Why I Consider This Short Setup to be One of the Best Ever
I've been watching this NQ setup for a couple of weeks now ever since it broke below its major uptrend from 2023. That was a big move down, but after only a couple of weeks, NQ is back for the retest just like I was hoping for. There are many things that make this a fantastic setup in my eyes, but the risk/reward is also great because you are entering right on the level if it breaks against you, you can exit quickly with minimal damage.
On the other hand, if this works and it ends up being a major top on NQ, you could hold comfortably for months and watch the cash flow in assuming the trend continues, which is what stocks usually do.
TLDW: Multi-year pattern breaks and retests on the major averages and many stocks including the mag 7 and semis. Everything is seemingly at major multi-year trend tests at the same time, so I expect fireworks here. My bias for now is short, but we'll find out soon enough if I'm going to need to take a loss and flip long or not. Remember, a multi-year pattern can take weeks or possibly months of consolidation before a breakout, it doesn't always happen in a day or a week.
We may have some big red days, but this trade is more about the belief that regardless of short term fluctuations in price, we will trend lower for the foreseeable future. We'll see how this one turns out.
On the other hand, if this works and it ends up being a major top on NQ, you could hold comfortably for months and watch the cash flow in assuming the trend continues, which is what stocks usually do.
TLDW: Multi-year pattern breaks and retests on the major averages and many stocks including the mag 7 and semis. Everything is seemingly at major multi-year trend tests at the same time, so I expect fireworks here. My bias for now is short, but we'll find out soon enough if I'm going to need to take a loss and flip long or not. Remember, a multi-year pattern can take weeks or possibly months of consolidation before a breakout, it doesn't always happen in a day or a week.
We may have some big red days, but this trade is more about the belief that regardless of short term fluctuations in price, we will trend lower for the foreseeable future. We'll see how this one turns out.
Nota
Got a bit of a squeeze today. Nice gap up and slow grind all day long basically. I do think VX was too strong today relative to the rally on ES, it's still holding demand after a brief move below. However, we have OPEX and other data this week the market may not be done reacting to yet that make VX analysis less reliable. Sometimes VX goes up because traders begin to hedge before events, but that doesn't really mean the market will go down.
As I've said since early in the week, this thing is not over from here. We still have consumer sentiment tomorrow and then the market can figure out what it wants to do. I think it is still unclear. Look where QQQ closed, right at the $475 level. It's another important spot, we'll see what the market decides to do and react. That's all we can do.
I personally did not close any puts today. I got a decent amount of COIN and GME yesterday and I slowly bought more all day. I have enough now, I'll sit on hands until it is time to stop out or take profit. Another big move for NQ today, over 2% on the session. I have a feeling we will see some big ranges soon and we've already been seeing it for a while. It's just a matter of if the volatility continues or not. Godspeed.
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