Actually, the title is a click bait. Big picture wise, QQQ is fine and it is real hard to find a structure risk at this point. I know some of us are worrying because QQQ looked weak today, but as explained earlier, stocks are under pressue today from Bond market. In the past, when bond yield rise 0.1%, it is a big thing and I have seen Nasdaq and SP500 going down 1-2% with this happened. So, the fact we actually closed in green showed market is buying at weakness. Also Nov VIX has been going lower and now under 20, which is another sign that investors do not see big volatility.
But we do need to be mindful about the potential risk. If I have to think of one big risk for QQQ, that would be the upcoming earning season where an unexpected surprise such as the one from ASML coming from any of the big 7 stocks. Investors are in the waiting mode: they do NOT want to miss the boat to ATH and that is why stock has been brought up every time it went lower, but they also do not want to commit for fear of an earning shortfall
What does this have anything to do with tomorrow?
- For QQQ, regardless if we open high or low, I think it will range bound with a high not exceeding 495 and a low not below 488. If QQQ opens high tomorrow, it may not be a good idea to chase, and if it opens low tomorrow, please do not panic.
- For NVDA, as people pointed out earlier, there are some huge call options between 137 to 142 (351K call options open which could worth hundred of millions). It would be a miracle if MM allows those calls to be ITM by the close. At the same time, put contracts are concentrated at 130 and below so MM could try to keep NVDA above 130 as well. Basically, same strategy as QQQ, no need to panic if NVDA is sold off at open, but also try not to chase if it opens high
The real risk level we need to watch for is that QQQ MUST hold 485-486. There are many important TA indicators all concentrating in this area that I am not going to elaborate. If we break below 485, the uptrend structure is damaged and that is when we need to start to be very careful. Until then, I really dont think we need to be worried.
For NVDA, we need to hold 127 level in ideal case, and MUST hold 123 in worst case. As long as we hold these, the uptrend still intact
