NQ Channel 7/21/2020

NQ almost reached the top of my channel. It pulled back which it shouldn't be a surprise. Anytime an index goes that far up in a short amount of time is bound to get a pullback. That's why you don't chase. There are probably a bunch of trapped bulls right now who FOMOed yesterday.

VXN was giving warnings yesterday that a pullback was coming. Whelp, it came true. However, I do not think the VXN is over yet. It may do another volatility run this week. The VXN seems to be primed for that move.

This is why I study the VIX, VVIX, and VXN. You can figure out when a pullback is coming soon.

I'll have to move my buy zone up a little for the NQ. The price is so high and liquidity is getting stronger... I don't think it will reach that low without a bounce.

The question still remains. Big Tech earnings. What will happen to FATMANG (Facebook, Amazon, etc) stocks if expectations are very, very high? What would happen after their earnings? I can predict that high expectations would cause a big hype rally. High expectations may also cause big disappointments. So, big tech seriously needs to have sky high earnings in order to meet the high expectations.

Think of the analogy with Marvel movies. The expectations are already high. So the studio knows that can disappoint fans in an instant. Same with earnings.

Look what happened to XLF/FAS when the expectations were very, very low last week.