If I’ve said it once, I’ve said it a thousand times: Never, ever short the Qs!

But what does this Knowledge Bomb even mean?

What even are “the Qs” anyway?

Better yet, what is the meaning of life?

I plan to answer most of those questions in detail today.

By the time I’m done with you, you’ll see exactly why I always say, “The market never goes down” (fine, sometimes it does) — and why I’m never bearish on the Invesco QQQ Trust Series 1 (QQQ).

BUT, if I WERE going to short the Qs (and I never will again!), I’ll tell you exactly what I’d be looking for on the charts. Hypothetically, of course.

Mainly, though, I want to show you one of the clutch QQQ chart setups that has worked for me time and time again.

So let’s dive right into the exchange-traded fund (ETF) that should be on everyone’s radar… just not as a bearish play.

Knowledge Bomb of the Day

Obviously our featured Bomb today is once again one you’ve heard me say on just about every LIVE trading show I’ve done thus far:

But before we dive into that, first let’s talk about what the QQQ even is, and why it should matter to your trading.

In a nutshell, the QQQ is an exchange-traded fund (ETF) that tracks the Nasdaq-100 Index (NDX) – so basically, it’s a mutual fund of the top 100 stocks, but without a fund manager and associated fees.

Not only that, but many of those 100 stocks are regularly on my Warlock Watchlist, due to their volatility and liquidity – two key parameters to the ideal VWAP stock.

According to the Invesco site, the QQQ was the second-most traded ETF in the U.S., based on average daily volume traded as of March 31, 2021.

In addition, it was rated the best-performing large-cap ETF growth fund (out of 440), based on total return over the past 10 years.

You know why? Because the Qs don’t lose, baby! (OK, sometimes they lose – but not often!)

I mean, look at the longer-term QQQ chart I showed you LIVE this morning…

If the market’s open, the Qs are likely higher
That is truly something else.

While I’m NOT a long-term investor, or even a swing trader (I’m a day trader – in and out with a quickness), if I WERE going to hold something overnight, it’d likely be the Qs.

Now, I’ve been trading QQQ for a long time, even before I discovered the power of VWAP, which is the only trade you’ll ever need.

But when I started adding my 1-minute/multi-day VWAP to the mix, it was a game-changer – especially when I started noticing a particular pattern setting up.

QQQ 1-minute/1-day chart – pre-market and the open, June 29, 2021
On the chart above, the shaded half is pre-market action via my Thinkorswim (TOS).

As I told you yesterday, pre-market levels are extremely important to VWAP day traders like me, because these levels are often revisited and tested in the regular session, so I typically place my stops or targets around them.

You can see on that chart that the tech ETF broke back BELOW the VWAP not long after the open, due to early selling pressure, forming a quick double bottom formation around the 1-day VWAP (dashed orange/yellow line).

When I see THIS pattern combined with an upside VWAP break, consider me VERY interested in a long QQQ play.

In fact, outside of my earnings reversal pattern that’s worked outstandingly for me in 2021 so far, this QQQ formation has emerged as a tried & true trade for me.

This is even more applicable when earnings aren’t rolling in, giving me the volatility and liquidity I need for my VWAP trades -because like I always say, “Nothing to do? QQQ!

If trading the QQQ itself is a little outside your capital comfort zone, check out its little sister, the TQQQ – which is the triple-leveraged ETF of the NDX.

If you’re watching the Qs, the TQQQ moves in virtual tandem.

You can see on the TQQQ chart below that it also enjoyed the ol’ Dip & Rip Multi-day VWAP Hold Breaking Back Over the VWAP pattern this morning.

TQQQ – 1-minute/1-day chart – June 29, 2021
When a stock (or ETF, in this case) goes below the VWAP and finds support at the prior-day VWAP, that’s my first sign the selling may be over already… and if you know the Qs, you know they usually tend to find buyers.

Of course, no one KNOWS what will happen; we only have history and patterns and the VWAP to give us clues. But I like to play the odds.

So when I see the Qs breaking back above the 1-minute VWAP after finding support, I know my trade is already defined, with my range going from the double bottom/multi-day VWAP to either previous highs or the next whole or half number overhead.

Now, if you haven’t heard the news, I will never short the Qs.

But if I HAD to short QQQ without a gun to my head, the ONLY way I’d pay attention is if the shares:

  • Broke below their multi-day VWAP and previous lows, AND
  • If the ProShares Ultra VIX Short Term Futures ETF (UVXY) was going higher… Which it never does! (OK, sometimes it does, but not often!)

That’s it for today, kids, but make sure you catch me at 8:30 a.m. ET tomorrow on Money Morning Live, followed by another hour of LIVE TRADING with me!

Will we see yet ANOTHER monster in tomorrow’s session, like we saw with Virgin Galactic (SPCE) yesterday and Marin Software (MRIN) this morning?

Only time – and VWAP – will tell.

See you in the morning!

Kenny Glick


3 responses to “Never Short the Qs!”

  1. MRIN, moonshot to 18.82 Stopped out at 10.47 with my final lot. Opened pre-market a 8.86, stopped out at 9.025. In again at 9.7 out at 10.4301, 10.452, 11.25, and stopped out at 10.47. Wild ride.

    Opened Streetsmart after lunch to see the show in the afternoon, to 18.82 !

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