QQQ in correction - How low will it go?
QQQ lost the 20 day SMA yesterday. History shows that there is a very strong probability that it will go lower. Today say it hold at the support of the AI-based rally over the last year or so. It broke through that the other week, but then we say the strong rally. I noted back then that it felt like a dead cat bounce counter rally to me. Looks like it is proving to be true. It is going to be tricky knowing where this one will stop. I previous posts I noted that red trend line a critical level and that is where we saw the dramatic bounce start from. I am sure where this one will stop. QQQ is usually very bullish and the second of two corrections can often be less than that first. I am looking at that red trend line again, the 200 day SMA, as well as the center of the trading channel.
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Lost support and down she goes.
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Friday the 13th. Here is my bearish idea. Not sold on it, but maybe.
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Action was all over today. Gap up this morning, sank to negative territory early afternoon, and then slightly positive to close out the day. Looking for a breakout of this down trend. I am not sold on how high this really has to go. The blue channel has been critical resistance since 2010 time frame, only broken during the COVID bubble and the brief stint in July. Maybe the market is looking to the larger black trading channel set by the covid rally as its new resistance. FOMO for the fed rate cut seems strong, but stocks are clearly in the higher reaches of being overvalued.
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So far, the down channel is holding strong.
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With a big morning gap up and strong buying all day, it seems that QQQ maybe out of correction.
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This is the last possibility for a bear case. Otherwise, FOMO is back.
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Last update for this idea. Broke out of the down channel this week and even had a day above the long-term trading channel. Today (Friday) saw a pullback into the channel with a test of support on the previous down channel. Also, the latest rally created a higher high. It looks like the bullish action will continue. Will we be able to break back above the trading channel like back in June?
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