8/28/2018 Markets reach new all time highs as trade deal with Mexico sparks a rally.

Greetings everyone!

Today’s post will be more detailed since we haven’t had one of those in a while.  I had a summer class and relatives/friends over so I had quite some stuff to do.  I also recently started playing a lot of poker cash games (No Limit Texas Hold’em).

Below are the daily charts of the indexes:

The chart of QQQ is above.  Notice that we’ve made a new all time high, but the RSI indicator did not make a new high.  This RSI divergence suggests lower prices ahead (within the next 2 weeks).  I plan to short QQQ near 185 with a target near 178, or slightly above 178.  The stop loss will be about 3 dollars above my short entry.  This is a risk reward of about 3 to 1.  

The SPY 500 is looking more healthy than the QQQ.  This new high is confirmed by an RSI with a similar reading on the previous high.  Although I’m slightly bearish on the SPY, I wouldn’t short it, and would rather short the QQQ.  

The DIA chart looks similar to the SPY chart, so I won’t waste your time discussing it.

MU has been a great trading vehicle for me over the last year or so.  Anyways, I mentioned that I would be looking to aggressively buy in the 46-50 range (suggesting on the lower side), and that has proven to be a good plan 🙂

However, something concerns me with this chart so I no longer have a position anymore.  The last three times MU rallied off a low, it retested that first low and then recovered.  I’ve drawn those three rallies in on the chart above.  Notice how the length of those moves are about 6-7 dollars each.  

I suggest selling your entire position here (as a swing trader) and look to buy below 49 again (preferably near 46).  I also think that this may be the start of a new downtrend, so you may want to avoid buying MU for the long haul.  Of course, you can still swing trade it back up (or down).

Thanks for reading, and have a great week!