QQQ and SPY continued higher on Monday as strength begets strength. As I said in my weekend newsletter, it doesn’t matter what the macro, breadth, or anything else is signaling. If price is saying higher, you better listen. As long as key supports hold, there’s no reason not to be bullish.
What I do find interesting is that the Q4 path I drew out on QQQ has been basically 100% accurate so far. I don’t expect that to last much longer, because forecasting further and further out gets more and more difficult. There are certainly issues that could lead to at least a short-term drawdown, which, again, should be buyable. If you want a full overview of my market thoughts and a breakdown of some of the most relevant tickers in the market today, check out the video above.
If we follow the historical pattern that has played out 6 out of 6 times we’ve entered a new rate hike regime in the past 30 years, SPY pulls back at least 7%. When that happens, the price action will start to look less bullish. We’ll see reversal candles, key levels breaking, and the few leaders that have been leading breaking down.
Right now we have bond yields pushing higher, poor breadth, the Fed tightening, the dollar rising, inflation staying sticky, the Iran war not slowing, and the election looming. I think a pullback is quite possible from here, but until we see signs in the chart that it’s starting, I can’t get too concerned.
QQQ Fourth Quarter Projection
