We just posted this and just booked this +80% QQQ Put (July 17th $110 put) gain at our members’ site,
This is why…
QQQ Follow Up
Posted by: Brandt 11:40 a.m. Monday June 29, 2015
It looks like we may have hit the intraday or a.m. low right on the nose and if you are fa,miller with our concept of an intraday flameout or what you might consider intraday/short term capitulation , a mass selling event that often marks a short term/intraday low, then you’ll recognize it in these charts and see why there was an objective reason for closing the QQQ position.
First the P/L:
At a cost basis of $1.52 for the QQQ July 17th $110 puts and a fill of $2.79, the P/L came out to a gain of +83%
The intraday NYSE TICK chart has been range bound, albeit in a volatile range, of about +/- 1000, no real huge extremes, but rather persistent extreme levels of 1000 (above and below) for the entire morning.
Our custom TICK indicator that I developed to give us a better sense of trend…
Shows the morning trend of increasing downside so I stuck with the QQQ put position after putting out this earlier warning that I may be closing it sometime today, Position Management-QQQ Puts.
While VERY early, to the far right it looks like the trend may be starting to change in intraday breadth as the histogram ticks up. I usually would wait to see if this is noise or if it develops further, but there was additional information.
The 1 min intraday chart caught up early to the futures decline as it is the fastest chart we use. Note the divergence from late Friday, the one I was a bit torn over as to some early price strength which I would say was there as an intraday bounce toward a gap fill, but as I also said Friday, “This is nothing like the previous Friday (June 19th) The Week Ahead post in which there was a fairly strong intraday 1 min chart signal that made it a high probability that we’d see early week/Monday price strength such as we did. This one was much weaker.
The intraday 3C chart shows the positive divergence I am talking about in white and then this morning’s cash market charts catching up to the drastic change in price action from Sunday night open of Futures with price turning down and in line/confirmation at the green arrow, but notice the volume increasing.
Looking for an intraday FLAMEOUT/short term mini capitulation selling event…
We use this concept a lot for flameouts as well as the opposite concept, “churning” events.
Note the QQQ 5 min chart shows a decent up-tick in volume on a bullish candle, Doji Star (upside reversal candle).
This isn’t a huge event or what I’d call a screaming signal that jumps off the chart, but subtle changes in character lead to changes in trends and with options, price can change quickly and go against you in a minute or two.
In any case, whether right or wrong on the timing intraday, we still booked a nice 80+% gain and still have all core shorts open.
I’ll have an intraday market update out in a few minutes.