Nasdaq
I've been sitting in a short QQQQ position since December and watched the NASDAQ go sideways for about seven weeks. Today I got out of my short position and broke even on the trade. Even though I wasn't down on the trade I got out because I don't like what I am seeing.
First of all, I'm watching one weak group after another rally to new highs. Last month the reits, transports and the home builders were the weak groups, now money is pouring into these stocks. Just about every group that was lagging is starting to catch up with the rest of the market. Even the Internets like yahoo are beginning to come to life. The only laggards left that I trade are the semis and the Q's. I get the feeling that these stocks may begin to catch up with the S&P and the Dow.
If you look at the above chart you will see a two day chart of the NASDAQ and the Dow Jones Industrials. In the afternoon today when the S&P and the Dow Jones were selling off, the NASDAQ showed relative strength. The Dow tested yesterday's low but the NASDAQ didn't even come close to yesterday's low..That's when I took off my short position in the Q's
Have I become bullish on the NASDAQ now? Not at all. There still is that bearish divergence that I've been commenting about these past few days and falling bond prices are usually bearish for the market. So for now I'll leave the Q's alone and continue trading individual stocks which I've been doing well with. If I do see renewed weakness in the Nasdaq, I have no problem getting short again even if it is at lower prices than where we are trading right now.
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4 comments:
I'm thinking you may have gotten out of your short too early. See my trading blog (http://www.etftrader.com) where I'm providing free QQQQ signals. I just short on Monday at open. Stay tuned.
I think you sold too fast. The Nasdaq driver up was Cisco.
CSCO is -1.5% down in Frankfurt
And the world's 3rd bank HSBC is -2% on huge volume. I expect that today everything financial & related to motgages will tank a lot.
Yesterday was a dead cat bounce.
Kevin, I'm confused and maybe you could help me out. From looking at your archives, and assuming that your "no position on the Nasdaq" post on 1/17 was a typo or misprint, it seems that you had short positions on the Q initiated in late Dec at around $44 at best, again at $44 on the first trading day of Jan, again at $44.80 or so on Jan 18, and finally covered all of them yesterday somewhere north of $44 for about breakeven.
Is that correct?
Any thoughts as to what would have to happen to make you trade long on the Q's?
Posts I reviewed to examine your positions:
You said on 12/27
http://kevinsmarketblog.blogspot.com/2006/12/market-summary.html
that you were already short the QQQQ from "five days ago" and were gonna add to it around 43.84. I would guess by looking at the chart that you would have been short initially on the Q's at about 44.
Now on 1/3 you said
http://kevinsmarketblog.blogspot.com/2007/01/qqqqnasdaq-retracement-levels-hold.html
you got additionally short around $44.
However, the next post tagged "Nasdaq" is on 1/17
http://kevinsmarketblog.blogspot.com/2007/01/nasdaq.html
and you said "Right now I have no position in the the Dow, NASDAQ or S&P."
Did you cover your two Q shorts between 1/3 and 1/17 and not tag the post "Nasdaq" or not post about it?
Or were you still short the Q and that was a misprint? I'm assuming it was a misprint.
Now here, you said on 1/18
http://kevinsmarketblog.blogspot.com/2007/01/nasdaq_18.html
that you shorted Q on the open. Is that an additional short, or a new short (having covered the old ones and not mentioned it)?
Just the other day, 2/6, you said
http://kevinsmarketblog.blogspot.com/2007/02/nasdaq.html
that you had a "small short position that I've been holding since December."
And yesterday (2/7), you said
http://kevinsmarketblog.blogspot.com/2007/02/nasdaq_07.html
"Today I got out of my short position and broke even on the trade."
No doodahs,
Not only are you confused but you have me confused as well. The NASDAQ has done nothing since December...I couldn't have made or lost much because the Q's have been in a trading range. In fact the net change from my original December short entry to my exit the other day is only about 35 cents at the worst! Nothing happened Bill...Look at the chart.
On January 3rd, I shorted more Q's on the high of the day and spoke about this entry the day before... I even posted on January 3rd that I took a dollar profit on the short trade and am going to hold the rest. I said "it's not often I make a dollar profit in one day" but I gues you missed that comment...That's ok.
On January 10th I commented that the NASDAQ was making higher lows and that I was tightening up my stops. I guess you missed that comment as well...but thats ok.
So by the time January 11th came around, I had such a small short position left, I considered it almost like being flat or no position. In fact, on January 11th, I said "I'm not a buyer or a seller right now. I am going to wait for earnings to come out". I said I was waiting to see what CSCO and INTC will do at their 50 day moving average. I guess you missed that comment as well.
On Jan 18th, I shorted the Q's and it's never been against me. So if you want to include that trade, then I did actually make a small profit, but I consider the whole trade a scratch.
I hope that clears things up for you..Thanks for following my trades so closely..Wanna be my clerk?
One more thing, you asked what will it take for me to get long Q's? I need to see the NASDAQ take a leadership role in the market. Right now the Nasdaq is lagging the market and I don't buy laggards. I'd rather buy stocks that are out performing the indices and that's what I've been doing since mid January. If you wish to analyze that trade too, I'll make it easy for you, start on January 17th when I began buying oil stocks. That was the low.. But I guess you don't want to talk about something like that...that's ok.. Enjoy
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