Sell / trim the pop, buy the drop. So yesterday the Nasdaq ran like 4,5% on a single day. Chances are favoring consolidation/pullback the day after. What are the odds of 2 consecutive 4+ % days? I don't know, but I better take some profits off to avoid being too greedy.
My plan for today is see how deep we retrace from here. On a small time frame I have a ABC correction that is likely to end in the 13.000+ region. If I see any price action I will buy back the calls I sold for profits yesterday trying to ride to the new high. See my chart below.
Recap of yesterday:
Trend channel did his job and took care of a (small) reversal or better said: exhaustion of the huge power move (cycle wave 3). As expected we are now moving sideways in wave 4 which is very typical and thus confirming that we are building energy for a next impulsive move higher. My expectation is that we will retrace to the 12681 area today or tomorrow before we run up higher. Failing to hold the trend channel drawn in wave C would take me out of the trade.
This are my main scenarios for now:
A) Neutral/ scenario: we start a new impulsive move up and are aiming for 12970. I'm long now, but will trim some longs if we get here. 12970 is the 123.6% extension of A projected on wave B. Failure to break this confirms me that we are in a corrective pattern and that we are currently kicking out all the short sellers before we go lower (below 12.200) which is very common in auction theory.
B) scenario: if we are able to breach the 123.6 level easily and even reaching the 13.180 zone my bias changes to very . That would be my sign that the correction is over for now, which opens up the way for new ATH's in the next weeks/months.
QQQ 330 Sept C (50% of the original position)
NQ Sept 15000 C
Let's follow this up and see what comes next.