Important bearish movement alert in QQQ -
Updated
Im blasting this out there premarket to all of you on Tradingview, but I already did so yesterday prior to close to the people I directly advise.
Market bottomed on Oct 13th, 2022, but most of the big money trend following systems couldn't have possibly sniped it at that point. Rather, they'd have waited until Jan 26th, 2023, when price crossed up over the widely followed 200 day SMA.
So why am I writing this as a warning?
Well, that's almost EXACTLY a calender year ago. Those of you who actually make a profit know how important the calender year is..... as the tax rate drops substantially from your normal income tax bracket down to long term capital gains.
It stands to reason that this event, along with the earnings of the megacaps this week, will present a massive round of "profit taking". That's just a nice word for selling, folks, and it has the same effect on markets as a panic sell. If you run this same scenario on QQQ back in 2008, the following week witnessed a 17% crash. While that is very extreme, I definitely see a drawdown here. I sent this out yesterday prior to close to everyone locally, as Microsoft and Google were set to announce earnings after the close and I was very worried that there was almost no scenario that WOULDNT result in a selloff.
Market bottomed on Oct 13th, 2022, but most of the big money trend following systems couldn't have possibly sniped it at that point. Rather, they'd have waited until Jan 26th, 2023, when price crossed up over the widely followed 200 day SMA.
So why am I writing this as a warning?
Well, that's almost EXACTLY a calender year ago. Those of you who actually make a profit know how important the calender year is..... as the tax rate drops substantially from your normal income tax bracket down to long term capital gains.
It stands to reason that this event, along with the earnings of the megacaps this week, will present a massive round of "profit taking". That's just a nice word for selling, folks, and it has the same effect on markets as a panic sell. If you run this same scenario on QQQ back in 2008, the following week witnessed a 17% crash. While that is very extreme, I definitely see a drawdown here. I sent this out yesterday prior to close to everyone locally, as Microsoft and Google were set to announce earnings after the close and I was very worried that there was almost no scenario that WOULDNT result in a selloff.
Note
First stop will be that bullish trend line, which I don't think will hold here....although it may be good for a pause. I think it's more likely we head for the 200 SMA.I am particularly worried about the high flyers such as Nvidia here. Intel dropped 12% at it's earnings last week and Nvidia shrugged it off. Now AMD is getting hammered after their earnings last night and I don't think Nvidia escapes this one unscathed. I think Nvidia is wildly overvalued but, more importantly, it's the poster child for the AI movement that's been powering a lot of the upward price movement of the tech heavy nasdaq the last year. If the head of the snake gets cut off.... well.... yeah.
I strongly advise to lock in profits, as I know there are about to be thousands of others who are doing just that.
Note
I have a lot more technical evidence of an already overextended market in addition to this bearish "profit taking" scenario I talked about above, but I left it out of here simply because I wanted to get this "alert" out premarket to the good folks at Tradingview who have given me so much information and wisdom in the past.
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