The market is enjoying a nice little bounce today after a couple days of getting roughed up.
I believe this corrective phase is just getting started, and the market is entitled to a much more severe pullback. I have a lot of conviction for this idea, so I’m prepared to commit a lot more capital if things go my way.
If the market had continued simply free falling, I would have just waited for QID to go up a couple more points, taken my profits, and moved on.
However, the market is cooperating today by giving me a chance to add to the position. Here is my strategy.
I’m going to treat QID like any other stock, and accumulate on the Fibonacci Retracements.
Here’s a very short term chart of this week’s action in QID:
As you can see, QID made a nice move from $36.78 to $40.68 over the course of this week.
Today, QID is coming back down a bit.
If QID finds its way down to the 38.2% retracement at $39.20, I will add to the position. If QID finds it way down to a full 61.8% retracement at $38.25, I will add a lot more, and perhaps even jump into some of the call options I suggested earlier in the week. I would probably go out to July if I invest some of the call options.
As long as QID remains above $39.20, I will simply hold my position unless it runs up into the $44 to $45 range, and which point it will be time to take profits.
I believe the long overdue correction has just begun. If it comes the way I see it, it will set the markets up for a very strong post summer rally.
Comments and Questions are welcome.
Great call on this. I got in at $37.02 with 500 shares and I have seen a nice 7.5-8% increase. I will also be adding more as we see what happens here. Thanks for the tip!
Editor: It has been a pretty tough week in the markets, so I wouldn’t be adding in here. If anything, now would be a better time to lock in your profits if anything. As I said, I believe this idea has farther to go, but only get in deeper if the market comes back a bit. That’s my view on it.
So I take it you will be adding to this position as of today???
Editor: I will be- just not exactly sure when. At this point, I might go for the options.
Will you be getting shorter as of today or do you think oil will continue to fall and keep bumping the market higher?
Editor: Taking a hard look today, and might make the move on Monday afternoon.
I sold my initial 500 shares and made a nice profit for just a week of holding on to it. I want to re-buy on this idea, because I see that it has fallen almost perfectly back down to what I initially invested at $37.02. I’m not sure how long to exactly hold out for, but I’ve been looking at the graphs for more info. It seems like QID is due to shoot up again. Although I’m not expert on this, I believe I’m reading these graphs correctly. Your thoughts?
Editor: I have decided to see if I can get lower levels on QID is the market continues to rise a bit. There is a disconnect between the QQQQs and the actual NASDAQ COMP as I covered in Friday’s BLOG. Please check it out.