The consolidation continues but we are testing the top of the range. Markets seem to be shrugging off inflation concerns and trending upward, but we are reaching a critical point that will give us a solid clue about what to expect next.
A couple weeks ago we looked a a trade (click here for the original post) that took advantage of the current consolidation. Take a look at how that played out on this chart:

At the time QQQ was about in the middle of the range it was locked into with clear upward momentum. The top of that range was about 340. We took advantage of the fact that it still had room to run and suggested buying a July call option with a strike of 336. 

QQQ moved very much as expected and is right at 340. The call option which was about $7.65 is now at $9.55 for a nice 25% profit. 

The big question is what to do next. 

This really comes down to your trading plan. The aggressive move is to hold on and see if there is even more room to the upside and more profit to grab if the premium on that call continues to climb. The conservative move is to lock in the 25% and give the market a chance to confirm if it is going to bounce off that resistance and head back down or breakthrough. 

Lee Gettess does a great job of showing how to recognize if the momentum is running out of steam and getting exhausted. 

Momentum Trading with Precision shows how to recognize which pattern is happening right now. Grab it here and make sure you are able to confirm the trend.  

Keep learning and trade wisely,

John Boyer


Market Wealth Daily