As discussed previously, inverse ETFs allow traders to short the market without requiring a margin account. Given the current market weakness, there are several Inverse ETFs that are or have recently provided entry signals. QID, the Proshares Ultrashort QQQ (or Nasdaq 100) is in a long-term bullish trend and recently gave a short-term buy signal.
Long-Term
QID Long Term Trend
The long-term bull trend was signaled during the first week of May, 2009. The MACD, our trend indicator, started rising from its lowest levels. Additionally, to show conviction, there was a divergence between Price and the MACD through the month of May before the QID settled down.
Short-Term
QID Short-Term Trend
The short-term chart gave two previous buy signals. One on May 11th, which would have put us in the position for only a couple of days for, likely, a small loss. The second on June 15th which would have been closed out around 25th of June for another small loss. The current buy signal was triggered on Thursday to open a position on June 6th.
A look at the charts actually provide several different, but decent entries. First, using the weekly charts, you can see the QID has been consolidating over the last 3-4 weeks. You could play a breakout above 33.65 as one entry. Secondly, on the daily chart, you could play a double bottom pattern that formed in June. The entry would be above the middle peak at around 34.61.
Finally, using the Triple Screen method, the entry would be based on last Thursday’s price action by applying the buy-stop and stop-loss rules.
Buy-stop: 33.53
Stop-Loss: 32.46
Risk per share: 1.07
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I am an amateur trader and investor with over 15 years experience in the stock market. I was bred to be a fundamentalist and followed fundamental analysis until 2009. Following the 2007-2008 bear market, I began to shift from a buy-and-hold strategy to trend-following techniques.