Nasdaq - Q Q Q - Go Short

6 thg 2, 2021

Today the QQQ printed a nice little Doji candlestick pattern. See it circled in red way up there? Could this be a top reversal day?

We've been looking for a temporary top of the very bullish recent post election rally.
At this point, we'd like to label today as wave 3 (purple) in a larger 5 wave up move for this year.
We are getting very overbought and beginning to see some divergences in RSI.

Today also completed the bigger (pink) crab pattern (see the Oct 13, 2020 SPX published chart "Could this be the Trail into the Election?)
at the 1.618 extension as circled in red.

Next, we see a nice little harmonic Bat pattern as a possibility (blue) with a projected pullback in the corrective 4th wave that we think QQQ
is in currently in.
We have lots of QQQ and SPY puts at this point. We're looking lower for prices to drop down into the target in the light green box as shown.
If we hit the target, we'd sell the puts for a nice profit and then buy calls... but first, lets get down to the target.

Although the market is bullish this year and the VIX is getting very low and traders very complacent, we need to watch the upcoming
4-5,4-5 waves to unfold. The market will begin to get more volatile soon as we work through these turns. The easy wave 3 low volatility is probably about used up.
We expect a sudden and surprising down move to chop traders in a volatile indecisive sideways pattern for a while.
If a trader takes a closer look at the short time and sudden drop down for wave 2 (purple), we can now expect a more time consuming corrective wave 4 (purple).
It will need to burn some time, build some energy, and then after shaking a lot of traders loose, resume the wave 5 (purple) uptrend.