Short Term, Hourly Chart Sell Signal QQQ and SPY

Click on Chart of QQQ to Enlarge

Today QQQ and SPY both gave hourly chart sell signals below the recent highs as suggested in the bearish trade set up post from a couple days ago.

So if you look at QQQ and were to short it at the current price with a stop a penny above Monday's high, there would be about 2.3:1 reward to risk if using the 3/26/15 low as a profit target to exit the short after entry.

For further confirmation a break of today/Tuesday's low would be further indication that a multi day sell off is in force.  Using the same stop but entering at Tuesday's low, would decrease the reward to risk to closer to 1.25:1.  Either way, I would estimate a short here to be a reasonable trade given the overall set-up and market context.  But understand that the profit target is not necessarily huge.  I do think there is reasonable chance of a sell off to near the February lows, but we will need to fine tune the exit as we see any decline unfold.  Stop movement and watching for the development of bullish divergence on a further decline would be the strategy to employ to lock in potential profits on a short and wait for the appropriate market feedback for exiting.

Pete