QQQ Chooses Megaphone

QQQ Selects a Megaphone Top

QQQ Selects a Megaphone Top

Yesterday at the open I showed that QQQ and NQ had a choice of plunging to start a megaphone top or continuing up to form a rising megaphone or rising wedge top.

The Nasdaq put in a little plunge to choose the megaphone top then promptly retraced to the megaphone (navy blue) VWAP.

QQQ could plunge straight from here to the bottom of the red megaphone (pink scenario), retrace to the red megaphone VWAP, then keep going down.  But it’s a strong favorite to put in another move to the navy blue megaphone top (green scenario). That’s because it broke out of the light blue rising megaphone without having formed a proper head and shoulders top inside it.

And it could keep megaphoning after that to morph the potential H&S top into a rising wedge top (purple scenario).

 

NQ has Maxed Out a Set of Price Channels

Nasdaq Futures (NQ) have Maxed Out a Set of Price Channel and Started a Top

Nasdaq Futures (NQ) have Maxed Out a Set of Price Channel and Started a Top

NQ has maxed out a set of price channels to its orange and silver megaphone tops using a system from The Neely Method for counting price channel waves plus traditional methods for drawing rollover channels.  Now NQ has to have started a top for the move out of the July 4th low.

But you can’t short yet.  Although you will occasionally see a very small fast top at the end of maxed out price channels, a protracted megaphone top (green scenario) is more likely and something like a rising wedge or rising megaphone top (pink scenario) would also be typical.

The pink scenario could also change the potential H&S on the chart (purple scenario) into a rising wedge top with another new high after the pullback to the orange megaphone VWAP.   You never know what kind of topping pattern you have until it completes and actually breaks out.

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.