Last week I was looking pretty smart as the market gave quite a bit of ground after two months of unabated appreciation.
This is a different week, and the market has resumed its climb, which so far is ok with me.
I one point I was up nicely on my 2,000 shares of QID- nearly $4k- now, with the market charging back up and on to higher levels, I am currently in a loss position of around $2800- however, as the market moves up, I’m making it back with PNWIF and CREE behaving a bit better.
So, since I chose not to take the profit when the opportunity was offered, where to from here? I was considering going in a bit heavier, but have held off for the time being. I’ve had another look at the charts, and believe there is an interesting dynamic going on that suggests there could be a little more upside in the NASDAQ COMP, which is what I’m betting on.
I’m still sold on the idea there is going to be one more big whoosh to the downside in the markets before we can really get healthy. My entry point on this last trade was good for a few days, but there is an interesting dynamic going on that might drive the market a bit higher in the short term. Take a look at this chart:
This chart is an overlay of the NASDAQ COMP vs the QQQQ- which represents the NASDAQ 100. As you can see, the QQQQs completed a 61.8% retracement of the 1st quarter carnage, but the NASDAQ COMP never really got there.
I believe there is a possibility the NASDAQ COMP might still be gunning for that 2600 level, which would complete the 61.8% retracement of the sell off there as well.
The S&P 500 looks almost identical.
If the NASDAQ COMP does trade up to 2,600, that is when I will get really aggressive on QID, which might include adding to my position in the stock, and/or jumping into some more aggressive call options.
For the time being, I am just standing pat and waiting with the position still open. I should have sold when I was up, but you can’t call them perfectly all the time.
With the headwinds of higher oil and interest rates, I just don’t think the market is quite ready to get super healthy. The pros are probably painting the tape at month’s end to make the picture look at bit rosier than it deserves to be and blow out all the shorts.
Comments and questions are welcome.