Don’t Let Monday’s Big Green Day Fool You

Monday was a relief rally, in my opinion.

Listen, I know how good that green felt after the week we just had, and if you bought that rip thinking the bottom’s in, this one’s for you.

QQQ already broke support, there’s no volume support underneath it, which means nothing is sitting there to catch it if the selling comes back, and the market sold off right into the bell Monday.

We have not had the head-for-the-hills moment yet, and when it comes it has a tell.

I’m going to show you exactly what it looks like so you’re ready to trade it when it shows up instead of getting caught in it, plus the two mornings this week that could set it off.

QQQ was in a vulnerable situation, now it’s in a dangerous situation. The S&P is still in the middle of nowhere, it keeps flirting with the bottom of its range, and the more you flirt with the bottom, the more vulnerable you are.

QQQ already broke down, it broke support and fell right out of its volume profile.

Quick translation on that. A volume profile shows you the prices where the most shares traded hands, and those heavy spots are where buyers stepped in before. Below where QQQ is now, those heavy spots are gone.

When you’re in a thin area like that, it’s willy-nilly, anything can happen. But if there’s pressure, price will give more into that pressure, and if there’s a catalyst it helps push price lower.

We went from vulnerable to dangerous, and now we need some sort of news. Of all the stories that broke over the weekend, the Nvidia one was not on my bingo card, but that’s not the news that does it.

The bigger picture is the AI race is real, and the real story is did they get ahead of their skis, and I think that’s why the market is taking a big pause.

When you have the kind of selling we had up until Friday,

Monday is either going to be a relief rally or the rollover begins. We got the relief rally, and I think we retest that area down below.

Mark’s been saying this feels like an orderly sell-off, and he’s right. This feels like a lot of selling.

It isn’t.

What I’m waiting for is the head-for-the-hills moment, and that’s when you start getting true gaps down and follow-through.

A gap down is when the market opens way below where it closed the day before, so there’s an empty hole on the chart where no trading happened, and follow-through is when it doesn’t bounce back, it keeps going the next day too.

We have not had that yet, guys.

So if you’ve been wondering whether every bounce is the bottom, this is how you tell.

Until we get gaps down with follow-through, this is an orderly sell-off, and you don’t have to panic on every red candle or buy every rip like it’s the all-clear.

Mark ran through the calendar with me, and there are two mornings this week where that news could hit.

CPI, the government’s monthly inflation report on consumer prices, comes out Tuesday before the bell, and PPI, the same idea on the wholesale side, comes out Friday.

That pre-market economic data always creates some sort of violent move if traders are reacting to it, and Thursday has Cisco and a few other decent-sized earnings on top of that.

Until then, we’re back to buying the dip and selling the rip in QQQ, and you’ve got to just follow the pattern.

QQQ is moving inside a channel now, two lines it keeps bouncing between, and as long as we abide by it, the path of least resistance is lower, because there’s no protection there.

This is going to be a fun week, guys.

Rock On,

Voz

P.S. CPI drops Tuesday before the bell, and that same morning at 9 AM ET I’m doing an open house in Game Plan, Tuesday, Wednesday and Thursday, free, trading the Qs live as we head into our hot season. If the flush shows up this week, I want you in the room when it does. COUNT ME IN