{"id":4530,"date":"2016-07-05T08:27:12","date_gmt":"2016-07-05T12:27:12","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=4530"},"modified":"2016-07-05T09:54:26","modified_gmt":"2016-07-05T13:54:26","slug":"short-qqq-buy-sqqq","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/short-qqq-buy-sqqq\/","title":{"rendered":"Swing Trade Alert &#8211; 5 Reasons To Buy $SQQQ Now (Short NASDAQ)"},"content":{"rendered":"<figure id=\"attachment_4534\" aria-describedby=\"caption-attachment-4534\" style=\"width: 300px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-4534 size-medium\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/SQQQ-300x60.png\" width=\"300\" height=\"60\" alt=\"\" title=\"\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/SQQQ-300x60.png 300w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/SQQQ-110x22.png 110w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/><figcaption id=\"caption-attachment-4534\" class=\"wp-caption-text\">Profit from short-term NASDAQ 100 weakness with $SQQQ<\/figcaption><\/figure>\n<p>Since\u00a0the <a href=\"https:\/\/www.nytimes.com\/2016\/06\/21\/world\/europe\/brexit-britain-eu-explained.html?_r=0\" target=\"_blank\" rel=\"noopener\">Brexit news<\/a> was announced on\u00a0June 23, stock traders and investors have been on a wild roller coaster ride.<\/p>\n<p>The NASDAQ 100 Index plunged sharply for two days, promptly reversed, and has since erased nearly the entire news-driven decline.<\/p>\n<p>But now that the NASDAQ is\u00a0back in the vicinity of its\u00a0pre-Brexit level, what happens next?<\/p>\n<p>We firmly believe recent market action has created a pretty convincing case for <em>near-term<\/em>\u00a0NASDAQ\u00a0weakness over the next 1 to 2 weeks.<\/p>\n<p>Accordingly, we see the potential for a rather <strong>profitable momentum trading opportunity<\/strong> in buying\u00a0<em>ProShares UltraPro Short QQQ ETF ($SQQQ), <\/em>an\u00a0<a href=\"https:\/\/finance.yahoo.com\/news\/3-ways-short-nasdaq-etfs-154603371.html\" target=\"_blank\" rel=\"noopener\">inverse leveraged ETF<\/a>\u00a0that moves higher when NASDAQ 100 moves lower.<\/p>\n<p>Continue reading to see our<strong>\u00a0<\/strong>five fantastic\u00a0reasons\u00a0it may be an<strong> excellent time to buy $SQQQ,<\/strong> along with a clear, &#8220;no nonsense&#8221;\u00a0technical\u00a0plan for entering and exiting the trade.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/short-qqq-buy-sqqq\/#Ready_To_React\" >Ready To React<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/short-qqq-buy-sqqq\/#Trigger\" >Trigger<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/short-qqq-buy-sqqq\/#Target\" >Target<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/short-qqq-buy-sqqq\/#Stop\" >Stop<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/morpheustrading.com\/blog\/short-qqq-buy-sqqq\/#Be_An_Astute_Trader\" >Be An Astute Trader<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Ready_To_React\"><\/span><strong>Ready To React<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>As mentioned in our\u00a0<a href=\"https:\/\/www.morpheustrading.com\/blog\/brexit-stock-market-support\/\" target=\"_blank\">previous post<\/a>, we always focus on <em>reacting<\/em> to market price action, rather than predicting it.<\/p>\n<p>Nevertheless, when\u00a0a high probability chart pattern falls on your lap, you need to be prepared with a clear\u00a0plan of action to profit from that reaction when the time comes.<\/p>\n<p>We will definitely share details of our action plan to buy $SQQQ in a bit, but let&#8217;s first review\u00a0an annotated\u00a0daily chart of $QQQ.<\/p>\n<p>Although $SQQQ is the actual ETF we are stalking for swing trade entry, we prefer to focus our technical analysis on $QQQ instead\u00a0because it is a well-known ETF proxy that more\u00a0closely mirrors the price action of the NASDAQ 100 Index:<\/p>\n<figure id=\"attachment_4540\" aria-describedby=\"caption-attachment-4540\" style=\"width: 950px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4540\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/QQQ-brexis-short.png\" alt=\"Chart from Morpheus Stock Screener\" width=\"950\" height=\"512\" title=\"\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/QQQ-brexis-short-110x59.png 110w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/QQQ-brexis-short-300x162.png 300w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/QQQ-brexis-short-768x414.png 768w\" sizes=\"auto, (max-width: 950px) 100vw, 950px\" \/><\/a><figcaption id=\"caption-attachment-4540\" class=\"wp-caption-text\">Chart from Morpheus Stock Screener<\/figcaption><\/figure>\n<p>As promised, here are five excellent reasons it may be a great time to sell short $QQQ (through buying $SQQQ):<\/p>\n<ol>\n<li><strong>Major prior resistance &#8211;<\/strong> Although\u00a0$QQQ has recently recovered most\u00a0of its post-Brexit losses, the NASDAQ 100 now starts the week dealing with resistance of its 50 and 200-day moving averages, as well as overhead resistance from its prior June 23 highs.<\/li>\n<li><strong>Bearish volume pattern &#8211;<\/strong> Volume on each of the recovery days was lighter than volume of the two big down days. This points to institutional distribution, which is selling among hedge funds, mutual funds, and other financial institutions.<\/li>\n<li><strong>Lower highs &#8211;<\/strong> $QQQ\u00a0already formed a significant\u00a0&#8220;lower high&#8221; in early June, which may indicate decreased bullish momentum on the intermediate to longer-term. This helps make the case that another &#8220;lower high&#8221; could be formed near current levels before stocks head back down.<\/li>\n<li>\u00a0<strong>Too quick &#8211;<\/strong> Odds of stocks\u00a0<em>at least<\/em>\u00a0retracing a substantial portion of its recent losses in the<em> near-term<\/em> are favorable. Past experience has taught me that a\u00a0sharp selloff followed by<em> too quick<\/em> of a complete recovery frequently leads to at least one quick\u00a0move lower (&#8220;shakeout&#8221;) before price advances further.<\/li>\n<li><strong>Positive reward-risk ratio &#8211;\u00a0<\/strong>Before entering\u00a0<em>any<\/em> new stock or ETF trade, we first determine how the potential profit (reward) compares to the potential loss (risk). Based on the entry, stop, and target prices detailed below, this setup offers a very favorable reward-risk ratio.<\/li>\n<\/ol>\n<p><strong>$SQQQ &#8211; A Better Way To Sell Short The NASDAQ<br \/>\n<\/strong><br \/>\nThanks to the\u00a0advent of inverse ETFs, which move higher as the underlying equity or index moves lower,\u00a0you can now\u00a0profit from a downward move in a stock or index\u00a0<em>without\u00a0actually selling short.<\/em><\/p>\n<p>Additionally, choosing a\u00a0<em>leveraged ETF<\/em> as your trading vehicle to short the NASDAQ 100 offers the ability to get more &#8220;bang for your buck&#8221; on smaller trading accounts (be warned\u00a0that leveraged ETFs are optimal only as only <em>short-term<\/em> trading vehicles because they may\u00a0under-perform over\u00a0longer holding periods).<\/p>\n<p>Below is a daily chart of $SQQQ, which moves inversely to $QQQ and at three times the percentage ratio:<\/p>\n<figure id=\"attachment_4541\" aria-describedby=\"caption-attachment-4541\" style=\"width: 949px\" class=\"wp-caption alignnone\"><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-4541\" src=\"https:\/\/www.morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/SQQQ-swing-trade.png\" alt=\"Chart from Morpheus Stock Screener\" width=\"949\" height=\"511\" title=\"\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/SQQQ-swing-trade-110x59.png 110w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/SQQQ-swing-trade-300x162.png 300w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2016\/07\/SQQQ-swing-trade-768x414.png 768w\" sizes=\"auto, (max-width: 949px) 100vw, 949px\" \/><\/a><figcaption id=\"caption-attachment-4541\" class=\"wp-caption-text\">Chart from Morpheus Stock Screener<\/figcaption><\/figure>\n<p>Looking at the chart above, notice we have labeled the trigger, target, and stop prices that comprise our plan for this momentum swing trade.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Trigger\"><\/span><strong>Trigger<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>As with all swing trade setups, it is crucial to wait for the price action to confirm this analysis before entering the trade.<\/p>\n<p>Therefore, you should wait until a bit of selling\u00a0pressure in the NASDAQ 100 at least pushes $SQQQ above its July 1 high of \u00a0$18.48 before entering a position (remember that weakness in $QQQ equates to strength in $SQQQ).<\/p>\n<p>Our <em>exact<\/em> buy trigger price for $SQQQ is listed in\u00a0<strong><a href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\"><em>The Wagner Daily<\/em><\/a><\/strong>, but the main\u00a0point is to wait for the chart pattern to show a bit of price confirmation in the right direction before assuming any risk.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Target\"><\/span><strong>Target<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><em>If<\/em> $SQQQ moves above its July 1 high,\u00a0momentum could easily\u00a0lead to a <a href=\"https:\/\/www.morpheustrading.com\/blog\/fibonacci-for-swing-trading\/\" target=\"_blank\">50% Fibonacci retracement<\/a> of the range from the June 24 high to the July 1 low.<\/p>\n<p>There is also a band of horizontal price resistance from May of 2016 around the 50% retracement level.<\/p>\n<p>This initial\u00a0profit target if $SQQQ\u00a0triggers for buy entry equates to a price level<strong> around $20.<\/strong><\/p>\n<p>However, traders willing to hold a bit longer (more risk for greater potential gain) may even be rewarded for their patience with a full 100% retracement of the prior downward move (June 24 high is\u00a0<strong>~$22<\/strong>).<\/p>\n<p>Again, remember this is merely a technical momentum trade setup,\u00a0<em>not<\/em> a substantial bearish call on the overall market.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Stop\"><\/span><strong>Stop<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>If $SQQQ rallies above its July 1 high, we do\u00a0<em>not<\/em> want to see it dip back below that day&#8217;s low shortly thereafter.<\/p>\n<p>However, a bit of volatility can be expected if bears re-enter the market, which means we need to give this ETF trade some &#8220;wiggle room&#8221; below its support level (July 1 low of $17.95).<\/p>\n<p>If $QQQ was the ETF in question, we would set the stop about 1% above its July 1 high.<\/p>\n<p>The equivalent stop in $SQQQ is roughly\u00a03% below its July 1 <em>low<\/em>.<\/p>\n<p>Again, subscribing members should note <strong><a href=\"https:\/\/www.morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\">today&#8217;s newsletter<\/a><\/strong>\u00a0for our exact stop price on this inverse ETF swing trade setup.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Be_An_Astute_Trader\"><\/span><strong>Be An Astute Trader<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Although we have five solid reasons the NASDAQ 100 could head lower in the coming days, never forget the most important mantra for stock and ETF traders: <em>Trade What You See, Not What You Think!<\/em><\/p>\n<p>This means that the unexpected can and frequently does happen in the business of trading.<\/p>\n<p>To protect yourself from unnecessary risk, don&#8217;t fall in love with any new\u00a0trade idea at the detriment of not following your plan for managing the trade.<\/p>\n<p>Above all, <a href=\"https:\/\/www.morpheustrading.com\/blog\/danger-jumping-the-gun-trading-psychology\/\" target=\"_blank\">be patient and wait<\/a> for the trade to generate a proper buy signal before entering the trade.<\/p>\n<p><em>Enjoy this article? Please share with your favorite social media network and drop us a comment below.<\/em><\/p>\n<div class=\"cfmonitor\" style=\"padding-top: 30px;\"><center><script src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\" async=\"\"><\/script><!-- Footer of content - Large --> <ins class=\"adsbygoogle\" style=\"display: inline-block; width: 336px; height: 280px;\" data-ad-client=\"ca-pub-7565144363001883\" data-ad-slot=\"6017996961\"><\/ins><script>\/\/ <![CDATA[\n(adsbygoogle = window.adsbygoogle || []).push({});\n\/\/ ]]><\/script><\/center><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Since\u00a0the Brexit news was announced on\u00a0June 23, stock traders and investors have been on a wild roller coaster ride. The NASDAQ 100 Index plunged sharply for two days, promptly reversed, and has since erased nearly the entire news-driven decline. But now that the NASDAQ is\u00a0back in the vicinity of its\u00a0pre-Brexit level, what happens next? We [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":4534,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[5],"tags":[],"class_list":["post-4530","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-picks-analysis"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4530","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=4530"}],"version-history":[{"count":0,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/4530\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media\/4534"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=4530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=4530"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=4530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}