A Perfect Trade for Increased Volatility: TVIX

DELAFIELD, Wis. (Stockpickr) -- U.S. equities are under selling pressure today, with the Dow Jones off by more than 50 points and the S&P 500 down by 13 points. The tech-heavy Nasdaq is taking the brunt of the selling, plunging by a whopping 70 points.

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It's been a long time since the market has had a healthy correction. When you look at the chart for the SPDR S&P 500 ETF Trust (SPY), you'll notice that we now have a failed breakout from the recent test of the SPY's highs. The selling for stocks could easily pick up the pace to the downside if the SPY takes out its 50-day moving average of $182.59 a share with high volume soon.

The PowerShares QQQ (QQQ) which represents a basket of the biggest Nasdaq stocks, has also failed to take out its recent highs and is now breaking below its 50-day moving average of $88.19 a share with heavy downside volume. The iShares Russell 2000 (IWM), a popular ETF to follow the small-cap market, has also failed to take out its recent highs and is breaking down here. The IWM is quickly approaching its 50-day moving average of $115.45 a share.

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Considering that the QQQ has now broken below its 50-day moving average, which is bearish technical price action. The next stop for 50-day breaks could very well be coming for the SPY and the IWM. If that does occur, then we're going to see volatility in the markets pick up dramatically. This could be a good time to look for ways to play an increase in volatility if U.S. equities are finally getting ready for the much-needed correction. This could be a meaningful correction since we haven't had one in a very long time.

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