In order to manage risk with the S&P 500 Index (SPX) likely to confirm a breakdown, we would use a probable mid-week bounce to sell existing longs in Cameco (CCJ), Hibbett (HIBB), the iShares 7-10 Year Treasury Bond ETF (IEF), Range Resources (RRC), and Toro (TTC), with top-down influences leading us to retract long ideas.
The NASDAQ-100 Index looks poised for downside follow-through, and should underperform the SPX, so we are revisiting the ProShares Short QQQ (PSQ):
PSQ has a pending breakout above resistance from the May high, which is likely to confirm based on the daily MACD indicator showing renewed short-term momentum. With short-term overbought conditions not in place, PSQ should maintain its uptrend.
PSQ made another higher low above support from its rising 50-day moving average while maintaining positive intermediate-term momentum. A stochastic “pop” on the weekly chart (not shown) also supports PSQ extending to new 52-week highs.
Assuming the trajectory of the uptrend maintains itself, a measured move projection of ~$16.30 can be derived as an intermediate-term target. A stop-loss order can be placed at the bottom of today’s gap, near $14.10.
ProShares Short QQQ (PSQ, $14.76)
Target: $16.30
Stop-Loss: $14.10
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