QQQ Daily, 05/05/2014: Time to leave price channel behind?

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Normally when you see a big reversal day like today, you have huge volume , but not today as Q's only traded 27 million shares. Still, price is the only thing that pays.

Now, after being contained within this falling price channel for nearly two months it does appear that the Q's will break out of it tomorrow. Depending on how your upper resistance line is placed, you could say that the Q's closed above that upper line today. So if the Q's can get any juice behind them tomorrow then they could not only break out of the channel but push above the swing high of 88.21, which is just below the next resistance level at the 50MA. If the Q's should fail now, then there's something very wrong with this sector. But I don't think they'll fail and the break out of the falling price channel gives us a bull flag . The width of this price channel is almost $4 dollars so the measured move from the break out would ultimately take the Q's above the swing high at 91.36 to around 92. In a perfect world. Let's first see if they can break out of the channel and do so with gusto before worrying about a move to $92.

Good Morning. more down today
I appreciate the charts. Respectfully, I think we are not in a channel, but in a descending broadening pattern. I'm positioned for one of the largest down trends of our lifetime and I believe the next leg down started at 88.21. I'm all-the-way-in SQQQ's.
CurtisM calmthewaves
calmthewaves, thanks for your comment.

Yes, I see that pattern. Back in January I saw the same pattern in the DOW and sure enough it proved predictive. At the time I didn't know it but this is what Basil Chapman calls a 'falling axe pattern,' and Basil is one of the best out there. But the parameters are very clear and if the Q's rise above 88.21, then that negates the falling axe pattern so I hope you have a stop in somewhere around the equivalent SQQQ level.

I do agree with you, Curtis. I place most of my positions before market closed.
CurtisM jasonexcel
jason, thanks for your comment. I think it's very important to use at stop at this stage of the game, but not a trailing stop. I think a hard stop at a set price is best. Then you can move it up as we go along. I don't like trailing stops because you're almost guaranteed to get stopped out on some day when there's a big intra-day move and then, after you've been stopped out, you get to sit and watch the market go higher without you. Once I get my stops set, I take the attitude of, "If you don't stop me out, you won't shake me out."

+1 Reply
ps. UL and UN shorts worked
CurtisM stockSMASH
biff, I think the trade on the Q's is at the upper price line. Enter there with a small position and a conservative stop and then move the stop up as we go along while adding to the position. I have 2/3rds of what I want in TQQQ and will look to add the last 3rd tomorrow or Wednesday.

Been tracking transports for years as they sometimes can be the canary in the coal mine Looks like a hammer today so expect transports to rally tomorrow.

Congrats on your UL & UN shorts.

never seen anything like and perhaps after qe and negative 0 interest rates ...we never will... i took some profit on the gap down. but still holding some shorts that are not working XLI. IYT did gap down and reverse. if it breaks over friday's range... market is gone... like up gone 1900 and more. but if does not... if the transports fade... watch out. market loves to fake out on the index stuff... but iyt is the bellwether and it can be a crystal ball. I caught the gap this morning LONG upro and the move was incredible. We are extended above my algo lines and we must trade down under them... but weekly has been blown monthy... there is a chink in the armour... and when the big boyz sell this bloat... the gas and force down may surprise. that said... i got money ready to be long tna and upro
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