The Qs Bounced Right Into the Spot Where Bounces Die

Wednesday’s relief rally in the Qs was a joke. You just know it.

I pulled up the Qs yesterday afternoon and before I drew a single line I’m like, I bet you this thing is sitting on a Fibonacci level right now. I’m not fibbing.

I see Fibonacci everywhere, and as you guys know I’m from Planet Palm Tree so I’m not even from this world.

So I pulled the fib.

And there it was…

The Qs ran right back up into the spot they broke on Friday and got slapped.

Everybody saw the Dow up 3% and called it a bottom. I saw a retest, and there is exactly one level on the Qs that tells you which of us is right.

One thing first, and I promise I’ll only say it once.

The longer a market consolidates, the more likely it drops. The lower it sits inside that consolidation, the more vulnerable it is to break on a catalyst.

The Qs have been in a wide consolidation for weeks and they’re sitting at the bottom of it. The first catalyst was the midterms. SPY had a nice move, the Qs went nowhere, and when the leader doesn’t lead, pay attention.

Inside that box there’s a pattern, and here’s the rule most people skip. You can see patterns on your charts all day long. They don’t matter until they’re activated.

The Qs put in a bear flag. That’s a sharp drop, the pole, followed by a lazy bounce, the flag. Through Thursday the 29th it was still just a shape. Friday the 30th we gapped down through the bottom of the flag, and that’s the trigger.

Once a pattern triggers you’re not guessing anymore. You’re dealing with probability, and the odds now lean past 50% that it keeps going. So you measure, and you do it twice.

Measurement one, the flag. Take the height of the pole, start from the point where the flag broke, and project it down. On the Qs that lands right around 667.

Measurement two, the fib. Draw it from the start of the descent to the base of the flag and watch how price behaves at the levels. The Qs had already broken the 13% level, and yesterday they ran back up, retested the base of the flag, and wicked right off it.

That’s a rejection, and the extension from there lands between 672 and 665.72.

One off the flag, one off the fib, about 5 points apart. You can’t make this up. When two measurements you took separately land on the same spot, that’s not a hunch anymore, that’s a target.

Mark pulled one more thing from Tim Colby in our traders channel. QQQ up over 1% on a day SMH closes down happens about one and a half times a year, and we got it yesterday, at the highs.

The Qs were running without their engine.

So I’m looking for the Qs to land somewhere between 665 and 672. I don’t know if that’s tomorrow or next week, which is why I’d rather have time on my side than a lottery ticket.

Now take the rule with you. Next time you see a pattern, ask if it triggered. If it did, measure it, then measure it a second way. If the two agree, you have a target.

This is all valid unless the Qs close back above 724.14, the top of the flag, and that’s a long way to go, homies.

Rock On,

Voz

P.S. The last time a Trump midterm ran into a December Fed meeting, the Nasdaq gave up 12.4% before the new Congress even sat down. Mark thinks it’s setting up again, and he fires his first trade on it Monday at the open. SEE WHAT HE’S TRADING