the deepest negative/distribution low since the 2009 trend started off the 2009 lows.

NDX-NASDAQ 100 Index

 I thought I'd compare the Tech bubble to the current charts like I did with the Dow and 1929, as you can see the tech bubble crept up fast as the F_E_D just kept hiking rates successively to deal with "irrational exuberance". You can see the 2002 base and conformation of the rally from there, the 2007 distribution, the 2009 accumulation and look how big the distribution right now is compared to all of those other major events for the NDX!!!

NASDAQ Composite... Unlike the top 100 NASDAQ stocks in the NDX, this is the entire Composite for the NASDAQ...

Again, the 1000 bubble popping happened fast because of F_E_D involvement, the 2002 base and confirmation of the bull market to 2007, the leading negative divegrence now is staggering in its proportions vs past MAJOR events.

Bottom line, I think the QQQ May $87 puts will be fine