Island Reversal

As a follow up to my 10/4/04 “Warning Flags” post, here’s what happened: The warning flags were accurate. The Cubes (Amex: QQQ) consolidated for a couple of days, which was actually constructive after a four-day sprint, but…

…then they tried to break to the upside on Wednesday and failed, bringing on a down Thursday and gap down Friday, on increased and above average volume, marking a distribution day on both the daily chart and the weekly chart (not shown). Rounding thins out is the circled six-day pattern on the chart, which is a multi-day island reversal pattern, marked by the gap up to start it, then the consolidation island, then the gap down to complete the pattern. We’ll see where this takes us. Definitely could get some volatility this week, as it is an options-expiration week. Cheers!