In This Environment, Trade ProShares UltraShort QQQ (ETF) (NYSEARCA:QID) and ProShares Ultra QQQ (ETF) (NYSEARCA:QLD)

August 11, 2017, 12:09 pm ET, BY Thomas H. Kee Jr- Editor, Stock Traders Daily| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

The Markets were slapped in the face after making new all time highs on Tuesday, they looked risky on Wednesday but then recovered, and then they broke down and made lower lows on Thursday.  All of these are reasons for concern, but we also need to ask why, and what we should do about it?

This environment favors risk-controlled Trading.

Price matters more than anything else, but news usually plays a role in declines, and this was no exception.  On Tuesday it was Trump and North Korea concerns, on Wednesday it was FANG related as Walt Disney Co (NYSE:DIS) decided to stop providing content to Netflix, Inc. (NASDAQ:NFLX), and on Thursday a number of factors were involved.  Retail earnings and a failure by the GOP to replace ObamaCare were negatives.  These series of events have clearly changed the sanguine environment that had existed at the beginning of the week.

At the same time, the ECB is printing $60B per month and there is no end in sight to this fabricated demand.  Liquidity is robust as a result.

With ample liquidity but a change in sentiment, an unusual environment exists.  A least, it is unusual when compared to the preferred approach, especially during summer months.  Prior to this recent news, my observation was the investors didn't want to be bothered.  The last thing they wanted to do was trade, or manage risk, it seemed. 

However, recent events have forced them to pay attention, and arguably the better way to approach this environment now is not to buy and hold, but to trade it proactively.  We can see that sentiment has deteriorated, and we know ECB money is still supporting global asset prices, which sets the market up for increased volatility, look at iPath S&P 500 VIX Short Term Futures TM ETN (NYSEARCA:VXX), and that is good for trading strategies.

Understandably, the task of trading during summer months is not very attractive, because it requires a degree of work that few want to adopt if they can avoid it, although it can be very rewarding.  Still, this does seem to be the environment for trading, so for people who want to take advantage of it while minimizing the time required doing it, I have an option.

Our Lock and Walk Strategy is a proven proactive strategy that can be completely automated with Trend Tracker.  This strategy trades ProShares UltraShort QQQ (ETF) (NYSEARCA:QID) and ProShares Ultra QQQ (ETF) (NYSEARCA:QLD) exclusively based on tests or breaks of support or resistance in the NDX.  It is as simple as we could make it too.  We have been using Lock and Walk since January 2009.  Review the Performance

With Trend Tracker, Lock and Walk can also be automated.  Trend Tracker knows the rules, manages the trades, and controls your risk automatically while you manage employees, jump on conference calls, or spend time with friends and family.  It is a solid option for people who do not want to be consumed by the market, but who also realize the opportunities that exist in environments like this.  You can review this video to learn more about Trend Tracker.  Trend Tracker Video

Whether you like the option we have put on the table or not, the conclusion is the same.  Sentiment has changed, volatility levels have increased, and this environment favors trading vs buy and hold as a result.  If you can find a way to embrace that we believe it will be rewarding over time.

Support and Resistance Plot Chart for

Real Time Updates for Repeat Institutional Readers:

Factset: Request User/Pass

Bloomberg, Reuters, Refinitiv, Zacks, or IB users: Access Here.