SRTY / SQQQ /Market Update

Looking at the market, so far our forecast for this week from Friday is right on, including our new NUGT position from Friday October 3rd, Trade Idea: (Swing Plus) GDX/NUGT and switching back and forth between 3X short the IWM and QQQ to 3X long and back to 3X short.

On a daily chart of the IWM, "A" is where we were long SQQQ (3x short QQQ) and SRTY (3x short Russell 2000).  Last Wednesday October 1st at "b" we closed SRTY and SQQQ and opened URTY and TQQQ (3x long QQQ and Russell 2000 respectively) from this post, Position Management & Trade IDea : QQQ/IWM  and Friday at "C" we switched back upon 3C negative divergences and sold URTY/TQQQ and repurchased SRTY and SQQQ putting us back short the QQQ and IWM in this post, Changing positions.

While I don't usually share my personal portfolio other than to say any position I personally enter is always posted here for you first, however I like all positions I post and it's just a matter of what positions make the most sense for each individual's trading style, risk tolerance, portfolio size, etc. I never wanted to create a "follow me" website, the trade ideas are ways to express concepts and information so you can apply them any way you see fit to any asset and any trading style. However, beyond the tracking portfolios ranking which I use to track every idea put out, the only real trading effectiveness of a single portfolio really is my own which is why I shared with you that the portfolio as a whole was up +5.66% for last week alone, quite a bit more added to that today from Friday's position switch.

When I first closed my core short positions in SQQQ and SRTY, I opened a somewhat speculative size, 50% of normal full size, TQQQ and URTY (3x long QQQ and IWM) and said, "If the base gets bigger and I feel it's more sturdy to hold a larger move, I'll bring those positions up to full size".

Normally I always want my SQQQ and SRTY short exposure even in small counter trend bounces, but these signals have been too good to pass up the chance to rollover some gains and compound.

From what I see now, Friday's call for early this week (today), looks pretty good.

 QQQ 1 min negative from Friday afternoon which is why I closed the 3x long QQQ and IWM and re-opened the "Default" position, long SRTY and SQQQ (3x short IWM and QQQ). I hope this isn't too confusing.

This morning's gap up I figured would fail,  this is the concept of 3C picking up where it left off, as I said last week and every week for the Week Ahead updates, "Whatever the closing signals on intraday timeframes, the following trading day, even over a 3-day weekend, almost always honors those signals"  which is what we are seeing right now with all 4 major averages now in the red .
 I switched back to the short side Friday by buying SQQQ (3x short QQQ) and on its 1 min chart from Friday you can see a positive divegrence suggesting higher prices coming which confirmed the QQQ negative divergences that formed at the same time.

 The IWM on Friday gave a negative signal just like QQQ, thereby confirming in multiple assets that we were looking at early weakness this week

And the 3x short IWM ETF, SRTY, was giving a confirming positive divergence Friday.

 As you saw already, SPY's 1 min negative from Friday afternoon and we have been seeing the pros come out late in the afternoon as they usually do, but on an increasing basis lately.

 Although we have a negative on the SPY 3 min from Friday, the larger probability is still the larger white positive divegrence suggesting that these recent negative signals are a pullback only before higher prices which might make sense as earning's season kicks off with AA on Wednesday.

 The SPY 5 min shows the head fake/failed breakout highs to the left we had been looking for and the current 5 min larger divergence. Remember I said this "V" shaped base was not strong enough for me to commit to full size long positions, it would have to come down and create a stronger base before I'd consider a bigger long position so this pullback is the opportunity to do just that.

Remember these are all short term trade indications.

 The NYSE TICK intraday has been pretty flat, in fact it's just recently broken below this channel.

Now my custom SPX/RUT Ratio Indicator that has been 100% correct since we have been using it.

This shows where the indicator was giving positive and negative signals and the SPX on top following. The two yellow arrows are my VIX inversion indicator and I pointed out that near term fear fell Friday just like the last yellow arrow and you see what happened to price.

On an intraday basis, the indicator has been perfect thus far leading the SPX lower, however the SPX has not made a new low at the time of capture of the chart and the indicator has, as of this moment, the SPX has now made that new lower low intraday as the indicator was suggesting.

What we need to do from here is simply verify that the 5 min positive divegrence still has gas in the tank to take the market higher. I expect the averages to pullback to somewhere around last week's lows and ,maybe even a stop run below that level. As that happens, we want to watch for signs of accumulation which would suggest a larger base is being constructed and the 5 min chart is still the short term dominant signal, if that happens I'll switch back to TQQQ and URTY long at full size position, if it doesn't happen, I'll keep the current SRTY and SQQQ short positions in place.

As far as entering new shorts, I'd rather wait to see if we get a base, if so, then we want to enter those new shorts in to price strength and 3C weakness so that would likely be later in the week.

We also have MCP up 8+% today and our new NUGT long from Friday 4+% today so I'll be watching those two.

First things first though and that's determining whether the market is going to put in a larger base as I have suspected since first entering the 3x long positions last Wednesday.