QQQ has Taken Out the June 9 High and Put a New High in its Red Megaphone Right Shoulder
PowerShares QQQ Trust Series 1 (NASDAQ:QQQ) has taken out the high of the big red June 9 candle. That kills a Neely correction set-up.
There’s still a Sornette crash set-up, but even that’s dragged out a bit long. A Sornette crash call leads 60% of the time to a crash of at least 20% that reaches the target within two weeks of the call. We’re right around the two week mark now.
QQQ could still put in a crash to at least 105ish very quickly by putting in the green scenario, which is a megaphone right shoulder on a potential head and shoulders top. Usually a megaphone right shoulder leads to a squeaker new high for the formation. Then a larger H&S completes and breaks out downwards.
The 40% of the time that a Sornette crash call fails, you’ll still usually see a decent-sized correction, often within a megaphone consolidation. In that case, we could see the purple scenario, but the blue scenario becomes the favorite.
The blue scenario is a stab at the 105 retrace target within the red megaphone. QQQ fails to get all the way to the target and then breaks out upwards from the red megaphone after an aborted attempt to retrace to its VWAP. This set-up would likely lead to a huge melt-up. Think 70ish points on QQQ from the high before the dip, 600ish points on ES.