NASDAQ And QID

The rally off the March 9 low sure has the look of a Bearish Wolfe Wave that possibly ended in a Bearish Rising Wedge at Wave 5. I would have liked it better if the NASDAQ had a Fakeout Breakout at Wave 5, but the April 13 high of 1660.83 fell shy of the trendline by roughly five points.

As we know, Bearish Rising Wedges are notorious for "morphing" (changing) into H&S Tops, which is what I was watching for when the NASDAQ gapped down yesterday morning and found a short-term bottom at 1631 to form a possible neckline with Tuesday's 1630 low. When the NASDAQ rallied to fill the morning gap and to form a possible Right Shoulder, I shorted it by going long the QID in both accounts in the 40.90s, just above the gap. That worked out nicely. The low on the session was 40.83 then the NASDAQ sold off and broke the 1630-1631 neckline of the H&S Top.

After rallying above 42.00, the QID looked to be putting in a very short-term H&S Top with the neckline at 42.00. I sold both positions just above the 42.00 neckline. The break of the neckline put a downside target of 41.69 IN PLAY, so I re-entered both postions in the low 41.70's.



Gain: $4,300. I'm long the QID from 41.70 and 41.72. We can see in Chart #2 above that the NASDAQ already has had a failed retest of the 1630-1631 broken neckline of the H&S Top. The afternoon high got above it, to 1635.33, then failed. If the NASDAQ rallies back above that high, I'll throw it in and keep roughly half of my gains from yesterday's trades.

On the downside, the broken H&S Top in the 10-Minute chart put roughly NASDAQ 1600 IN PLAY (1660-1630 = 30 points of downside from the break below 1630). That's just above the 1590-1596 gap in the chart from April 8, so given the broken H&S Top, a move down toward that gap seems reasonable. Especially so, since I'm long the QID ;)