After four days of bullish price action since the FOMC lows, SPY and QQQ both ran into resistance and we saw some decent-sized pullbacks on Wednesday.
The price action in AAPL, GOOGL, and AMZN on Tuesday was a big warning sign that some kind of pullback was coming. AAPL wicked into the all-time high and sold off, GOOGL wicked above the 100-day SMA and closed with a large bearish candle, and AMZN closed near the lows of the day. This was a big reason I took profits on many of my swings in AMAT, QQQ, SNDK, SIMO, MSFT, LRCX, and XLK. I wanted to lock in some solid realized wins during this bullish pop, and I messaged the entire RLT Swing Trade community on Tuesday when I was taking those profits.
We saw QQQ get within pennies of the ATH on Tuesday, just 30 cents away to be exact. That puts QQQ even closer to its ATH than SPY thanks to the strong moves we’ve seen recently in AI and big tech.
SPY Daily Chart
While the markets are still climbing the wall of worry, and the fact that we haven’t sold off despite so much bad news is in itself a bullish signal, those catalysts weighing on the market do eventually need to go away for a sustained push higher, in my opinion.
The 10-year U.S. Treasury yield hit a 19-year high today, which is a real headwind for equities. Over the past 30 years, we have always seen at least a 7% drawdown in SPY during the first 60 days of a new hiking regime. I think that is still a likely scenario for SPY, which means October could be a bit bumpy.
US Treasury 10 Year Yield 3 Day Chart
It would also make sense for us to push into new ATHs, at least on QQQ, and get everyone all hyped up and bullish just before another breakdown. However, look at the January 28, 2026 candle. It also came within pennies of the ATH, never actually broke above it, and then dropped nearly 13% over the next three months.
QQQ Daily Chart January 2026 Price Action
So with all of that said, and those expectations going forward, how do I view the market right now?
Based on the past four days of price action, today’s retest on QQQ was very understandable and very reasonable in size. If we use the last FOMC move as an analog, we should actually drop a bit more tomorrow, potentially into the $734 to $729 area, before another push higher. That could take us into a new ATH before a potentially larger drop occurs.
One of the charts I think will be instrumental in telling us where we are heading next is SOXX. As we all know, semis had an absolutely epic run in early 2026. The big question now is whether we have finished the correction from that wave higher or if there is still more pain to come.
In Elliott Wave terms, we are either in a B wave and need a final C wave lower before completing the correction, or we have already started another wave higher that should take SOXX well into new all-time highs.
SOXX has held up nicely over the past few months and didn’t give back nearly as much as some of the higher-beta sectors. It is now back above the 100-day SMA and is trying to break above the key resistance at $565 that has been in place since mid-July.
I will be watching SOXX closely here.
If we see a sharp gap lower under the 100-day SMA, that would be a warning sign that we could be entering a more vertical C wave lower. If instead we see a sharp gap up that holds and doesn’t fade, I will assume we are in the next wave higher and will be targeting $780.
SOXX Daily Chart
MU earnings are next week, so keep a very close eye on them. MU gapping in either direction could be a big deal for the AI trade and, therefore, a big deal for the overall market.
There are so many charts right now that are incredibly interesting. Bond yields are ripping higher, diesel prices are exploding, crude is back on support and could be ready to push higher, inflation is staying sticky, and the Iran war doesn’t look like it is getting resolved anytime soon.
With so many charts to manage and macro factors to think about, it is easy to get lost trying to make sense of all of it.
This is why I always come back to the QQQ and SPY charts when forming my overall market view.
I put together this QQQ chart as a bit of fun to see just how close I can get to predicting the price action for the fourth quarter. Predicting the exact price action that far out is impossible, and luckily, that isn’t our job as traders.
That doesn’t mean I don’t try to do it every now and then, though.
QQQ Fourth Quarter Guess
