Two Places the QQQ Can Run This Week

I was going through the QQQ this afternoon and I found something I had not even noticed.

There are two gaps sitting on that chart right now. One above us and one below us, and neither one has been filled.

Which matters this week specifically, because we have three scheduled events that can move this market hard enough to fill either one. PMI tomorrow morning, ADP on Wednesday before the bell, and the employment report Friday.

And the 10-year just broke out completely. Rates are running and the market is not down anywhere near as much as it should be.

Something has to give there.

Below I will show you both gaps and the exact levels, plus how to find these on any chart you own.

Because once you can spot a gap, you know where price is going to travel to before it starts moving. Not the direction, but where it lands when it goes.

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Start with what a gap even is, because this is one of those things people nod along to without knowing.

A gap is a price range that never traded.

The market closes at one price, something happens overnight, and it opens somewhere completely different. Everything in between got skipped. Nobody bought in that range, nobody sold in it, and nobody holds a position anywhere inside it.

And that is exactly why price keeps coming back to fill them.

Think about what a normal price level looks like. People own things there, some of them up and some underwater waiting to get back to even, and every one of them does something when price arrives.

A gap has none of that. Nobody is standing in it, so when price starts moving through there is nothing to slow it down and it travels.

The two on the QQQ right now

There is a gap above us running roughly 721 to 730. That is about a 10 point move to fill it.

And there is a smaller one below, roughly 715 down to around 710, which is about five points.

So we have 10 points to the upside and five to the downside, both open, both unfilled.

I am not telling you which one fills first, because I do not know. What I am telling you is that both of them are sitting there, and when this market finally decides to move, those are the two places it is most likely to travel to in a hurry.

What could set it off

Three things this week, and all of them are on the calendar.

PMI comes out tomorrow at 9:45, which is after the open, so watch that one. Intraday data lands differently than premarket data because everybody is already positioned when it hits.

ADP is Wednesday before the bell, so if that surprises you get a gap at the open.

And the employment report is Friday, which is the big one.

Any of those three can produce the move, which gives you three separate chances in one week to close one of those gaps.

What has me on edge

The 10-year has completely broken out and rates are running.

Mark made the point this afternoon and it stuck with me. Given what rates are doing, the market should be significantly lower than where it is, and instead it is sitting here chopping around and mostly ignoring the bond market.

That kind of divergence does not usually last long. Either rates come back in or the market comes down to meet them.

And I will be honest, I am getting mixed pings on the QQQ and bearish pings on IWM, which looks terrible right now. I do not think small caps run this market, but it is interesting that both are pointing the same direction at the same time.

The seasonality thing

Everybody is going to tell you September is the worst month of the year, and historically that is completely true.

I am not acting on it right now, because this summer was not normal. The chop has been unbelievable, the usual relationships kept breaking, and nothing behaved the way the calendar said it should.

So I am not about to start trusting historical averages in a market that has spent three months ignoring them.

If September does what September usually does, fine. We will see it in the price and we will trade it.

What I want you doing

Pull up the QQQ on a daily, find both gaps yourself, and mark them on the chart.

Then watch what happens around 9:45 tomorrow and again Wednesday morning.

You are not trying to predict which one fills. You are trying to know where price can run once it starts moving, so you are not sitting there surprised when it arrives in twenty minutes.

Rock On,

Voz

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