Two weeks ago my Weekend Update was titled, "Out on A Limb." Last weekend's update was titled, "On Thin Ice." Both updates chronicled patterns that were highly suggestive of an imminent and tradable decline. Two weeks ago it was a combination of market indices that were sending out the warning. One week ago it was the Mag Seven intraday charts sending their collective warning. By mid-week last week, I sent out, "Nail In The Coffin," which confirmed the breakdown, bringing us to this Weekend's pressing question: Now What? All of the indices and most of the Mag Seven stocks are sending the same message, so let's get that message right and we can answer the Now What question as well as a tactical roadmap setting up a bigger strategic bet for the next six weeks, suggesting either, "Adding to current bearish positions, or alternatively, "It went too high, now what?" Let's start with the big picture: SPX Long Term I've shown this chart before, it sets out the path from the 2020 Covid lows to the October, 2025 highs, complete with a "throw-over" of the upper parallel channel and last week's important retrace back inside the channel. Price should now continue its trajectory to the lower parallel channel, around 5,500 or about a 15-20% decline into next year. It will take the Nasdaq with it, probably closer to 20% than 15% and maybe a lot more. SPX Short-Term Roadmap This is where things get interesting. The short-term (Hourly) pattern is that all of last week's decline accounts only as a Wave I down, with Wave II unfolding from Friday's lows into a peak early next week. From that Wave II top, Wave III down will assert itself in an "all hands on deck" panic decline. The trigger will be taking out Friday's low prints as follows: SPX < 6631 DJI < 46,495 QQQ < 598.68 I'm allowing for the late Friday rally to continue a bit higher, but note the Wave (iv) high on the SPX short-term chart @ 6,758 -6775, about 30-40 SPX points higher to right at the 50% Fib retracement level. That would be natural place for this rally to end. For reference, let's look at where that is on the Short-term QQQ chart: QQQ Hourly The 50% Fib retracement level is 618, just above the Wave (iv) peak of 616. So let's round-up, making QQQ 620 a price level that would at least temporarily call into question the short-term Wave III down scenario. In any case, a break below Friday's lows would be considered confirmation of an imminent deep dive into December expiration, and maybe into the 1st quarter of 2026. Summary That's it for this weekend: Short & Sweet. The decline hinted at two weeks ago and again last weekend is upon us. QQQ fell from 637 to 598 in the past three trading days, and that was just Wave I. There are those who think its all over and the market is going to run into the end of they year, i.e., typical bullish seasonality. Above QQQ 625 and they may be right. Anything less and they are wrong, dead wrong. SQQQ Hourly QQQ taking out Friday's low moves this SQQQ hourly wave count front and center: A series of Waves 1-2 in stair step progression. If it happens early next week, mid-$20's will my preferred target and our Dec $14C is destined to be 10-bagger. A boy can dream, eh? Active Options PRO Service Premium Service
