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This chart shows the VXN which is like the VIX but for the Nasdaq 100 stocks. And the specific set-up here is that the dark blue standard bollinger bands have expanded so that the top band is above the 126 day 2.0 standard deviation bollinger band.
What does this mean?? It basically is just telling us that the short term volatility is far from the average longer term volatility. And this is a condition that often precedes significant lows in stock prices.
We did not see this happen in the VIX on this pullback, but the chart above of VXN very clearly shows the spike in the VXN and now a reversal back inside the bands which has corresponded with a hammer type candlestick in QQQ prices on Tuesday.
So for now, it looks like a significant low may be in place in QQQ. My suspiscion is that we will see a significant rally, but this one might fail to make a new high in QQQ, and then we see a larger scale correction.
For now I am bullish as long as prices are closing above Tuesday's low in QQQ.