Hello friends, welcome back. Today, let’s break down a clean, actionable trading setup using TQQQ and SQQQ, the leveraged ETFs that track (and inverse-track) the NASDAQ 100. If you trade short-term moves—anywhere from one hour to one day—this breakdown will give you a simple way to spot opportunity, manage your risk, and understand how momentum shifts.
Understanding TQQQ and SQQQ
- TQQQ moves with the NASDAQ—3× the daily direction.
- SQQQ moves against the NASDAQ—also 3× leveraged.
So if QQQ drops 1%, TQQQ drops about 3%, and SQQQ rises about 3%.
On November 13, the overall market dipped, and SQQQ jumped nearly 6%, creating a strong short-term trading opportunity.
Identifying the Setup
1. Watching the Trendline on TQQQ
TQQQ had been moving up for several days, forming higher highs and higher lows. But when it failed to push higher and broke below a key neckline trendline, that was the first signal that upward momentum was fading.
A break like this often tells you the market is starting to shift from bullish to neutral or bearish.
2. SQQQ Showing the Opposite Picture
Because SQQQ moves inversely, the confirmation showed up clearly:
- A strong bullish reversal bar on Wednesday morning
- A clean pullback
- Followed by multiple bullish bars
- All visible on the 4-hour chart
This told us that momentum was turning upward on SQQQ—meaning the overall NASDAQ pressure was turning downward.
3. The 34-Period Rising Moving Average Indicator
At the bottom of the chart, you can use a momentum tool (like a 34-period rising MA histogram):
- Red bars = momentum down
- Green bars = momentum up
This morning’s shift to green added yet another layer of confirmation that SQQQ was ready to move higher.
When multiple signals agree, confidence in the trade increases.
The Result: A Clean, Short-Term Opportunity
With all signals aligned, buying SQQQ offered a realistic 3–5% return within the same trading day. Leveraged ETFs move fast, so precision counts.
If you catch just one of these strong setups per week:
- Weekly potential: 3–4%
- Monthly potential: 10–12%
- Yearly compounding can exceed 100%, even after accounting for losing trades
But remember—leveraged ETFs cut both ways. They can move 1–2% in minutes. Risk management is not optional.
Should You Hold Longer-Term?
Not recommended for most traders, especially for SQQQ.
The market has a long-term upward bias, so holding SQQQ for more than a few days usually works against you.
If you want a long-term position, TQQQ is structurally better—but still volatile. These are tools for active traders, not passive investors.
What to Expect Next
Tomorrow is Friday, and with limited trading hours left in the week, we might see continued downside momentum. The market may need a pullback or a pause before the larger bull trend resumes—possibly toward late December or early next year.
For now, stay patient, focus on clean confirmations, and avoid chasing moves after they happen.
Stay Connected
For more market insights, chart breakdowns, and educational content:
- YouTube Channel: https://www.youtube.com/@ApplTree360-s6j3t/videos
- Blog Website: https://appletree360.com/
Thank you for reading. Trade safe and see you in the next update.
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