When the 60 minute chart on a stock forms a double inverse pup and mini inverse pup, this sets up a very strong breakdown signal complete with a target set at the lower bollinger bands. Pup patterns are when the 5 period simple moving average stalls sideways as the 15 period simple moving average continues to rise.  Eventually, steam builds in the contracting trend channel to cause an explosive breakout above the 5 period moving average usually with upside targets at the upper bollinger bands.  Mini pups are when the lead %d stochastics stalls on the rise as the laggard %dslow stochastics continues to rise to form a wedge like breakout Inverse pups are strong but adding in a mini inverse pup is like a heat seeking missle complete with a target.

On July 14, 2006, AAPL formed a 60 minute inverse pup AND a mini inverse pup formation.  The mini inverse pup set targets right at the 60 min lower bollinger bands at 51.15 x 51.10 levels.  We took AAPL SHORT at 51.72 at 9:38am to ride it down on beautiful 3 min mini inverse pups as well as 8/13 minute inverse pups to lock into the sellers at 51.12, out + .60

The markets have been a nasty downward spiral due to the middle east conflicts.  The monthly lower bollinger bands on the QQQQ’s sit at 34.85.  This would be the ideal support and spot to nibble LONGS.  Earnings season kicks off next week so filter tightly.  Good trading!

Feel free to send any questions or comments to jay@undergroundtrader.com

Jea Yu has been involved with the equities markets for over 10-years. He specializes with intraday trading in the U.S. equities and futures markets. To receive a free 7 day trial to Jea Yu's Underground Trading Pit, click here or call 888.484.8220, ext. 1.