QQQ Update

First I want to reiterate that the primary trend in 3C is very bearish, I want my positions largely aligned meaning short so about 80% of the portfolio is in line with underlying flow, the other 20% can be split between hedges, select longs or cash in my view, but in no way are any of the added call/long positions leaning toward a net long position.

I also don't see anything remarkably bullish like the Jan 27th through Feb. 6th positive divergences that led to the February rally/short squeeze, we don't have divergences in timeframes that long (the best we have now are weak 5 min vs strong 30 min in Feb and the best we have is about a day of accumulation vs a week or more in February). That being said, we are in a more volatile market and nothing moves in a straight line so if I had a small portfolio and transaction costs were a factor, I'd probably sit on my shorts and puts and not worry about hedge longs, if I had the time, the inclination, the ability to be nimble and wanted to cut closer to the bone, then some of these longs make sense to add some extra gains to your portfolio, big picture though it's a passing moment that is not of any real significance.

QQQ Charts...

 Longer term I've had some members mention a megaphone top, this is what I call a "Right Angle Broadening Top", however all H&S tops start as right angle broadening tops and later may morph in to a H&S top as a lower reaction high is made that completes a right shoulder.

There's a huge difference between the two tops as far as volume analysis, a H&S needs very specific volume confirmation to confirm lest you be fooled as many traders were in 2010 with what looked like a H&S top, but was missing volume confirmation. 

A Broadening top has erratic volume and needs no confirmation, it also tends to move either down from here and break the neckline (the volatility shakeout is a bridge we'll cross when we get there, but the same concept with a BA top as a H&S ) and often they will touch the lower support, make another run toward a new high or the upper resistance trendline and fail about half way there, then break through the lower support line (and once again pull a volatility shakeout). The H&S would be more common, but I've seen plenty of Broadening tops.

 As for the 2013/2014 trend and my Trend Channel, it gave a break or stop put at the red arrow, there was no other stop out in the preceding trend, it started right around the same time the carry trades were being entered around November of 2012.

As I have often explained with the Trend Channel, it will never take you out at the top, but it removes arbitrary stops or profit taking and allows you to catch the meat of the trend or the 80% easy money while tops and bottoms are very volatile and it's a coin toss, but after the initial stop out there is typically a volatility episode and a higher move can be seen, but in retrospect most of the time you are best off taking the initial stop out as the following top volatility is more opportunity cost and very dangerous for a rather small return vs the safety of the trend.

 The 2-day 3C chart shows distribution in to the 2007 top area and then massive accumulation around the March 2009 lows, this is about the time the F_E_D added to QE 1 which was late 2008 and was MBS purchases only, early in 2009 they added Treasury purchases and we got the Bernanke Put as primary dealers were being given risk free capital to put to work in higher yielding assets (stocks) as the F_E_D monetized the debt via the primary dealers.

The distribution cycles correspond with the end of QE programs and the 2013/2014 leading negative signals are the worst on record for the NDX just like the Dow is worse than the 1929 Dow right now.

The 4 hour chart also shows significant distribution, this is where "Relative Analysis" is helpful, seeing where price and 3C were at one point (A) vs the present (B), you can see we are in much worse shape now, that's the underlying distribution trend.

 The 60 min chart shows the accumulation area we knew would lead to a head fake/bear trap and a strong short squeeze rally from the Jan 27 to Feb 5/6th period as seen to the left, the distribution area is in a clear stage 3 top.

Here we see it again on a 5 min trend.

To really show you the change in character ("Changes in character lead to changes in trend"), the rally was from about 2/5 lows to 2/18 which was 8 trading days, about a trading week and a half and gained +6.57%, recently from the 2/18 period to present the Q's have LOST -1.14% over a period of 18 trading days, or nearly 4 trading weeks, that''s a MAJOR change in character and consistent with a stage 3 top moving to stage 4 decline.

 However the options trades in the Q's right now are based on short term charts, the equity shorts are based on longer term charts. This 1 min shows the accumulation from yesterday and a head fake move with a leading positive divegrence, it's only a 1 min chart, but unlike the rest of the week, this is the first time we have seen any positive migration among the timeframes.

For example the 2 min chart showing the divegrence has gained strength.

Or this leading 3 min, still not that strong and more likely a shorter term bounce at best, but enough for a hitch-hiking trade or to hedge some shorts, or I'd have no problem just sitting through it.

This is also the first time in a week we have seen any averages see a 5 min positive, this is why I increased the hedge capabilities with the Q's, it still isn't a large base and remember it's like gas in the car, if you only have a little it can only take you so far.