We haven't had many option trades triggered in the past few weeks, but that looks about to change. The charts immediately below suggest that price action over the next week will be critical for the intermediate term trend. I've removed much of the previously annotated information to make the chart interpretation easier, and more basic for trading purposes. A sentence or two per chart is all we need going forward over the next few days. QQQ Daily Trend The intermediate term trend remains down since the late 2022 Nasdaq high. The major next turn will be the transition from a Wave 2 retracement to a Wave 3 of (3) down and this chart suggests it is imminent. If the decline on Friday continues into early next week and it has the look, feel and momentum of a Wave 3, look for new trades...daily. QQQ 120 Minute Breaking that Wave 2 C channel to the downside will be a key level break and the first sign that the next leg down has begun. QQQ Hourly My biggest fear is that the market gaps down precipitously and we have to chase the decline we have seen coming for the past few months. This close-up chart suggest that if we see QQQ break into the 290's to go ahead and start buying QQQ March puts. If that break happens early in the trading day, check the website for any new such trades. QQQ - Simple Trading System: Fear & Greed and Price Oscillator remain on Sells IWM Daily IWM 120 Minute IWM Hourly For IWM the analysis is the same as with QQQ, only here a breakdown below the Wave 2C channel would be into the high 180's. The fact that the EW pattern is so similar gives credibility to the aforementioned big picture pattern recognition prognosis. 10 Year Yield It's possible that the only thing that is keeping the market from going to hell in a hand basket is that interest rates have taken a short-term reprieve from their massive 2021-2022 rally from 1.2% to 4.4%. It is sitting this weekend at 3.526% and has retraced between a Fib .236 and .382 of the entire rally. If it breaks-out higher next week the markets should swoon. TSLA The key level for TSLA next week is around $160, which if broken for more than a couple of days would most likely trigger an intermediate term Sell Signal. The chart below is a shorter-term trading model and its key level sits at around 180, tracking the near vertical rise in the stock very closely. In other words, its a dangerous time to be entering long. I've heard from some subscribers who (on their own) bought TSLA calls and have massive profits into week's end (see example embedded in chart). So I don't have to write each of you all back my advice is to take profits on at least half now and certainly on any breakdown below 180. Cathie Wood On Tesla Stock Price But Wood sees big gains ahead for the stock. “Just from electric vehicles there could be almost a fivefold increase in this stock during the next five years,” she said in a webinar cited by CNBC. “And if you believe in autonomous cars at all, it’s closer to 13 times during the next five years. So we are as bullish about Tesla as we have ever been.” Five times the recent price would be $653, and 13 times would be $1,699. Link to article (Jan 20)
