So what's going on with the ProShares UltraShort ETFs?
Almost all of them are carving out charts
with the same characteristics. I've made some rough (very rough!) notations on
the chart of the Ultra Short QQQ ETF (QID) below. There are two interesting formations
playing out simultaneously:
- A head-and-shoulders is forming. I have pointed out the
head and both shoulders in the chart below with the big red sloppy letters S
and H and S. This chart formation carries bearish implications for this ETF.
- Moving averages tell a different story. It is clear that
both the 20-day and 50-day moving averages are well above the 200-day moving
average. Recent action shows the ETF staying above its 20-day MA until October
27. At that point it fell below the 20-day and soon bounced off the 50-day MA
and closed the week once again above the 20-day MA. I have underlined in blue
where QID bounced off the 50-day. This successful test of the 50-day and
retaking of the 20-day is potentially bullish.
Conclusion
Two chart formations presaging completely different
outcomes.
If QID drops below its 50-day MA, it completes the
head-and-shoulders and the assumption is that the ETF could drop another 20 or
25 points.
On the other hand, the latest price action has kept the
price of QID above the 20-day MA despite a big down day for the ETF on Thursday.
Also implying further gains is MACD where the histogram has just crossed zero in
the positive direction. DMI is also looking pretty decent.
As I mentioned above, nearly all of the ultra short ETFs are
looking very similar. Further substantial gains in these ETFs, though, would
require that stocks finally break below the October lows. Economic reports seem
to be conspiring to drive stocks down but investors are hanging in there and
keeping the major averages from taking another leg down.
E-Mail me and tell me your opinions GO LONG OR
SHORT MONDAY ?
