The QQQ has gained over 50% in the last four months, we expect a strong correction soon.
On June 10 - 2020. it had its first new high at $248 with an RSI topping at 75.
On June 25 - 2020. We had a new high topping at $251 with a lower RSI 69.40.
July 01 - 2020. We had a new high of $250 with an RSI of 63.
The divergence can be seen when it has touched the same level over and over again but with a lower RSI. This means that the trend is getting weaker as well; the volume Is dying down.
The first corrected is expected to be a 38.2% fib level, around $20.
*The second possibility is bouncing out of the 50 EMA at $232-$235.
I'll kee you guys updated as the trade unfold.
Comment
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*Today it broke a new high, but the volume is very low.
If they can't consolidate at this level, I expect this to go lower.
Great analysis as usual, I hope is a correction only and not a trend reversal
aaronsmth5
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Are we about to really get a 3rd island top today? Are you still seeing a weak RSI on this 3rd new high like I am?
Winallday310
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@aaronsmth5, The RSI is only 66, we have a reach new high of $5. So the divergence still there since there is no volume pulling it up and the trend is getting weaker.
aaronsmth5
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@Winallday310, Yup, I'm seeing the same thing on Thinkorswim. Thanks for the response
gata9aigata9ai
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No. The Nasdaq is headed to 14,000 before we get a major pullback. People are still worried about investing in stocks which is a bullish indicator. FED backed tulip mania is just getting going. You haven’t seen anything yet. When the bears become bulls (will begin to happen around Nasdaq 13,000, that’s when I would “consider” a short position. Anyone shorting this market in July is in for a lot of pain. Follow market psychology and not TA. TA can not help you in a market backed by FED money and emerging FOMO.
Winallday310
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@gata9aigata9ai nobody will tell you correctly when hedge funds will dump their shares.
Institutional shareholders own the majority of stocks.
Gamblerman
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We will have a pull-back because of the RSI divergence, but it will hardly last. Just a counter-trend trade. QQQ is going to 300 by August. Not a good idea to fight this trend. P/C ratio continues to favor the bulls. Too many puts being bought.
mak337
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I like it. I'm in SQQQ since this morning. A bit painful today, but I'm hanging tough for a bit. In addition to bearish divergence, looks like a double top. If it can't break through 251 tomorrow, I like a drop to your target ~230. If it does break 251 and bounces on a retest, I'll bail.
Winallday310
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@mak337, Hold tight, with that weak volume won't break anything. I got in also today noon but driven by FOMO. 3rd day green, maybe one more.
elcidcampeador
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I agree but it also is looking like a bullish triangle (I hope I'm wrong). The biggest divergence we have is between the economy and the index and that never ends well so if we do not have a rational pull back of 10% or so soon and the qqq keeps going up... it will fall hard later.