Why I Won’t Swing This Thing Right Now

People keep asking me why I prefer to day trade the QQQs in the morning.

Fair question, because it's a great instrument. It moves, it's liquid, the options are cheap. And you just need a tiny move in the index to get a triple-digit return on your options.

It’s how I’ve nailed 44 out of my last 50 trades in it.

So why wouldn't I hold it for a few days and let it run if my entries are so on point?

Because I've been staring at this chart all week and there's one feature on it that decides whether the next move is up or down, and right now that feature is telling me to sit on my hands for anything longer than a session.

It has nothing to do with the trend or a moving average or volume.

It's the shape of the pause.

Below I'll show you what I mean, why it makes a swing trade in here dangerous, and why the exact same condition is the reason the morning trade works so well.

Every chart that's going somewhere does the same thing on the way.

It runs, it pauses, it runs again. And the part most skip past is the pause, because it looks like nothing is happening, so nobody bothers to look at it properly.

The pause is where all the information is.

When a stock takes off and then consolidates in a tight little range, that's buyers holding on.

Nobody's panicking, nobody's dumping, they're just waiting.

Those are your tight flags, and when one breaks the move usually continues, because the people who were going to sell already had their chance and didn't take it.

Now watch what happens when the pause gets wide.

A wide, sloppy, choppy consolidation is a completely different animal, and what you're watching there is buyers and sellers arguing with each other. The range keeps expanding, you get big swings inside it, and nobody's winning. The longer that goes on, the more likely it resolves down instead of up.

That's where the Qs are right now.

What This One Is Doing

We had a nice move up. June hit and we consolidated. We got a pop out of that, which was great.

But this consolidation is getting too wide.

We need tight flags to the upside and we're not getting them. And the longer we don't gap up and don't break out and continue the trend, the more likely we fall.

I've seen this exact thing before. Go back to December into January, when we were consolidating and just didn't have any momentum. Same structure, and you know how that ended.

So I can't have a stance on the Qs for a swing trade right now. If we can't gap up, or at least start breaking down, we're kind of just nowhere.

Nowhere.

Why That Kills A Swing

Think about what you're asking for when you hold something overnight.

You're asking the chart to keep going in your direction while you're not watching it. You take the position, you go to bed, and you find out in the morning whether the overnight session was kind to you.

A tight flag makes that a reasonable ask, because everybody in the name agrees on roughly what it's worth and they're just waiting.

A wide chop makes it a coin flip. The range is expanding, the swings inside it are getting bigger, and the thing that decides your trade is whatever happens between 4pm and 9:30 while you're asleep. Call that hoping, because it isn't a setup.

And it hurts more in the Qs, because they move more than SPY does. Same signal, bigger swing, which is fantastic when you're right and expensive when the structure is this messy.

Now Here's The Fun Part

Everything I just described as a problem for a swing trader is a gift to a day trader.

Wide range means big intraday moves. Buyers and sellers arguing means the thing travels. Choppy structure means it goes somewhere every single session, even when it goes nowhere over a week.

I don't need this chart to trend. I need it to move between 9:30 and 10am, and a wide messy consolidation is one of the best environments there is for exactly that.

Which is why I stopped swinging this thing and started taking one trade a morning instead.

I'm going live tonight to walk through how that morning trade works, including the specific move I'm looking for before the bell even rings.

So today, look at the pause on whatever you're holding. Is it tight, or is it getting wider? That tells you which of these two jobs you should be doing with it.

Rock on,

– Voz

P.S. I'm going live tonight at 6pm ET to walk through the morning trade on this exact ticker.

How I find it, what I'm looking for before the bell even rings, and why a chart this messy is the one I want. It's free and I'd love to have you there.

See you there!