Hi shoppers,
Licia here with your Profits in Pumps, video edition this week. Same great content, just delivered a little differently.
Let's talk about the Invesco QQQ Trust (QQQ), because Monday's action is going to matter.
Why Monday's Open Is the Moment of Truth
Going into Friday, QQQ had a clean bull flag working. Price traded in a tighter and tighter range, respecting the uptrending median line every single time it came near it. Then it did exactly what a bull flag is supposed to do: it popped right over that resistance, turning those all-time highs into new support.
The level to watch is 747.42. That's the gap support. Under gap rules, if price maintains that level for a day or two, the rally continues and the next target (TGT) is 761.50 at the top of the channel.
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Here's what makes me a little nervous, though. Friday closed as a doji-style candle. If Monday opens below 747.42 and trades lower, and the real bodies of Friday's candle and Monday's candle don't touch, that creates what we call an evening star. That's a change-in-trend signal, and it's not something to ignore.
So here's how to think about Monday. If QQQ opens below 747.42 and stays there, puts make sense. If it maintains the gap and holds that support, calls are in order. One level, two very different trades.
The same setup is playing out in the VanEck Semiconductor ETF (SMH). Friday, SMH stopped right at the median line and popped. It's holding that move well. Watch for the same evening star possibility, or a continued leg higher if the gap holds. Same rules apply.
Monday will tell us a lot. Are we topping out again, or does this rally have more room to run? Keep your eye on that open.
Thanks everyone. Have a wonderful weekend, and I'll see you Tuesday. Let's make some money out there.
Licia