QQQ Put Addition Trade Set-up

While there may be many assets that we could consider besides the Q's on a bounce, like the inverse ETFS such as SQQQ, SRTY, FAZ, TECS, SPXU or the short term VIX futures like VXX/UVXY, I'm not ruling any of those out, I'm just using the QQQ puts that I want to replace as an example asset.

Looking at the price chart, we are deep enough in to stage 4 that a bounce here would be of little consequence, see last night's Daily Wrap for the September example that was a little too hot and a little too cold for our current situation, but a reasonably close proxy.

Just looking at the QQQ price chart (and remember from my point of view, I would not trade anything long, but rather sell or short in to any price strength, I want to trade with the current stage which is decline, anything other than that better have a strong edge as it runs counter to the stage we are in), this looks like a reasonable area and target...

 QQQ daily chart wit the range, the head fake above the range and while the SPX has already retraced all of the February 2nd rally to all time highs and then some, the Q's haven't quite made it. There's a gap just above from today's gap down, this would make for an excellent upside target and a new QQQ put position,  the beauty of this is "If it does not make the move, no harm no foul". Price either comes to us on out terms or we wait for the next trade, nothing risked, nothing lost in this situation.

On a QQQ 60 min chart you see the heavier volume as support is broken and stoops are hit, then additional volume at what looks like a short term capitulation low.

Thus a bounce in to today's gap, makes for an excellent QQQ put entry at a discount. Since we are not going long on this, there's no harm if the trade set-up doesn't work as planned and instead heads lower.

If there were strong bounce signals, I might put out a scalp trade (long) in to the gap, I don't see signals strong enough to warrant such risk taking, so I'd just see (set alerts) if the gap is filled, if not, then core shorts are still performing.

 This is my custom TICK/SPY indicator which is showing improving intraday breadth which makes sense with everything else starting with the reason for closing the AAPL and QQQ put to the prospect of opening a new position at a better entry and a discount on the puts.

Other than the intraday breadth improving, there are no real strong bounce signals. This doesn't reduce the probabilities of a bounce here, it just shows the market is weak and there's no justification for trying a long piggy back trade.

This 5 min , small QQQ positive divergence at a flat area in price is the best we have for a bounce signal, really there's not much more.

 Remember our UVXY long (2x long VXX/VIX short term futures) ?

This 15 min VXX chart is SCREAMING for an upside move.

The inverse XIV, short VIX short term futures on a 15 min chart is sending the exact opposite signal confirming our VXX/UVXY long position.

I can't find much of anything short term that says market bounce, it just doesn't have the strength which isn't surprising in the middle of a stage 4 decline (or start).

TLT (20+ year bond fund) which we expected to see a pullback and accumulation and then a trend higher has done both thus far and is just missing the trend higher. The gap in TLT, a pullback and bounce in the market near term makes sense here too, but there just aren't many or any short term signals pointing to that, there are a lot of other things like TICK or the price pattern today, the deep sell-off in such a short period that all make sense, but not great short term positive divergences yet and that goes for other assets like HYG.

So if the trade comes to us , GREAT. If it continues lower (the market), our core short positions will continue to benefit and ultimately we are looking for a break below the 2015 range and a move to or below the October lows.