The Other-side of Relative Performance

I'm obviously talking specifically about VERY near term intraday performance. Yesterday I put out an SQQQ long (UltraPro 3x Short QQQ) Trade Idea : SQQQ Long , right now  this is one of my favorite leveraged inverse or short ETFs considering probabilities, relative performance, risk and timing.

You may recall in Friday's Broad Market Update I included a breadth chart of the NASDAQ Composite, it was an Advance/Decline line vs the COMPQX and there was a significant divergence in the A/D line (negative) vs the COMPQX and this is a huge Index, all NASDAQ listed stocks.

In any case, here's what the Q's are looking like, why I like SQQQ as a broad market play (and it gives you some idea of where I'm looking as far as individual assets beyond ETFs).

 This is the QQQ's Rate of Change, the same settings as the earlier IWM post, this area that I believe is a reversal process (as I had said Friday in The Week Ahead, I thought this week the head fake move above the range resistance would start to wrap up). The Q's broke resistance from the strong February Rally highs which it completely retraced as did the IWM.

 Near term, on the relative performance spectrum, the Q's are on the opposite side of the SPY. This is the trend of a 1 min chart with the Feb. high resistance level (yellow) and what happened as soon as price crossed above it as this is where retail traders will buy, especially on a breakout after a 3 month range of getting chopped to pieces trying to pull trades off inside a +/-3% range.

Again, in this situation (trend) a head fake move has to be convincing, it's meant to create retail demand which pros sell in to, it's also meant to squeeze out shorts as we can't have everyone on the same side of the trade in a zero sum game (the market) where someone has to lose money for someone to make it.

I think the 3C trend as price crosses resistance ALONE, is evidence enough of what a head fake move is used for and gives us the confirmation we need to have in order to establish it's a head fake move and not a real breakout.

The most recent ROC of 3C is in the area of last Friday to present.

 This is an intraday view of the same 1 min chart. Even intraday the Q's are showing some of the worst underlying relative performance.

 The 2 min chart showing confirmation, the yellow trendline is former resistance from the Feb. rally highs.

 a wider 3 min trend view, also the former Feb rally resistance (yellow) and 3C's recent downside ROC.


 This 10 min chart shows the most interesting area of 2014, the accumulation we spotted as far back as late January in to the first week of February leading to the February cycle/rally (for the IWM/QQQ it's a rally as they retraced the entire move already, for the other averages it's still a larger cycle in my view).

You can see the retracement of the entire rally on a negative divegrence, this isn't even that sharp, although respectable, but compared to the leading negative now, we are dealing with two totally different situations and this one looks much worse, thus my preference for SQQQ (long).

 The more strategic view on a 30 min chart since the Feb rally.

 And the long term strategic view on a $ hour chart.

This QQQ 60 min shows the negative at the top of the Feb rally and the extreme leading negative now, compare the relative placement of 3C at the two relative price levels at A & B.

For confirmation, 3C should make an all time new higher high with price, instead it's probably days away from an all time new low for the chart.

This is the same 60 min chart for SQQQ, the long UltraPro Short QQQ I like. Note the positive divegrence which is where the Q's topped and retraced the Feb. rally then note how 3C is in line with price nearly perfectly until this huge leading positive divegrence confirmed by the Q's as well as 4 other long and short leveraged ETFs all with the Q's as the underlying.

I guess you could call this a SQQQ reiteration.