Thursday, October 4, 2012

QQQ Short Trade Set-Up

Click on Chart to Enlarge

QQQ (Nasdaq 100) is setting up for a nice short-selling opportunity.  The move down off the Sept high made a minor shift of the price logic to down.  Now the correction back toward the highs has been slow relative to the decline keeping the price logic down.

The chart above highlights a probable rally high area in which technical sell signals could be taken for entry with a minimum target below the recent Sept. lows.

The set-up is very similar to what occurred at the spring high this year which I highlighted in this post and  in this follow-up post as the entry was completed.

In the current set-up, wait for 30 min or 60 min bearish divergence to show up on the technicals.  Then wait for a sell signal for entry.  The stop must be above the rally high.  If the high is broken the pattern is invalid and the rally may be very likely to continue.  For exit, half could be sold if the recent Sept low is broken.  Then exit the other half on a technical buy signal (i.e. MACD bullish cross from below the zero line).

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