QQQ view and GAP DOWN

BMW:
这种gap down 常见的几种情况
1，consolidation-- bear flag 撞线继续， 下破798
2，sharp reversal -- gap fill-- pull back--再涨
3，开盘继续跌，11点开始回测813或808
OE week
you need confirmation of breakdown first.
OE week reversal 还是很常见的. 一般是周二或周三
如果周三close 前还没有reversal sign, 估计周四周五会很bloody, due to delta neutral effect
I tend to believe we will have a positive week, but for this market I will stay short term

QQQ:
Current future mkt:
SPX future is trading at 806, down about 20 points
DOW future is trading at 7675, down about 200 points
NDX future is trading at 1206, down about 30 points

If the situation does not gets better, we are looking at about 15-20 points close to 810-805 range open for cash SPX.

Again 800-805 SPX has been held a few times as you can see the chart, unless Future mkt decisively break down 800, 800 line will still be the battle field for bulls and bears.

So how to deal with this:

First, do not panic, second, do not greedy

There are 2 possible cases after open with such gap:

(1) Gap down, after 30-60 minutes consilidation with light volume, and not so bad breadth. Buyers decide to rush in buy at this point, and then mkt reversal to 820-835 area.
In this case, means buyers need step in to save this mkt, then at certain threashhold, force bears to cover. This case had happened past 3 times when mkt reach to this area. so should that happen again? Be prepared it might happen again.

(2) Gap down, no strong buyers to show up, mkt goes sideways till lunch with horrible breadth while resting, then decisively go lower break down.

Both cases are NOT too difficult to tell, within first 30-60 minutes of trading we should see mkt action proves itself.

If you are holding long positions, do not panic, wait for ~30 minutes to see how price, volume develope on your holdings, then decide which case is on your holding, then decide what to do.

If you are holding short positions, be ready to cover around 10am if you see case (1) is developing, in BOTH cases, You need to put stops in, or at least have trailing stops in, just in case this is a false break down.

IF you are holding cash, don't think you missed anything, be patient, let mkt decide which way it DECISIVELY goes before jump in. Remember once you jump in, have stops in place.


there is a way to detect if mkt will have a reversal or not:

Look for DIVERGENT LOW, if that happens tomorrow or wednesday, cover 75% shorts and enter 25% long. when confirmation comes, cover rest 25% short and add to 50% long.