Trade Idea: TQQQ (Long)

This is another short duration trade idea, I have not entered a position here as of yet. TQQQ is a 3x leveraged long NDX100/QQQ ETF. Many times in situations exactly like this (where a short duration correction is probable, we will see signals appearing in the leveraged ETFs before the underlying index (NDX/QQQ). I suppose this is because there's more demand for the leveraged product as there's less profit potential being a shorter duration position, but this is not only how we confirm signals (using multiple derivatives of the underlying), it's also how we can get a feel for what traders are thinking and this would suggest that they are thinking this is a corrective move that needs leverage to make it worthwhile, much in the same way I'll use options for their leverage.

I personally think that the IWM is more "oversold" on a relative basis vs the other averages and thus probably makes for a better position. In the past I would only chose 1 of these (either the IWM or QQQ) as they traded almost exactly the same, but we have been seeing the market splinter much more so that may not be the case to the same degree it was.

Remember if you enter an IWM/Russell 2000 based position, you'll want to be careful with any correlated trades which would be more along the lines of a small or mid-cap ETF and if you enter the Q's, then the correlation you may want to watchout for would be technology. Having a long QQQ based position and long Technology based position in my view is too much correlation.

 The 1 min is starting to lead in TQQQ

 This is yesterday's 2 min early positive divegrence that was being put together and you see where it just got run over and failed, now there's a second chance as I figured they'd try and we have a relative positive.

Remember they have some inventory in place most likely from BEFORE the fail, they'll want to free that up, although there are numerous ways they can do that, a bounce would be the simplest concept.


Also remember that just about EVERY Wall St. created cycle (even a super mini like this, which we know was Wall St. created because we saw it yesterday) HAS A FUNCTION, IT HAS A JOB TO DO, so don't just expect a little bounce to work off an oversold condition, there's a reason why they are putting it here. There are a lot of 50-day moving averages in the area for the majors on daily charts, technical traders pay attention to them, so that could very well be the game, but it's always going to be to shakeout as many traders as they can.

 TQQQ 1 min positive forming. You can see it needs more of a base built sideways.

To compare to some of the longer charts (TQQQ is 3x long, SQQQ is 3x short)

This is compared to the 3x short, SQQQ 10 min, this shows the negative probabilities for the market.

SQQQ 30 min again with a large base

and 60 min with a large base, all showing the bearish probabilities.

This is TQQQ's 60 min chart for comparison, leading negative while SQQ has a huge base in place.

However we are looking at short term /duration longs in TQQQ.