Market Summary
The indices were up today with the Dow Jones taking the spotlight. The dow closed above 12,500 for the first time. The Nasdaq however continues to lag and I'm looking for a bounce here to add to my short position in the QQQQ..
The other day I pointed out that the nasdaq had a weekly bearish engulfment. One of my favorite trades is to short a 50% rally of the range of that engulfment day. So that means I will short QQQQ around 43.84 if it gets there. I already have a small short position from about 5 days ago and I am looking to add. Shorting the bounce at 50% is a trade I will take without hesitation because the risk reward is so good. The protective stop is above the high of the engulfment bar.. It's a very clear straight foward trade and I will take that trade every time like I have for the past 15 years.
I'm really not looking to do too much else until the new year when volume comes back into the market. I'm watching gold and silver here but like I said, I'm going to wait another week before I start initiating new positions.
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6 comments:
That 50% retracement level also happens to line up with resistance from the falling 21 day moving average on the Q's. That is my best case upside projection for this current bounce, and I agree that it seems like a good place to go short the Q's.
Check out what the Nasdaq has done every January for the past 6 years
Kevin, how do you short qqqq's,put options,or inverse etf's? Also if you can break down the $rut,if you ever get time,thanks for your hard work, love the blog! thanks again,Chris
Hey Chris...You can get short the nasdaq many ways..Buying puts is one way on qqqq, you can also short qqqqq or buy QID. QID is the inverse of the nasdaq so buying QID is a bearish position on the nasdaq.
I'm not going to short the SPY or DIA because they have NOT broken trend.. QQQQ is the only index that has broken it's short term uptrend so thats where I want to be. You always want to short the weakest and buy the strongest as a rule. I am still vey cautious on the other indices so I am not going to be buying anything at the moment. I'm just playing QQQQ short.
Kevin, Thanks for your response. Good luck on your trading and your blog. Ive made it a regular stop on my daily reading. Chris
Thank you Kevin, very interesting strategy and I also appreciate your blog.
Thank you..
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