Nasdaq 100 – Daily Trend Model
Courtesy of Allan
This trend model can be used to trade QQQQ options and if you are so inclined, gives a "worst-case"scenario for analyzing "best case" scenarios for gains in puts. The wave count is suggesting another 7-17% decline in store for the index. Extrapolating that to the QQQQ would suggest a drop to between 41-37 from its current level of 44.84. Let’s take a look at the QQQQ chart and see how close it comes:
In conclusion, while the Daily Trend Model is SHORT, it doesn’t give guidance as to how far or for how long the market will decline. EW is a imperfect science, but it does provide some structure for projections and in this case, is suggesting a decline taking the QQQQ to levels between 35-41. With four weeks to go to June expiration, there are a lot of strikes in the QQQQ puts that will thrive under the auspices of these projections.
*****
Elliott Wave International’s 50-page eBook, The Ultimate Technical Analysis Handbook, will show you the various methods of technical analysis they use every day and teach you how to use these powerful tools for yourself. Learn more about this free eBook, and download your copy here.
Allan’s “Trend Following Trading Model,” is based on his trend-following trading system for buying and selling stocks and ETFs. Most trades last for weeks to months. Allan’s offering PSW readers a special 25% discount. Click here. For a more detailed introduction, read this introductory article.
