Sorry forgot to include the link in the last one, this one has it
What a move down the /NQ is down over 500 points right now. ASML disappointed overnight and put fears that the AI story may not be all that the bulls were dreaming of with their guide. The why of course doesn’t matter, I’ve been pointing to the Nasdaq weakness for a few days and even mentioned how we were in a big bear flag just yesterday in the recap.
What is a bear flag? A bear flag is a chart pattern that forms when a name comes down and can’t find buyers to push it higher so it flags at the lows instead of the highs like a bull flag. This means more likely than not, something is coming to where that bear flag will break lower. Again why charts trump all, they show the actual positioning of money and and as we’ve seen for 5 days now, money is not positioning in large cap tech ever since CPI last week.
The QQQ is clearly breaking down below the 21 ema right now. If this closes below here, big tech is done for a little bit. The next level of support is the 50 day down at 470 but this is what bear flags do, they break down. Now, it takes a couple weeks for the moving averages to settle down, flatten out, and be reclaimed. Unless you’re holding onto a trade for tax purposes, tech shouldn’t be on your mind for now. Of course this could be a fakeout and we reverse up like we do in seemingly every name with technical damage, but if you are disciplined, you don’t go long below the 21 ema and you remove risk as well until we are back above it. That simple rule of thumb will keep you from every getting hit in prolonged drawdowns. If you’re long alot of tech now, I would sell covered calls vs your positions now if you don’t want to sell for tax purposes. These will be weak and you can generate income on your position as you hold.
The SPY, below, is losing the 8 ema today but it still remains over the 21 ema and looks ok. Other things besides big tech are doing well, that is all we can say for now..
Recent Trades
PLD - In the 7/2 recap here I noted this risk reversal on Prologis and it is up around 6% today to 128.50. Overall since this trade was posted the $100 short puts went from 2.25 to .60 for a nice gain and the 130/140 call spreads went from 1.20 to 3.90. The entire trade was placed for a credit and both legs work. That was an excellent trade and had everything in place from macd inflection to risk reversal placed. Just beautiful.
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