Allow Me to Sober Up This Drunk Market

It is worth reiterating that violent price swings, wild indecision, overnight and intraday reversals, are all part and parcel of a corrective or even bear market. They are not the exception but, instead, the rule. And are to be expected. TSLA, for example, is now down 7% as I write this after having sold off last night, then went green, etc.. And AAPL awaits us all tonight. 

I am not saying that makes this type of market any easier to trade. Quite the contrary, as I myself am getting whipped around on most of my positions, especially given the swings the last twenty-four hours or so.

But what I am saying is that if you recognize these conditions, you can likely save yourself tons of unforced errors by not adopting an overly aggressive posture and risking too much directionally, at least for now. 

Case in point: On the QQQ hourly chart, updated below, which is the ETF for the top-100 Nasdaq stocks, the chart dates back to the beginning of 2022. This is your year in the life of the Nasdaq, so far. 

And it shows us a clear downtrend, with a bear flag which resolved lower two weeks ago, and now another potential bear flag (light blue lines, which is a continuation pattern of the prior selling, typically) developing as we speak. Sentiment is varied and mixed, depending on whether you are looking at FinTwits, CNBC, the AAII survey, or CNN Fear & Greed. But there is certainly a faction of vocal traders seeking a sharp short squeeze rally, if not new highs soon enough. 

However, the technicals simply do not point to that, just yet. And the continue wild price swings, abrupt reversals both ways, and heightened emotions are often associated with ongoing bearish markets rather than a new bull having just been borne out of the selling.