4/2/2018 Market Selloff Again Due to Trade War Fears? In depth look at QQQ, AAPL, and BABA today.

Fun Fact #17

Did you know that the ask price can be lower than the bid price? The ask price is what you must pay to buy a stock, and the bid price is the price you can sell a stock at.

I didn’t know that the ask price could be lower than the bid price until today, but apparently it can happen. Here’s a screenshot of my level 2 quotes. Hopefully it’s not a glitch or bug. My theory is that the orders posted in the image below were “All or None” orders, meaning the entire position must be bought or sold in order to be executed. I’ve also confirmed that this scenario can happen by reading through answers on Quora, which is a popular Q & A social media platform.  

WTF!?

 


 

4_2_2018 Market Stocks.PNG

 

QQQ analysis 4_2_2018.PNG

QQQ sold off hard today, but had a decent recovery in the last half hour of trading. The average true range (ATR) is now 3.843 which is telling us that there’s a lot of volatility. My guess is that any move upwards will be extremely quick as shorts panic cover. We may still go lower due to the trade war issue. Something to keep in mind is that earnings season is coming up soon, and that generally has a big impact on the stock market. 

QQQ is still in an uptrend, but as you can see in the chart above, the 50 day SMA is starting to curl downwards. We still need to close the week back near 160 or there will probably be a lot more downside in the next few months. 

AAPL analysis 4_2_2018.PNG

AAPL is the most note worthy stock to discuss today. Although QQQ sold off hard due to the other FAANG stocks (AMZN, NFLX, GOOG, and FB), AAPL held up nicely and is only down .66%. It’s generally a good idea to look for stocks that aren’t selling off as hard as the broader market because these stocks tend to hold up well on further downside. Notice how QQQ was down 2.89% today, but AAPL is down less than 1/4 of what QQQ is down in terms of percentages.  A close below 165 would signal further downside, but it looks like AAPL will hold that 165 level for now. 

 

BABA analysis 4_2_2018.PNG

BABA is approaching the 165-175 level again, which I think is a good level to start buying. If you like using volatility stops, a good general guideline is to place a stop loss roughly 2 ATRs away from the price. For example, if you were to buy BABA now, you would place a stop loss about 13 dollars below the current price at about 164. The calculation is as follows: The 14 day ATR is 6.714,  multiply that by 2 to get ~13. Remember that stop losses should be placed at strategic locations where price shouldn’t go unless the trade was proven to be wrong. 

 

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