7/25/14 was down -$0.44 and the model projects that the CME Index component on Friday's kill will be down between -0.40 and -0.70.

At Friday's settlement, the HEQ4 is discounted to the index by 6.40 with 13-days to cash settlement. Considering the historical tendency for the index to be quite stable during the first part of August, I suspect the QQQs will have a difficult time working much lower - at least until we see a rapid break in the Index. The biggest drop in the Index we have seen from this date to cash settlement was -10.58 that occurred in 2009. The next largest drop was the -4.18 drop that occurred in 2012. On average over the last ten-years the Index has tacked on +0.51 and in 2011 the index jumped +8.01.

I think this tells us that we could be in for a very bumpy ride as the QQQs move toward cash settlement. This should make for happy technical scalping for the technical traders.

It appears to me that buying the dips might work with my trading style.

Best wishes,

dhm