Line up some shorts

The markets continue to hang on but it's not looking good, as all of the major indices appear to be either rolling over, forming a H&S, making lower lows, etc. Depending on whether you've been drawing your trendlines with a crayon or a Micron drawing pen, the bulls have either already broke down or are barely holding on.

The S&P, for example, made a lower low today (1,370) even though it closed off its lows at 1,377. A relief in oil prices hasn't help much this week but perhaps upcoming economic news will (ISM, inventories, and unemployment).

Bottom line: now is the time to line up some shorts. Even if your outlook remains bullish it won't hurt to have a contingency plan. A close below SPY 138 will likelylead to SPY 132 and a close below QQQQ 48 might lead to QQQQ 46 or lower.



QID


















SDS


















While I recommend having some individual long/short stocks on your watchlist, it is always important to follow the broad markets. Since the current overall tone feels bearish right now, consider picking out some strike prices and expiration months for QID and SDS. These Ultra Short ETFs aim to double the inverse returns of QQQQ and SDS, respectively. You will notice that QID appears to have made a possible double-bottom (think QQQQ upside down) and SDS appears to have made a reverse H&S (again, think SPY upside down).