QQQ (Nasdaq 100 Tracking ETF) will trigger a short entry on a break below the 60 minute broadening wedge (aka-megaphone) pattern. Near-term swing targets are listed on the 60 minute chart with the typical swing targets on the daily chart.

My preferred swing target at this time is T2 (100.09) with a suggested stop TBD based on the entry price if & when a short entry is triggered. As my expectation is for a relatively swift move down to at least the first short-term target on the 60 minute chart (T1 at 106.25), as well as the fact that would be just under a 2% drop, SQQQ (3x leveraged short $NDX etf) will be the preferred & official instrument used for the two near-term targets listed on the 60 minute chart (106.25 & 105.33).

Assuming that an entry is triggered & the swing trade on the daily chart begins to play out, it would be prudent to cover (sell) SQQQ at one or both of the 60 minute targets & then roll into a non-leverage eft [QQQ, PSQ (1x short QQQ), the $NDX e-mini futures (NQ)], or possibly a 2x leveraged etf [short QLD (2x QQQ) or long QID (2x short QQQ)] if we start to get some impulsive selling & additional sell signals/bearish developments in the US stock indices.

It has been while since I’ve even bothered with posting any analysis on the broad markets are they have been in a steady grind higher without any significant technical developments worth mentioning & even longer since I’ve added a broad market tracking etf as a short trade idea. However, I see enough technical evidence as well as complacency (e.g.-AAII bull/bear spread over 25% for the second consecutive week) that I believe a short on just about any of the major US equity indices, given the proper trigger/technical entry soon, offers a very attractive risk-to-reward ratio, even if those trades are unarguably counter-trend trades. Then again, so were the numerous broad market shorts posted here over the last few years and just about all of those trades were successful.

As always, trade according to your own risk tolerance & trading objectives, only selecting trades that align with your own analysis of where the markets or a particular stock might be headed. Counter-trend trades tend to have a much higher failure rate than those aligned with the current trend, even when breaking down from a clear technical pattern. With that being said, successful short trades during an uptrend are not only possible but can also provide the benefits of hedging (against a market drop when positioned with a full or high long exposure to the market) as well as a way to book very quick profits if timed correctly, as stocks often fall much faster than they rise.  E.g.- If this trade triggers an entry soon as expected & my preferred swing target of 100.09 is hit, by my guesstimation, that trade should take about 3 weeks, give or take a week. If so, the leading US index will have completely wiped out all gains that it has built since Oct 31, 2014…. about 5 months of gains wiped out in less than a month. Again, a big IF so only time will tell. Personally, I started scaling into a QQQ short position today although once again, the official entry (and my “full position” trigger) is a break below the 60 minute Ascending Broadening Wedge pattern.

click here to view the live, daily chart of QQQ