The Difference Timing Makes

The Fast Top Scenario at Friday's Open - Didn't Play Out Because QQQ Bogged Down

The Fast Top Scenario at Friday’s Open – Didn’t Play Out Because QQQ Bogged Down

The chart above is the fast top scenario from Friday’s open. If QQQ hadn’t bogged down at 144 for the last four hours of the trading day, QQQ would likely be crashing now.

QQQ's Stall on Friday Means It is Unable to Complete a H&S Top Here Inside the Blue Rising Megaphone

QQQ’s Stall on Friday Means It is Unable to Complete a H&S Top Here Inside the Blue Rising Megaphone

Instead, QQQ’s stall on Friday means it can’t complete a head and shoulders top here inside the blue rising megaphone.  It could still complete a H&S top across the blue rising megaphone bottom (pink scenario), but that scenario is so rare I used to think it didn’t exist.

Friday’s stall means QQQ is a strong favorite to put in a higher high outside the blue rising megaphone if it breaks out of the megaphone here (purple scenario).  Otherwise, QQQ should continue melting up the blue rising megaphone, typically forming a rising wedge or rising megaphone extension, until it forms a H&S somewhere near the top of the red megaphone.

But if anything can trigger the rare pink scenario, it would be something like a surprise FOMC announcement, so you can’t get too smug about long positions.

Perfect Set-Up for the Fast QQQ Top

QQQ Head and Shoulders Top

Right This Second the Green Fast Top Scenario is the Favorite

QQQ just filled Wednesday’s gap up and bounced in a way perfect for setting up a head and shoulders top on the blue rising megaphone top for the silver rising megaphone.

If QQQ can complete the green scenario’s H&S top inside the blue rising megaphone and break out from both the H&S and rising megaphone at the same time, it would be a perfect set-up for a fast crash to the bottom of the red megaphone high odds of a retrace to VWAP and then continued crash down out of the larger H&S on the chart.

We’re at the tail end of the timing band for a Sornette bubble crash call of at least 20%.   QQQ has a mandatory megaphone VWAP retrace target of roughly 100, with the megaphone bottom at 70 if QQQ manages a genuine breakout through VWAP.

A fast stab at 100 that started getting bought hard before reaching 100 would be a fantastic set-up for a gigantic move up.  Exact long-term targets would depend on exactly how and where QQQ reversed.  I’ll do a long-term chart after we see how QQQ tops for this dip.

But the green topping scenario is not a lock.  There are more ways for QQQ to extend this move than I can show on the chart.

QQQ Takes Out June 9th High but Within a Megaphone

QQQ has Taken Out the June 9 High and Put a New High in its Red Megaphone Right Shoulder

QQQ has Taken Out the June 9 High and Put a New High in its Red Megaphone Right Shoulder

QQQ has taken out the high of the big red June 9th candle. That kills a Neely correction set-up.

There’s still a Sornette crash set-up, but even that’s dragged out a bit long.  A Sornette crash call leads 60% of the time to a crash of at least 20% that reaches the target within two weeks of the call.  We’re right around the two week mark now.

QQQ could still put in a crash to at least 105ish very quickly by putting in the green scenario, which is a megaphone right shoulder on a potential head and shoulders top.  Usually a megaphone right shoulder leads to a squeaker new high for the formation.  Then a larger H&S completes and breaks out downwards.

The 40% of the time that a Sornette crash call fails, you’ll still usually see a decent-sized correction, often within a megaphone consolidation.  In that case, we could see the purple scenario, but the blue scenario becomes the favorite.

The blue scenario is a stab at the 105 retrace target within the red megaphone.  QQQ fails to get all the way to the target and then breaks out upwards from the red megaphone after an aborted attempt to retrace to its VWAP.  This set-up would likely lead to a huge melt-up.  Think 70ish points on QQQ from the high before the dip, 600ish points on ES.

NQ Price Channel or Rising Wedge Right Shoulder

NQ has Put In a Rising Wedge or Price Channel Right Shoulder

NQ has Put In a Rising Wedge or Price Channel Right Shoulder

NQ has put in a price channel or rising wedge right shoulder on its potential head and shoulders topping pattern.

The price channel would be in its critical decision wave, with NQ having failed to zoom to the channel top to set up an upwards breakout.  That means, whether it’s completing a price channel or rising wedge, NQ should pause here to form at least a temporary top on this move up.

NQ could top here to complete a right shoulder on its H&S before a crash down through the neckline (green scenario).  Or NQ could form a bigger, looser top to tag the high and create a double-headed H&S before a return to the neckline and a new right shoulder (likely a triangle right shoulder).

Or NQ could consolidate here in a false top within the orange megaphone before a retrace to its VWAP and a trip to its top for another new all-time high (blue scenario).  NQ could also consolidate briefly and then just head straight up to the orange megaphone top.  Either way, after a new all-time high it would need a retrace to VWAP before it was legal to break out upwards.

There’s a Sornette bubble crash call on the FANG stocks.  That means we’d see the green scenario roughly 60% of the time.