You See There, Scooter. He Thinks of the Simplest Things First

We live in a social media and finance world these days where overanalyzing a plethora of backward-looking statistics, esoteric options market flows, and just about every explanation under the sun as to why the market supposedly, allegedly, can or can not do something at any given moment. Against that backdrop, I find it often best to boil things down to simplest terms, not unlike Karl does with impressive success. 

With this in mind, we have more selling in the market today, with small caps and the helping to lead lower. There are a multitude of folks who seem to have made it their vocation to explain away every bout of weakness as to why it is merely setting up the next leg higher. And, indeed, that has been the case for a while. But the moment never lasts, and even Jay Powell himself hinted at as much this morning when he let slip the idea of eventually taking the punch bowl away. Markets have a nasty way of making you think a certain outcome is totally off the table, just when it becomes a more menacing threat than ever. 

As QQQ loses $310 this morning after a lethargic early bounce attempt by bulls, I come back the widely-watched and overhyped inverse head and shoulders bullish bottom we viewed with great skepticism earlier this week (purple lines on updated QQQ daily chart, below).

Under this support level, the risk of a rising tide of selling is higher than many seem to expect or think is possible.  I recognize the VIX apologists will be out in full force today talking it down and basically mocking anyone who thinks it is going higher. But that may be a sign in and of itself of just how much complacency remains in the tape--The selling the last few days should have seen the VIX closer to 30 than 20. 

Either way, I am happy to stay focused my "levels" analysis and avoiding widely-watched patterns with had too much of a hope/rose-colored vibe. Keeping it simple, QQQ seems at risk to test $300 next if bulls fail to remount $310 by the end of this week.